CTB INTERNATIONAL CORP, 10-K405, 1999-03-31

CTB INTERNATIONAL CORP
10-K405, 1999-03-31
FARM MACHINERY & EQUIPMENT

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<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________

FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended December 31, 1998

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period From _____ to _____
______________________

Commission File Number 000-22973

CTB INTERNATIONAL CORP.
(Exact name of registrant as specified in the charter)

<TABLE>
<S> <C>
Delaware 35-1970751
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>

State Road 15 North, P.O. Box 2000, Milford, IN 46542-2000
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (219)-658-4191

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common Stock,
par value $.01 per share Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. Yes [X] No [ ]

The aggregate market value of common stock held by non-affiliates of the
registrant as of March 24, 1999 was approximately

$73,591,391

The number of shares outstanding of the registrant's common stock as of
March 24, 1999 was
12,014,921

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the 1998 Annual Report to Stockholders are incorporated by
reference into Parts I, II, and IV.

Portions of the definitive Proxy Statement dated March 24, 1999 to be
delivered to stockholders in connection with the Annual Meeting of Stockholders
to be held May 4, 1999 are incorporated by reference into Part III

<PAGE> 2

CTB INTERNATIONAL CORP.

FORM 10-K

For the Fiscal Year Ended December 31, 1998

INDEX

<TABLE>

<S> <C> <C>
Part I Page
Item 1. Business 3
Item 2. Properties 10
Item 3. Legal Proceedings 10
Item 4. Submission of Matters to a Vote of Security Holders 10

Part II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters 11
Item 6. Selected Financial Data 12
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 12
Item 7a. Quantitative and Qualitative Disclosures about
Market Risk 12
Item 8. Financial Statements and Supplementary Data 13
Item 9. Changes in and Disagreements with Accountants on
Accounting and 13
Financial Disclosure 13

Part III
Item 10. Directors and Executive Officers of the Registrant 13
Item 11. Executive Compensation 13
Item 12. Security Ownership of Certain Beneficial Owners
and Management 13
Item 13. Certain Relationships and Related Transactions 13

Part IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K 14
Signatures 18
</TABLE>

2
<PAGE> 3
PART I

ITEM 1. BUSINESS

(a) GENERAL DEVELOPMENT OF BUSINESS

CTB International Corp. (the "Company") is a designer, manufacturer and
marketer of agricultural equipment comprised of animal agriculture systems,
including automated feeding, watering, ventilation, heating and nests, as well
as automated controls; integrated commercial egg production systems; and grain
storage and handling systems. The Company serves the poultry, swine, egg
production and grain industries. The Company markets its agricultural products
on a worldwide basis primarily under the CHORE-TIME(R), BROCK(R), FANCOM(R),
ROXELL(R) SIBLEY(TM) and STACO(R) brand names.

CTB International Corp.'s initial predecessor, Chore-Time Equipment Inc.
("Chore-Time Equipment"), was founded in 1952 by Howard S. Brembeck who also
established Brock Manufacturing Inc. ("Brock") in 1957. In 1976, Chore-Time
Equipment and Brock came under common ownership and in 1985 were merged into a
single corporation (the "Predecessor Company").

The Company and its wholly-owned subsidiary, CTB Ventures, Inc., an Indiana
corporation ("CTB Ventures"), were formed by affiliates of American Securities
Capital Partners L.P. ("ASCP"). Pursuant to the Stock Purchase Agreement among
CTB Ventures, the Predecessor Company and the selling stockholders parties
thereto, which included certain members of senior management (the "Predecessor
Company Stockholders"), on January 4, 1996, CTB Ventures purchased all of the
outstanding capital stock of the Predecessor Company (the "Acquisition").
Concurrent with the Acquisition, the Predecessor Company merged into CTB
Ventures and CTB Ventures changed its name to CTB, Inc. ("CTB").

On May 1, 1997, the Company acquired all of the capital stock of Fancom
Holding B.V. ("Fancom Acquisition"). Fancom Holding B.V. is based in The
Netherlands and is a manufacturer of climate control systems and software
applications for the agricultural industry. These systems permit the
simultaneous remote monitoring and operation of multiple poultry and swine
locations and the complete control of all critical processes within facilities
where poultry and swine are raised and eggs are produced, including climate,
feeding, watering, weighing and feed storage. The Fancom Acquisition
strengthened the Company's ability to offer integrated equipment solutions and
to further access the European market where 90% of Fancom's sales are made
through approximately 100 distributors and dealers.

On May 29, 1997, the Company sold substantially all assets (other than
accounts receivable) relating to its PVC deck, dock and fence business to a
subsidiary of Royal Group Technologies Limited ("Vinyl Division Divestiture").
In conjunction with the sale, the Company entered into a joint venture with the
acquirer to produce certain extruded PVC agricultural equipment component parts
for the Company for a period of five years.

On June 23, 1997, the Company acquired substantially all of the assets and
certain specified ordinary course liabilities of the Grain Systems Division of
Butler Manufacturing Company ("Kansas City Grain Systems Division Acquisition").
Based in Kansas City, Missouri, the Kansas City Grain Systems Division
manufactures grain storage bins and markets grain storage, conditioning and
handling systems for grain producers and processors throughout the world. The
Kansas City Grain Systems Division Acquisition contributed to the Company's
competitive position in grain storage markets by greatly increasing the scope of
its distribution network, enhancing the Company's grain storage bin
manufacturing capability and adding an additional range of on-farm and
commercial grain storage bins to its existing product line. The acquisition
expanded the Company's grain bin distribution base by an additional 300 dealers,
expanding dealership coverage in key grain producing states. The Company has
the right to use the Butler logo for two years and the trademark and trade name
for three years after such closing date.

On August 26, 1997, the Company completed the initial public offering of
its common stock.

3
<PAGE> 4
bins in addition to seed storage and grain and seed handling equipment in
Brazil. The Company contributed $3.6 million to the joint venture in 1998. On
January 22, 1999, the parties agreed to terminate and liquidate the joint
venture due to business and general economic conditions in Brazil. The Company
recognized in 1998 a $0.5 million write-off for its share of operating losses of
the joint venture and a $3.1 million charge for impairment in value of the
investment.

On January 12, 1999, the Company acquired Roxell N.V. ("Roxell") of
Maldegem, Belgium. Roxell is a leading manufacturer of automated feeding and
watering systems as well as feed storage bins for the poultry and swine
production markets.

(b) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS

The Company operates in one industry segment which includes the design,
manufacture and sale of agricultural equipment.

MARKET OVERVIEW

The Company serves the agricultural market. Demand for the Company's
products is driven by the overall worldwide level of poultry, swine, egg and
grain production as well as the increasing focus both domestically and
internationally on improving productivity in these markets. These markets are
driven by a number of factors including consumption trends, which are affected
by both the level of economic and population growth and the impact of
governmental policies which can affect both the level of local production and
import/export production levels. Because the U.S. is a net exporter of all of
these products, both the Company's domestic and international sales benefit from
positive worldwide trends in these markets. Additionally, other factors such as
weather conditions, can have a major influence on local and worldwide demand for
the Company's products.

A primary driver impacting demand for the Company's products is economic
and population growth occurring in the Company's international markets,
including Asia, Latin America and to a lesser extent, Eastern Europe and Russia.
Increasing disposable income in international markets enables consumers to
devote larger portions of their income to improved and higher protein-based
diets. In the past, this has meant stronger demand for meat, specifically
poultry and pork, as these meats provide a more cost-effective source of animal
protein than beef. The Asian economic crisis that began in the second half of
1997 and related spillover effects into Brazil slowed the Company's export
growth in 1998. Although the Company expects continued slowness in these markets
in 1999, the Company believes the long-term market fundamentals remain strong,
and demand in Asia and Brazil should increase once their economic crises end.

Demand for grain and the required infrastructure for grain storage,
conditioning and handling is driven by several factors, including additional
grain being used as feed to support the increased international production of
poultry, swine and other meats discussed above. The U.S. Federal Agricultural
Improvement and Reform (FAIR) Act of 1996 and continued crop yield enhancements
are expected to lead to increased worldwide grain production. Additionally,
increased demand for worldwide grain production should support increased values
for grain products. Furthermore, the less functionally sophisticated and
efficient grain storage facilities outside the U.S. and Western Europe, which
experience higher levels of grain spoilage and loss, are increasingly likely to
be replaced by more modern equipment. The Company believes these dynamics will
continue to support rising domestic and international demand for the Company's
grain storage and handling systems.

4
<PAGE> 5

In 1998, pork supplies outpaced processing capacity in the United States.
This had the effect of lowering prices growers received when taking hogs to
market in much of the world. The combination of the supply/capacity limitation
resulting in lower prices caused a decrease in demand for the Company's animal
agriculture products sold into the swine market. The Company believes this is
part of a historical cycle in the hog market that will last into the first half
of 1999.

COMPANY PRODUCTS

The Company has historically been primarily a producer of feeding systems,
commercial egg production systems and grain storage. More recently the Company
increased its emphasis on its other animal agriculture products by introducing
more advanced poultry watering systems and poultry and swine ventilation
systems. Through acquisition, the Company has added greater breadth of swine
feeding components, heating systems and computer-based controls to its animal
agriculture line. And, through an exclusive marketing alliance, the Company has
added a nesting system. These product offerings are part of the Company's
strategy to offer complete, integrated systems for poultry, egg and swine
production. The Company believes that its ability to offer integrated systems
to poultry, egg and swine producers provides it with an advantage over its
competitors enabling producers to purchase complete, integrated production
systems from a single distributor who can offer high-quality installation and
service. The Company is also a designer, manufacturer and marketer of grain
storage bins and handling systems for farm and commercial storage, and markets
grain conditioning equipment. The Company believes its systems offer the
highest quality in grain storage, exhibit strength and durability, facilitate
efficient handling, and minimize spoilage and loss.

The Company manufactures and sells its animal agriculture equipment under
the CHORE-TIME(R), FANCOM(R), ROXELL(R), SIBLEY(TM) and STACOR(R) brand names
and its complete line of galvanized steel grain storage bins and handling and
conditioning systems under the BROCK(R) brand name.

Animal Agriculture

Feeding Systems

The Company manufactures feeding systems for the buildings in which
broilers (chickens raised for consumption), turkeys and breeders (chickens and
turkeys raised to produce hatching eggs) are raised. Broilers and turkeys are
raised in grow-out houses and breeders are raised in breeder houses. The Company
also manufactures swine feeding systems for all stages of swine production,
including feed storage bins, feed delivery systems, and volumetric feeders.

In addition to the individual product features outlined below, the Company
believes that its poultry and swine feeding systems are distinguished by
corrosion-resistant plastic and galvanized steel parts; special engineering for
durability and reliable operation; the FLEX-AUGER(R) system which allows feed to
be conveyed up, down and around corners; and automated controls which coordinate
feeding, watering, ventilation and lighting schedules. Additionally, the
Company's feed storage bins, used for bulk feed storage, are distinguished by a
number of patented features that are designed to maximize capacity, permit easy
cleaning and ensure proper feed flow, including the "ALL-OUT? System" which is
designed to manage the quality of stored feed, and features which prevent rain
and condensation from entering feed storage bins; and provide first-in,
first-out material flow to keep feed fresh to prevent spoilage and blended to
provide uniform quality rations to the poultry and swine as bins fill.

POULTRY. The Company believes that feed accounts for 60% - 70% of the
total cost of raising poultry. The profitability of growers of broilers and
turkeys is largely dependent on the efficiency with which they convert feed to
meat ("feed-to-meat ratio"). The profitability of growers of breeders is largely
dependent upon the total amount of feed required to maximize egg production. The
Company's feeding systems for broilers and turkeys are designed to maximize the
feed-to-meat ratio by making feed attractive and easily accessible to broilers
and turkeys at all stages of growth while simultaneously limiting feed waste.
The Company's feeding systems for breeders are designed to maximize egg
production by delivering appropriate diets at scheduled times, by reducing
competition for feed among breeders and by separately feeding hens and roosters
thereby reducing stress and enhancing productivity of the hens and roosters.

<PAGE> 6
The Company's poultry feeding systems consist of feed storage bins located
outside the grow-out or breeder houses, a feed delivery system which delivers
the feed from the feed storage bin into the house and an internal feed
distribution network which delivers the feed to the birds. The feed delivery and
distribution systems include the Company's FLEX-AUGER(R) products which convey
the feed through an enclosed pipe from the feed storage bin to the house where
another auger delivers it to feeding pans. Feeding pans are suspended
throughout the grow-out and breeder houses with suspension apparatus and other
components allowing direct feed delivery to each bird. The suspension apparatus
for grow-out houses raises and lowers the pans according to the size of the
birds. In addition, these patented feed pans adjust from flood feeding for young
chicks to regulated feed levels for older birds. Automatic timers are also
available to allow for automated periodic feeding. Feed storage bins
manufactured by the Company are sold as an integrated component of the Company's
feeding systems.

SWINE. The profitability of swine producers depends largely on the
feed-to-meat ratio and the number of pounds of lean meat of swine produced. For
sow operations, (swine produced for breeding purposes), profitability is
determined by the size and number of litters per sow per year. The Company's
feeding systems for swine are designed to maximize the feed-to-meat ratio of
swine by delivering appropriate diets at scheduled times to prevent swine from
eating continuously, thus reducing feed waste and improving feed conversion and
utilization. The Company's feeding systems for sows are designed to maximize the
production of piglets by lowering animal stress and reducing the associated
costs by limiting feed waste and minimizing labor costs.

The Company's swine feed delivery systems are similar in concept to those
designed for poultry, consisting of a feed storage bin outside of the swine
building, a FLEX-AUGER(R) feed delivery system which conveys the feed to and
through the building to feed dispensers suspended within the building which
provide individualized feeding. Automatic timers are available to allow for
automated periodic feeding.

Watering Systems

The Company produces nipple watering systems for breeder, egg layer and
broiler houses. The ability of each bird to obtain water easily and immediately
is an essential factor in facilitating weight gain. The Company's watering
systems consist of a water pipe system which distributes water throughout the
house to drinking units supported by winches, cables and other components. The
water is delivered to the system through a regulator designed to provide
differential water pressure according to demand. For grow-out houses, the
watering system delivers water through a patented button nipple drinker that
produces a large bead of water allowing young birds to find the water quickly
and easily, facilitating weight gain.

The Company believes that its watering systems are further distinguished by
water pressure and height adjustments which allow the delivery of appropriate
flow rates to birds of all ages, corrosion-resistant parts, easy installation,
maintenance and self-cleaning features.

Ventilation Systems

The Company manufactures and supplies ventilation systems for breeder,
layer and broiler grow-out houses and swine buildings. The systems consist of
fans, shutters, evaporative cooling systems, winches, inlets and other
accessories to regulate temperature and air flow. The acquisition of Fancom
complements the Company's product line of ventilation systems with
state-of-the-art climate control and software applications which permit the
remote control and monitoring of the climates of multiple poultry and swine
locations. Proper ventilation systems are crucial for maximizing feed-to-meat
ratios by reducing stress caused by extreme temperature fluctuation, allowing
for higher density production and providing for optimum bird and swine health
through disease prevention.

The Company believes that its ventilation systems are distinguished by ease
of assembly in the field, energy-efficient airflow management, a unique design
ideal for international sales which ships compactly and inexpensively and
assembles with little hardware and few tools, a reliable system of environmental
controls and a non- corrosive line of fans designed for egg layer and swine
buildings. In addition, the Company's ventilation systems may be marketed with
the Company's feeding and watering systems to poultry growers and with the
Company's feeding systems to swine growers to offer integrated production
systems which can be controlled by the Company's automated controls.

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Heating

The Company manufactures and markets systems which provide heat for poultry
and swine in grow-out buildings. The heating systems provide efficient,
reliable supplemental heat for young and growing animals in colder climates.
Supplemental heat minimizes the energy animals spend keeping warm, which, in
turn, enhances feed efficiency.

Automated Controls

In conjunction with sales of automated poultry, swine and egg production
systems, the Company sells a full range of systems controls ranging from timers
and thermostats to complex whole-house PC-based control systems. Controls are
available for the breeder, grow-out, egg laying houses and swine buildings to
operate automatically the feeding, watering, ventilation and lighting
operations, either individually or as fully-integrated systems.

In the U.S., the egg industry has led the advancement in automation by
utilizing PC-based control systems to coordinate the feeding, watering,
ventilation and lighting schedules in the house(s) on an integrated basis. The
coordination of these functions has resulted in increased operating
efficiencies. The Company anticipates similar advancements in the broiler,
turkey and swine industries from existing standards of independent controls to
integrated systems similar to the egg industry.

The Company manufactures its own line of control products which includes a
broad range of sophisticated, whole-house personal computer-based control
systems and increases the Company's flexibility in offering fully- integrated
systems. The Company offers systems ranging from individual climate, liquid and
dry feeding, and weighing controls to PC-based systems allowing for simultaneous
remote monitoring and control of multiple poultry and swine locations.

Nests

The Company offers mechanical nest systems through an exclusive marketing
arrangement. Nests are used in poultry breeder operations for the purpose of
efficiently gathering and handling fertile eggs.

Egg Laying/Handling Systems

The Company is a leading U.S. manufacturer of egg production systems. Its
integrated system approach includes layered galvanized wire mesh cages, feed
storage bins, a feed delivery system, cage mounted feeders, an egg collection
system, ventilation, waste removal and watering equipment. The feeding, watering
and ventilation components of each system are similar to those described above.

The profitability of poultry egg producers is determined by the number and
size of eggs produced by each bird, the cleanliness of the eggs and the length
of each bird's laying cycle. Egg production is optimized by factors similar to
those maximizing feed-to-meat ratios for broilers and therefore product features
such as periodic individualized feeding, easy access to water and adequate
ventilation distinguish the Company's egg laying systems. In addition, egg
producer profitability depends upon the gentle handling of eggs to minimize
breakage. The Company's egg handling system is distinguished by a patented egg
collection system, designed to handle eggs more gently, resulting in fewer
cracked or broken eggs. In addition, because the Company manufactures all the
necessary production systems for an egg house, it can offer fully-integrated egg
production systems monitored and operated locally or remotely by the Company's
automated controls.

Grain Storage and Handling Systems

The Company manufactures a wide variety of models of grain storage bins for
on-farm and commercial grain storage in diameters ranging from 15 to 105 feet
with capacities to over 680,000 bushels. The Company also manufactures and
markets a line of industrial bulk storage bins and conveying equipment. In
addition to the products marketed under the BROCK(R) brand name, the Company
produces grain storage bins on a private label basis.

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The Company's grain storage bins are distinguished by an aeration floor
which helps preserve grain condition, patented corrosion resistant bolts and
certain additional patented features which allow for easy unloading of grain.
The Company believes its grain storage bins are further distinguished by
superior roof strength, ease of installation, special engineering for
durability, reliable operation, and superior cosmetic appearance.

The Company also manufactures an enclosed conveyor system for transporting
grain efficiently without waste and spoilage. Grain conditioning equipment used
to enhance the quality and marketability of stored grain is marketed by the
Company as part of its Grain Systems package of products.

PRODUCT DISTRIBUTION

The Company sells its agricultural products primarily through a network of
U.S. and international independent distributors and dealers who offer targeted
geographic coverage in key poultry, swine, egg and grain producing markets
throughout the world. The Company's distributors and dealers sell products to
poultry, egg, swine and grain producers, agricultural companies and other end
users. These independent distributors and dealers install and service the
Company's products, many of whom also offer additional technical support and
service to the end user. Some of the Company's distributors sell products
directly to end users and others sell products through their own dealer
networks. The Company provides training to its distributors and dealers at its
training center, qualifying distributors and dealers to install and service the
Company's products and systems. The Company believes that its distribution
network is the strongest in the industry, providing its customers with high
levels of top quality service. The Company maintains long- standing
relationships with its distribution network.

SOURCES AND AVAILABILITY OF RAW MATERIALS

The Company manufactures its products primarily with galvanized steel,
steel wire and polymer materials, including polyvinylchloride (PVC) pipe,
polypropylene and polyethylene. In addition, it purchases certain components
including electric motors for incorporation in some of its products. It also
purchases grain handling systems which it sells together with grain storage bins
outside of the U.S. PVC pipe is purchased primarily from a company formed in
conjunction with the Vinyl Division Divestiture in which CTB has a 50% ownership
interest. The Company is not dependent on any one of its suppliers and has not
experienced difficulty in obtaining any parts or materials. The Company
purchases galvanized steel from a variety of integrated mills and galvanizing
processors. In addition, the components or substitute components, materials and
parts purchased by the Company are readily available from alternative suppliers.

PATENTS AND TRADEMARKS

The Company has numerous patents covering innovations in poultry and
livestock feeding and other agricultural equipment and has applied for
additional patents. The Company aggressively seeks patent protection for its
technological developments. The Company also has numerous trademarks and has
submitted applications for additional trademarks. While the Company believes
its patents and trademarks have significant value, the Company does not believe
that its competitive position is dependent on patent protection or that its
operations are dependent on any individual patent or group of related patents.
No significant patents will expire prior to December 31, 2001.

SEASONALITY

Sales of agricultural equipment are seasonal, with poultry, swine and egg
producers purchasing equipment during prime construction periods in the spring,
summer and fall and farmers traditionally purchasing grain storage bins in the
summer and fall in conjunction with the harvesting season. The Company's net
sales and net income have historically been lower during the first and fourth
fiscal quarters as compared to the second and third quarters when distributors
and dealers increase inventory in anticipation of seasonal demand.

BACKLOG

Backlog is not a significant factor in the Company's business taken as a
whole, because most of the Company's products are delivered within a few weeks
of being ordered. The Company's backlog on or about March 24, 1999 and 1998,
was $39.3 million and $33.8 million, respectively.

<PAGE> 9
COMPETITION

The market for the Company's products is competitive. Domestically and
internationally, the Company competes with a variety of manufacturers and
suppliers, many of which offer only a limited number of the products offered by
the Company and two of which offer products across most of the Company's product
lines.

Competition is based on the price, value, reputation, quality and design of
the products offered and the customer service provided by distributors, dealers
and manufacturers of the products. The Company believes that its leading brand
names, strong distribution network, diversified product line, product support
and high-quality products enable it to compete effectively. The Company further
believes that its ability to offer integrated systems to poultry, egg and swine
producers, which significantly lower total production costs and help producers
achieve further productivity gains and profitability, provide it with a
competitive advantage. The Company also believes that integrated equipment
systems offer significant benefits to distributors, including lower
administrative and shipping costs and the ease of dealing with a single supplier
for all of their customers' needs. In addition, the Company believes its
distributors and dealers provide producers with high quality-service,
installation and repair.

RESEARCH AND DEVELOPMENT ACTIVITIES

The Company has research and product development and design engineering
located in Milford, Indiana, Panningen, The Netherlands, and to a lesser extent,
certain of its other locations. Expenditures by the Company for product
research and development amounted to approximately $5.8 million, $4.4 million,
and $3.6 million for the years ended December 31, 1998, 1997, and 1996,
respectively.

EMPLOYEES

As of March 24, 1999, the Company had approximately 1,600 employees. The
Kansas City Grain Systems Division's approximate 109 hourly employees are
currently subject to a collective bargaining agreement which expires January 31,
2000. Management believes that its relationships with the Company's employees
are good.

(d) FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND
EXPORT SALES

United States and foreign operations, which currently includes subsidiaries
in The Netherlands and Brazil are as follows:

(in thousands) 1998 1997 1996
- -------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales:
United States $240,348 $177,439 $148,089
Latin America 1,845 3,519 718
Europe/Middle East 29,987 21,105 46
Operating income (loss):
United States 20,593 23,836 19,290
Latin America (1,196) (525) (12)
Europe/Middle East 3,805 2,528 56
Identifiable assets:
United States 154,309 142,794 102,897
Latin America 2,457 1,863 336
Europe/Middle East 38,360 22,894 118

</TABLE>
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Net sales (based on destination) were as follows:

<TABLE>
<CAPTION>
(in thousands) 1998 1997 1996
- -------------------------------------------------------------------------
<S> <C> <C> <C>

United States $193,534 $128,480 $105,962
Latin America 21,497 18,734 14,129
Europe/Middle East 39,310 31,133 10,334
Asia 7,881 15,869 14,174
Canada 9,958 7,847 4,254
- -------------------------------------------------------------------------
Total $272,180 $202,063 $148,853
- -------------------------------------------------------------------------
</TABLE>

ITEM 2. PROPERTIES

The following table sets forth information regarding the principal
properties of the Company as of March 24, 1999:

<TABLE>
<CAPTION>
Location Facility Description Square Feet Leased/Owned
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Milford, Indiana Plant, corporate headquarters and 611,000 Owned
miscellaneous areas
Kansas City, Missouri Plant and office 396,000 Owned
Maldegem, Belgium Plant and office 161,400 Owned
Decatur, Alabama Plant and office 120,000 Owned
Panningen, The Netherlands Plant and office 88,000 Owned/Leased
Anderson, Missouri Plant and office 66,000 Owned
Schaefferstown, Pennsylvania Plant and office 29,000 Leased
Wierden, The Netherlands Plant and office 25,800 Leased
Springdale, Arkansas Plant and office 15,000 Leased
Vitre, France Warehouse and office 15,000 Owned
Londrina, Brazil Warehouse and office 14,000 Leased
Deurne, The Netherlands Warehouse and office 8,300 Leased
Nova Odessa, Brazil Warehouse and office 8,300 Leased
</TABLE>

Management believes that its facilities and equipment are generally
well-maintained and are in good operating condition and that its capacity for
the manufacture of its products is adequate to satisfy anticipated demands for
the foreseeable future.

ITEM 3. LEGAL PROCEEDINGS

There are various claims and pending legal proceedings against the Company
involving matters arising out of the ordinary conduct of business. While the
Company is unable to predict with certainty the outcome of current proceedings,
based upon the facts currently known to it, the Company does not believe that
resolution of these proceedings will have a material adverse effect on its
financial statements.

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

No matters were submitted to a vote of security holders.

EXECUTIVE OFFICERS OF THE COMPANY

J. CHRISTOPHER CHOCOLA - President of the Company since February 1996 and
Chief Executive Officer of the Company since April 1997. Mr. Chocola has served
as Chief Executive Officer of CTB (prior to January 1996, the Predecessor
Company) since March 1994. From July 1993 to February 1994, Mr. Chocola served
as Executive Vice President of the Predecessor Company. From November 1993 to
July 1996, Mr. Chocola served as the General Manager of the Chore-Time division.
From October 1991 to November 1993, Mr. Chocola served as the General Manager of
the Brock division. Mr. Chocola joined the Predecessor Company in 1988. Mr.
Chocola was elected to the Board of Directors of the Predecessor Company in
February 1991 and of the Company in February 1996.

<PAGE> 11
BRIAN D. DAWES - Vice President and General Manager-Floor Systems of CTB
since May 1997. Mr. Dawes was Vice President of the Vinyl Products Division of
CTB (prior to January 1996, the Predecessor Company) from July 1994 until May
1997. Mr. Dawes served as Manager of National Contract Sales at Zimmer, Inc.,
an orthopedics product division of Bristol-Myers Squibb, from 1992 until July
1994. Mr. Dawes rejoined the Predecessor Company in 1994, having served in
management positions at the Predecessor Company from 1981 until 1986.

MICHAEL J. KISSANE - General Counsel and Secretary of the Company since
April 1997 and Vice President of the Company since December 1995. Mr. Kissane
has been a Vice President of CTB (prior to January 1996, the Predecessor
Company) since July 1993, the Secretary of CTB (prior to January 1996, the
Predecessor Company) since March 1994 and has served as General Counsel of CTB
(prior to January 1996, the Predecessor Company) since joining the Company in
January 1992. Prior to joining the Company, Mr. Kissane was a member of the law
firm of Strauss & Kissane in San Diego, California.

MARK A. LANTZ - Vice President and General Manager - Cage Systems of CTB
since May 1997. Mr. Lantz served as Vice President-Operations of CTB from
February 1996 until May 1997. Mr. Lantz served as Operations Manager of CTB
(prior to January 1996, the Predecessor Company) from November 1993 until
February 1996, as Vice President-Manufacturing of the Predecessor Company from
July 1993 until November 1993 and as Plant Manager of CTB (prior to January
1996, the Predecessor Company) from October 1991 until July 1993. Mr. Lantz
joined the Predecessor Company in 1989.

GEORGE W. MURDOCH - Executive Vice President and General Manager,
Chore-Time International since January 1998. Mr. Murdoch served as Vice
President of International Marketing from September 1996 to January 1998, as
European Sales Manager from August 1994 to September 1996, as Sales
Manager-Latin America from January 1994 to August 1994, and Regional Sales
Manager from January 1991 to January 1994.

DON J. STEINHILBER - Vice President, Chief Financial Officer and Treasurer
of the Company since April 1997. Mr. Steinhilber served as Vice President and
Assistant Treasurer of the Company from December 1995 until April 1997. Since
December 1996, Mr. Steinhilber has served as Vice President, Chief Financial
Officer and Treasurer of CTB. From July 1993 to December 1996, Mr. Steinhilber
served as Vice President and Treasurer of CTB (prior to January 1996, the
Predecessor Company). From July 1991 to July 1993, Mr. Steinhilber served as
International Controller of the Predecessor Company. Mr. Steinhilber joined the
Company in July 1991.

ROGER W. TOWNSEND - Executive Vice President of CTB since April 1996 and
General Manager-Brock Grain and Feed Systems of CTB since May 1997. Mr.
Townsend was Chief Operating Officer of CTB (prior to January 1996, the
Predecessor Company) from March 1994 until May 1997. From November 1993 to
July 1996, Mr. Townsend served as General Manager of the Brock division. From
July 1993 to November 1993, Mr. Townsend served as Vice President of Engineering
of the Predecessor Company. From October 1991 to July 1993, Mr. Townsend served
as Assistant General Manager of the Brock division. Mr. Townsend joined the
Company in 1977.

PART II

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

CTB International Corp. common stock began trading on the NASDAQ Stock
Marketr under the symbol "CTBC" on August 21, 1997. As of March 24, 1999 there
were approximately 142 stockholders of record.

The following table sets forth the quarterly high and low sales prices for
Company's common stock as reported by the NASDAQ Stock Market.

<TABLE>
<CAPTION>
1998 1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr.
---- ------- -------- ------- -------
<S> <C> <C> <C> <C>
High $17-1/4 $17-3/16 $14 $9
Low $12-3/4 $13-9/16 $6 $5-7/8
</TABLE>
11

<PAGE> 12

The Company does not anticipate paying any dividends on the common stock in
the foreseeable future, and intends to retain all earnings, if any, for general
corporate purposes. The declaration and payment of dividends, if any, by the
Company will be dependent upon the Company's results of operations, financial
condition, cash requirements and other relevant factors, subject to the
discretion of the Board of Directors. The Company's credit agreement contains
certain restrictions on CTB's ability to pay dividends or make other
distributions.

ITEM 6. SELECTED FINANCIAL DATA

The response to this Item is incorporated by reference to the information
under the caption "Summary Financial Information" on page 18 of the Company's
Consolidated Financial Statements contained in the 1998 Annual Report which is
incorporated herein by reference.

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

The response to this Item is incorporated by reference to the information
under the caption "Management's Discussion and Analysis of Financial Condition
and Results of Operations" on pages 19-25 of the Company's Consolidated
Financial Statements contained in the 1998 Annual Report which is incorporated
herein by reference.

Concerning Forward-Looking Statements - This Report on Form 10-K, including
the Management's Discussion and Analysis of Financial Condition and Results of
Operations and other sections, contain forward- looking statements that are
subject to risks and uncertainties and which reflect management's current
beliefs and estimates of future economic circumstances, industry conditions,
Company performance and financial results. Forward-looking statements include
the information concerning possible or assumed future results of operations of
the Company and those statements preceded by, followed by, or including the
words "future," "anticipate(s)," "expect," "believe(s)," "plan," "outlook,"
"should," or similar expressions. For these statements, the Company claims the
protection of the safe harbor for forward-looking statements contained in the
Private Securities Litigation Reform Act of 1995. Readers of this Report should
understand that the following important factors, in addition to those discussed
elsewhere in this document, could affect the future results of the Company and
could cause those results to differ materially from those expressed in these
forward-looking statements: availability of and price of raw material, product
pricing, competitive environment and related domestic and international market
conditions, operating efficiencies and actions of domestic and foreign
governments. Any changes in such factors could result in significantly
different results. The "Forward-Looking Statements" section of Management's
Discussion and Analysis of Financial Condition and Results of Operations on
pages 24-25 in the 1998 Annual Report is incorporated herein by reference.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is subject to market risk associated with adverse changes in
interest rates and foreign currency exchange rates, but does not hold any market
risk sensitive instruments for trading purposes. Principal exposed to interest
rate risk is limited to $43.2 million in variable rate debt. The Company
measures its interest rate risk by estimating the net amount by which potential
future net earnings would be impacted by hypothetical changes in market interest
rates related to all interest rate sensitive assets and liabilities. Assuming a
hypothetical 20% increase in interest rates as of December 31, 1998, the
estimated reduction in future earnings, net of tax, is expected to be
approximately $0.3 million.

The Company mitigates its foreign currency exchange rate risk principally
by establishing local production facilities in the markets it serves and by
invoicing customers in the same currency as the source of the products. The
Company also monitors its foreign currency exposure in each country and
implements strategies to respond to

<PAGE> 13
changing economic and political environments. The Company's exposure to foreign
currency exchange rate risk relates primarily to U.S. dollar-denominated
inter-company loans. The Company's exposure related to such transactions is not
material to cash flows. However, the Company's exposure related to such
transactions to the Company's financial position and results of operations is
anticipated to be adversely impacted by approximately $150,000, net of tax, for
every 10% devaluation of the Brazilian Real per U.S. dollar and $60,000, net of
tax, for every 5% depreciation of the Dutch Guilder per U.S. dollar. These
amounts are estimates only and are difficult to accurately estimate due to
factors such as the inherent fluctuation of inter-company account balances and
the existing economic uncertainty and future economic conditions in the
international marketplace.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

In response to this item, reference is made to the information under the
captions "Summary Financial Information," "Independent Auditors' Report,"
"Consolidated Statements of Income," "Consolidated Balance Sheets,"
"Consolidated Statements of Stockholders' Equity," "Consolidated Statements of
Cash Flows," and "Notes to Consolidated Financial Statements," on page 18 and
pages 26-43 of the Company's Consolidated Financial Statements contained in the
1998 Annual Report, which is incorporated herein by reference.

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

None

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

In response to this Item, reference is made to the information under the
caption "Election of Directors" on CTB International Corp.'s Proxy Statement for
the 1999 annual meeting of stockholders which is incorporated herein by
reference and to the information contained as a separate item in PART I hereof
under the caption "Executive Officers of the Company" which is also incorporated
by reference.

ITEM 11. EXECUTIVE COMPENSATION

In response to this Item, reference is made to the information under the
caption "Executive Compensation," and "Report of the Compensation Committee on
Executive Compensation" on CTB International Corp.'s Proxy Statement for the
1999 annual meeting of stockholders, which is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

In response to this Item, reference is made to the information under the
caption "Principal Stockholders" on CTB International Corp.'s Proxy Statement
for the 1999 annual meeting of stockholders, which is incorporated herein by
reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Stock Purchase Agreement

Pursuant to the Stock Purchase Agreement, the Company agreed to make
certain contingent payments to the Predecessor Company stockholders (the
"Earn-Out Amount") based on a calculation of cumulative Earnings Before
Interest, Taxes, Depreciation and Amortization ("EBITDA") calculated in
accordance with the Stock Purchase Agreement. The Earn-Out Amount was
determined based on cumulative EBITDA for the three-year period ended December
31, 1998. The cumulative EBIDTA target was subject to adjustment in the event
of any merger, acquisition, divestiture or other extraordinary transaction. An
amendment to the Stock Purchase Agreement to give effect to the Kansas City
Grain Systems Division Acquisition, the Fancom Acquisition and the Vinyl
Division Divestiture revised the EBITDA target from $89.5 million to $103.4
million.

<PAGE> 14
The Earn-Out Amount recorded under the terms of the Stock Purchase
Agreement as amended has been calculated as $7,040,000. The Company is
obligated to pay the Earn-Out Amount in three installments beginning on April 5,
1999. The first installment is equal to 50.0% of the actual Earn-Out Amount,
and the second and third installments are each equal to 25.0% of the actual
Earn-Out Amount. Interest will accrue at the prime rate as of December 31,
1998, which was 7.75%.

Portions of the Earn-Out Amount are payable to certain current directors
and officers of the Company.

Under the terms of the purchase agreement, the Company is required to pay
annual management fees of $300,000 plus expenses to ASCP. Additionally, other
fees paid by the Company to ASCP include $750,000 in connection with the
Acquisition on January 4, 1996; $503,000 in connection with the acquisitions of
Fancom and the Kansas City Grain Systems Division; and $350,000 in connection
with the Offering. In conjunction with the Offering, certain stockholders
(including affiliates of ASCP, J. Christopher Chocola and Caryl Chocola)
redeemed 15,000 shares of Preferred Stock and exchanged 9,069 shares of
Preferred Stock for 647,786 shares of Common Stock.

PART IV

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

(a.) 1. Consolidated Financial Statements

The following financial statements as set forth under PART II, Item 8
of this report are incorporated by reference to the Company's 1998
Annual Report:

Consolidated Statements of Income
Consolidated Balance Sheets
Consolidated Statements of Stockholders' Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Independent Auditors' Report
<TABLE>
<CAPTION>

1998 Form
10-K Page
<S> <C>
Independent Auditors' Report 15

(a.) 2. Financial Statement Schedules

Schedule I - Parent Company Financial Statements 16
Schedule II - Valuation and Qualifying Accounts 17
</TABLE>

All other schedules are omitted because they are not applicable, or
not required, or because the required information is included in
the Consolidated Financial Statements of CTB International Corp. or
the Notes thereto.

(a.) 3. Exhibits

The exhibits filed with this report are listed on the "Exhibit Index" on
page 19.

(b.) Reports on Form 8-K

None filed in the fourth quarter 1998.

<PAGE> 15
INDEPENDENT AUDITORS' REPORT

To the Stockholders and
Board of Directors of CTB International Corp.:

We have audited the consolidated financial statements of CTB International
Corp. as of December 31, 1998 and 1997, and each of the three years in the
period ended December 31, 1998, and have issued our report thereon dated March
8, 1999; such consolidated financial statements and report are included in your
1998 Annual Report to Shareholders and are incorporated herein by reference.
Our audits also included the consolidated financial statement schedules of CTB
International Corp. listed in Item 14. These consolidated financial statement
schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion based on our audits. In our opinion,
such consolidated financial statement schedules, when considered in relation to
the basic consolidated financial statements taken as a whole, present fairly in
all material respects the information set forth therein.

DELOITTE & TOUCHE LLP

Chicago, Illinois
March 8, 1999
<PAGE> 16

SCHEDULE I

PARENT COMPANY FINANCIAL STATEMENTS

As discussed in Note 10, under the terms of the New Credit Agreement, CTB,
Inc., the Company's wholly owned subsidiary, is limited in the dividends it may
distribute to the Company, subject to meeting certain financial goals and
requirements. Accordingly, the following parent company only financial
statements are presented because the distribution of the net assets of CTB, Inc.
are restricted.
CONDENSED BALANCE SHEETS
DECEMBER 31, 1998 AND 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
ASSETS
Equity investment in subsidiaries $76,825 $73,546
------- -------
TOTAL ASSETS $76,825 $73,546
======= =======
LIABILITIES AND STOCKHOLDER'S EQUITY
Stockholder's Equity $76,825 $73,546
------- -------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $76,825 $73,546
======= =======
</TABLE>

CONDENSED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
1998 1997 1996

Equity in undistributed net income of subsidiaries $ 9,196 $ 13,899 $ 8,502
------- -------- -------
NET INCOME $ 9,196 $ 13,899 $ 8,502
======= ======== =======
</TABLE>

CONDENSED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
1998 1997 1996

<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 9,196 $ 13,899 $ 8,502
Adjustments to reconcile net income to net cash
provided by operating activities:
Equity in undistributed net income of subsidiaries (9,196) (13,899) (8,502)
------- -------- -------
Net cash provided by operating activities -- -- --
------- -------- -------
Net increase in cash -- -- --
Cash at beginning of period -- -- --
Cash at end of the period $ -- $ -- $ --
======= ======= =======
</TABLE>

Note 1 - The Company uses the equity method of accounting for its investment
in subsidiaries.

Note 2 - See the Notes to the Company's 1998 Consolidated Financial Statements
for a complete description of the Company's accounting policies.

<PAGE> 17
SCHEDULE II

VALUATION AND QUALIFYING ACCOUNTS
Years Ended December 31, 1998, 1997 and 1996
(in thousands)
<TABLE>
<CAPTION>

Column A Column B Column C Column D Column E
-------------------------- --------- --------------------- -------- --------
Additions
---------------------
Balance at Charged to Charged to Balance at
beginning costs & other end of
of period expenses accounts Deductions period
------------ --------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
1998
Allowance for doubtful accounts . $657 $568 -- $103 (1) $1,122
Inventory obsolescence reserve. . 554 188 -- 108 634

1997
Allowance for doubtful accounts . $449 $362 -- 32 $657
Inventory obsolescence reserve. . 214 372 -- 32 554

1996
Allowance for doubtful accounts . $435 $325 -- $31 (1) $449
Inventory obsolescence reserve. . 190 24 -- -- 214
</TABLE>

- ----------------------
(1) Uncollectible accounts written off

17
<PAGE> 18
SIGNATURES

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

CTB International Corp.

By: /s/ J. Christopher Chocola
-----------------------------
J. Christopher Chocola
Chief Executive Officer

March 31, 1999

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

Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ J. Christopher Chocola Director, President and Chief Executive 3/31/99
- ------------------------------- Officer (Principal Executive Officer)
J. Christopher Chocola

/s/ Don J. Steinhilber Vice President and Chief Financial Officer 3/31/99
- ------------------------------- (Principal Financial and Accounting Officer)
Don J. Steinhilber

/s/ Caryl M. Chocola Director 3/31/99
- -------------------------------
Caryl M. Chocola

/s/ Michael G. Fisch Director 3/31/99
- -------------------------------
Michael G. Fisch

/s/ Larry D. Greene Director 3/31/99
- -------------------------------
Larry D. Greene

/s/ Frank S. Hermance Director 3/31/99
- -------------------------------
Frank S. Hermance

/s/ David L. Horing Director 3/31/99
- -------------------------------
David L. Horing

/s/ Charles D. Klein Director 3/31/99
- -------------------------------
Charles D. Klein

</TABLE>

18
<PAGE> 19
EXHIBIT INDEX

Exhibit Number

<S> <C>
3.1 Form of Restated Certificate of Incorporation of the Company filed
as Exhibit 3.1 to the Company's Registration Statement on Form S-1
(Registration No. 333-29873) (the "Company's Registration Statement") and
incorporated herein by reference.
3.2 Form of By-Laws of the Company filed as Exhibit 3.2 to the Company
Registration Statement and incorporated herein by reference.
4.1 Specimen Certificate of Common Stock of the Company filed as Exhibit
4.1 to the Company Registration Statement and incorporated herein by
reference.
10.1 Commitment Letter, dated as of March 21, 1997, by and among CTB, Inc., and
KeyBank National Association filed as Exhibit 10.1 to the Company
Registration Statement and incorporated herein by reference.
10.2 Asset Purchase Agreement, dated as of March 31, 1997, by and among
Butler Manufacturing Company and CTB, Inc., filed as Exhibit 10.2 to the
Company Registration Statement and incorporated herein by reference.
10.3 Share Purchase Agreement, dated as of May 1, 1997, by and among Chore-Time
Brock Holding B.V. and Halder Investments III B.V., V. Berger, A. Faber,
J. Paquet, J.H.M. Cremers and H.W. Gootzen and Fancom Holding B.V. filed
as Exhibit 10.3 to the Company Registration Statement and incorporated
herein by reference.
10.4 Asset Purchase Agreement, dated as of May 29, 1997, between CTB, Inc., and
Royal Crown Limited filed as Exhibit 10.4 to the Company Registration
Statement and incorporated herein by reference.
10.5 Stock Purchase Agreement, dated as of November 29, 1995, by and among the
Company, CTB Ventures, Inc., CTB, Inc., and the selling shareholders party
thereto filed as Exhibit 10.5 to the Company Registration Statement and
incorporated herein by reference.
10.6 Stockholders Agreement, dated as of January 4, 1996, by and among the
Company and the Individual Shareholders party thereto filed as Exhibit
10.6 to the Company Registration Statement and incorporated herein by
reference.
10.7 Board Representation Agreement, dated as of January 4, 1996, by and among
American Securities Capital Partners, .P., J. Christopher Chocola, Caryl
Chocola and the Company filed as Exhibit 10.7 to the Company Registration
Statement and incorporated herein by reference.
10.8 Form of Non-Qualified Stock Option Agreement filed as Exhibit 10.8 to the
Company Registration Statement and incorporated herein by reference.
10.9 Profit Sharing Plan filed as Exhibit 10.9 to the Company Registration
Statement and incorporated herein by reference.
10.10 Management Incentive Compensation Plan filed as Exhibit 10.10 to the
Company Registration Statement and incorporated herein by reference.
10.11 Escrow Agreement, dated as of November 29, 1995, by and among CTB
Ventures, Inc., the shareholders party thereto and NBD Bank, N.A., filed
as Exhibit 10.11 to the Company Registration Statement and incorporated
herein by reference.
10.12 Management Consulting Agreement, dated as of January 4, 1996, by and among
CTB, Inc. and American Securities Capital Partners, L.P., filed as Exhibit
10.12 to the Company Registration Statement and incorporated herein by
reference.
10.13 Agreement for Partial Release of Escrowed Funds, dated as of March 1,
1997, by and among CTB, Inc. and each of the shareholders party thereto
filed as Exhibit 10.13 to the Company Registration Statement and
incorporated herein by reference.
10.14 Transaction Consulting Agreement, dated as of April 30, 1997, by and among
the Company and American Securities Capital Partners, L.P., filed as
Exhibit 10.14 to the Company Registration Statement and incorporated
herein by reference.
10.15 Transaction Consulting Agreement, dated as of April 30, 1997, by and among
CTB, Inc., and American Securities Capital Partners, L.P., filed as
Exhibit 10.15 to the Company Registration Statement and incorporated
herein by reference.
10.16 Acquisition Agreement of all shares of Roxell N.V., dated November 30,
1998, filed as Exhibit 99.2 to the Company's February 10, 1999 Form 8-K
filing.
</TABLE>
19
<PAGE> 20
<TABLE>
<S> <C>
10.17 Representations and Warranties of Sellers, filed as Exhibit 99.3 to the
Company's February 10, 1999 Form 8-K filing.

10.18 Amendment No. 3 dated as of November 19, 1998 to Credit Agreement
dated as of August 15, 1997.

11 Computation of Earnings Per Share incorporated herein by reference from
the Company's Annual Report.

13 1998 Annual Report to Shareholders of CTB International Corp.

21 Subsidiaries of CTB International Corp. filed as Exhibit 21 to the
Company Registration Statement and incorporated herein by reference.

27 Financial Data Schedule incorporated by reference.

</TABLE>
20

<PAGE> 1
Exhibit 10.18

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

CTB, INC.
CHORE-TIME BROCK HOLDING B. V.
as Borrowers

And

THE FINANCIAL INSTITUTIONS NAMED HEREIN
as Lenders

And

(Logo)

KeyBank National Association
as Administrative Agent

_____________________

AMENDMENT NO. 3
dated as of
November 19, 1998

CREDIT AGREEMENT
dated as of
August 15, 1997

_____________________

================================================================================
<PAGE> 2
AMENDMENT NO. 3 TO CREDIT AGREEMENT

THIS AMENDMENT NO. 3 TO CREDIT AGREEMENT, dated as of November 19, 1998
("this Amendment"), among the following: (i) CTB, INC., an Indiana corporation
(herein, together with its successors and assigns, the "Company" or a
"Borrower"); (ii) CHORE-TIME BROCK HOLDING B. V., a private limited liability
company formed under the laws of The Netherlands (herein, together with its
successors and assigns, "Chore-Time Netherlands" or a "Borrower"), which is a
Wholly-Owned Subsidiary of the Company; (iii) the financial institutions which
are signatories hereto, each of which is one of the Lenders (the "Lenders")
party to the Credit Agreement; and (iv) KEYBANK NATIONAL ASSOCIATION, a national
banking association, as Administrative Agent (the "Administrative Agent") for
the Lenders under the Credit Agreement:

PRELIMINARY STATEMENTS:

(1) The Borrowers entered into the Credit Agreement, dated as of August
15, 1997, as amended by Amendment No. 1 thereto, dated as of March 1, 1998, and
Amendment No. 2 thereto, dated as of June 1, 1998, with the Lenders named
therein and KeyBank National Association, as Administrative Agent for the
Lenders under the Credit Agreement (as so amended, the "Credit Agreement").

(2) Capitalized terms used herein without definition shall have the
respective meanings ascribed thereto in the Credit Agreement.

(3) The Borrowers have requested the Lenders and the Administrative
Agent to increase the Total General Revolving Commitment under the Credit
Agreement from $90,000,000 to $135,000,000 and to amend certain of the other
terms of the Credit Agreement, and the Lenders and the Administrative Agent are
willing to amend the Credit Agreement, all as more fully set forth below.

(4) The amendments to the Credit Agreement provided for in this
Amendment shall not be or become effective unless and until the conditions
specified in section 4 hereof have been satisfied on or before the Effective
Date provided for therein.

NOW, THEREFORE, the parties hereby agree as follows:

SECTION 1. AMENDMENTS TO CREDIT AGREEMENT.

Subject to satisfaction of the conditions specified in section 4.2 hereof,
the Credit Agreement is amended, as of the Effective Date (as defined in section
4.2 hereof), as follows:

1.1. Increase in Commitments, etc. The Total General Revolving
Commitment is increased from $90,000,000 to $135,000,000, and Annex I to the
Credit Agreement is replaced by Annex I hereto, reflecting the changes in the
General Revolving Commitments of the Lenders. Any Lender under the Credit
Agreement which is not a Lender party to this Amendment shall cease to have any
Commitment or rights or obligations under the Credit Agreement as amended
hereby.

1.2. Alternative Currency Sublimits. (a) Clause (i) of section
2.1(a) of the Credit Agreement is amended to change the maximum aggregate amount
of General Revolving Loans of all Foreign Borrowing Subsidiaries from
$25,000,000 to $50,000,000.

(b) Clause (iii) of section 2.1(a) of the Credit Agreement is amended
to change the maximum aggregate amount of all General Revolving Loans
denominated in Alternative Currencies from $25,000,000 to $50,000,000.
<PAGE> 3

If on any date when the Interest Period of any General Revolving Loans
of any Foreign Borrowing Subsidiary is scheduled to expire (after giving
effect to any other payments on such date), the aggregate outstanding
principal amount of General Revolving Loans of all Foreign Borrowing
Subsidiaries (determined at the equivalent amount in Dollars, if any of
such Loans are denominated in an Alternative Currency) exceeds $50,000,000,
the Foreign Borrowing Subsidiaries shall prepay on such date General
Revolving Loans in an aggregate principal amount at least equal to such
excess. If on any date when the Interest Period of any General Revolving
Loans denominated in an Alternative Currency is scheduled to expire (after
giving effect to any other payments on such date) the aggregate outstanding
principal amount of all General Revolving Loans denominated in any
Alternative Currency (determined at the equivalent amount in Dollars)
exceeds $50,000,000, the Borrowers shall prepay on such date such General
Revolving Loans in an aggregate principal amount at least equal to such
excess.

1.3. PRICING CHANGES. The Pricing Grid Table which appears in
section 2.8(g) of the Credit Agreement is replaced with the following:

PRICING GRID TABLE
(Expressed in Basis Points)
<TABLE>
<CAPTION>

Total Indebtedness/Consolidated EBITDA Applicable Applicable
Ratio Eurocurrency Facility
Margin Fee Rate
- -------------------------------------- ------------ ----------
<S> <C> <C>

> 3.25 to 1.00 122.50 40.00

> or = 3.00 to 1.00 and < 3.25 to 1.00 102.50 35.00

> or = 2.50 to 1.00 and < 3.00 to 1.00 90.00 30.00

> or = 2.00 to 1.00 and < 2.50 to 1.00 80.00 25.00

> or = 1.50 to 1.00 and < 2.00 to 1.00 65.00 25.00

< 1.50 to 1.00 55.00 20.00

</TABLE>

1.4. EFFECTIVENESS OF PRICING CHANGES. Notwithstanding anything to the
contrary contained in sections 2.8(g) or 4.1(a) of the Credit Agreement:

(a) the Applicable Eurocurrency Margin applicable to all
Eurocurrency Loans shall be 102.50 basis points per annum, effective as of
the Amendment No. 3 Effective Date, as to all such Eurocurrency Loans then
or thereafter outstanding, until changed in accordance with the provisions
of section 2.8(g) of the Credit Agreement on the basis of the Borrower's
ratio of Total Indebtedness to Consolidated EBITDA, determined on the basis
of the Borrower's consolidated financial statements for the first fiscal
quarter ended after the Amendment No. 3 Effective Date; and
<PAGE> 4

(b) the Applicable Facility Fee Rate shall be 35.00 basis points per
annum, effective as of the Amendment No. 3 Effective Date, until changed in
accordance with the provisions of section 4.1(a) of the Credit Agreement on
the basis of the Borrower's ratio of Total Indebtedness to Consolidated
EBITDA, determined on the basis of the Borrower's consolidated financial
statements for the first fiscal quarter ended after the Amendment No. 3
Effective Date.

1.5. EXTENSION OF MATURITY DATE. The date which appears in the definition
of the term Maturity Date in section 1.1 of the Credit Agreement is changed to
the fifth anniversary of the Amendment No. 3 Effective Date.

1.6. MAXIMUM NUMBER OF BORROWINGS OF EUROCURRENCY LOANS. Section 2.2(b)
of the Credit Agreement is amended to change from 10 to 12 the maximum number of
Borrowings under the General Revolving Facility consisting of Eurocurrency Loans
which may be outstanding at any time under the Credit Agreement

1.7. ADDITIONAL DEFINITION. The following definition is added to section
1.1 of the Credit Agreement in appropriate alphabetic order:

"AMENDMENT NO. 3 EFFECTIVE DATE" shall mean the "Effective Date" as
defined and determined pursuant to Amendment No. 3, dated as of November
19, 1998, to this Agreement.

1.8. TOTAL INDEBTEDNESS/CONSOLIDATED EBITDA RATIO. Section 9.7 of the
Credit is amended to read in its entirety as follows:

9.7. TOTAL INDEBTEDNESS/CONSOLIDATED EBITDA RATIO. The Company will
not permit the ratio of (i) the amount of Total Indebtedness at the end of
any fiscal quarter to (ii) Consolidated EBITDA for the Testing Period then
ended, to exceed (x) 3.50 to 1.00 in the case of any Testing Period ended
prior to December 31, 2000, or (y) 3.25 to 1.00 in the case of the Testing
Period ended December 31, 2000 or any subsequent Testing Period.

1.9. TOTAL INDEBTEDNESS/TOTAL CAPITALIZATION RATIO. Section 9.8 of the
Credit is amended to read in its entirety as follows:

9.8. TOTAL INDEBTEDNESS/TOTAL CAPITALIZATION RATIO. The Company
will not at any time permit the ratio, expressed as a percentage, of (i)
the amount of Total Indebtedness to (ii) the amount of Total
Capitalization, to exceed (x) 65.00% as of the end of any fiscal quarter
ended prior to December 31, 2000, or (y) 60.00% as of the end of the fiscal
quarter ended December 31, 2000 or any subsequent fiscal quarter.

1.10. Continuation of Roxell Holding N.V. as a Foreign Borrowing
Subsidiary. Section 8.13 of the Credit Agreement is amended by adding the
following at the end thereof:

Notwithstanding the foregoing, if within 60 days following the date Roxell
Holding N.V. becomes a Foreign Borrowing Subsidiary hereunder, it fails to
provide a pledge agreement covering all of the shares owned by it in its
principal operating Subsidiary, as security for Roxell Holding N.V.'s Loans
hereunder, and an opinion of local counsel as to the validity and
effectiveness of such pledge agreement, all of such documentation to be in
form and substance reasonably satisfactory to the Administrative Agent,
then no further Borrowings by Roxell Holding N.V. shall be made hereunder,
it shall immediately prepay in full its Loans hereunder and it no longer
shall be considered a Foreign Borrowing Subsidiary.

<PAGE> 5
1.11. ADDITIONAL REPRESENTATION. A new section 7.20 is added to the
Credit Agreement, reading in its entirety as follows:

7.20. YEAR 2000 COMPUTER MATTERS. The Company and its Subsidiaries
are reviewing the areas within their business and operations which could be
adversely affected by, and have developed or are in the process of developing a
program to address on a timely basis the "Year 2000 Problem" (that is, the risk
that computer applications used by the Company and its Subsidiaries may be
unable to recognize and perform properly date-sensitive functions involving
certain dates prior to and any date after December 31, 1999). Based upon the
current status of such review and program, the Company reasonably believes that
the "Year 2000 Problem" will not have a Material Adverse Effect.

SECTION 2. REPRESENTATIONS AND WARRANTIES.

The Borrowers jointly and severally represent and warrant that:

2.1. AUTHORIZATION OF AMENDMENT, ETC. This Amendment has been duly
authorized by all necessary corporate action on the part of the Borrowers, has
been duly executed and delivered by a duly authorized officer or officers of the
Borrowers, and constitutes the valid and binding agreement of the Borrowers,
enforceable against the Borrowers in accordance with its terms.

2.2. REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Borrowers contained in the Credit Agreement, as amended hereby, are true
and correct on and as of the date hereof as though made on and as of the date
hereof, except to the extent that such representations and warranties expressly
relate to a specified date, in which case such representations and warranties
are hereby reaffirmed as true and correct when made.

2.3. NO EVENT OF DEFAULT, ETC. No condition or event has occurred or
exists which constitutes or which, after notice or lapse of time or both,
would constitute an Event of Default.

2.4. COMPLIANCE. The Borrowers are in full compliance with all covenants
and agreements contained in the Credit Agreement, as amended hereby, and the
other Credit Documents to which any Borrower is a party.

2.5. FINANCIAL STATEMENTS. (a) At the date hereof the Parent Financial
Statement Conditions are satisfied.

(b) The Borrowers have delivered to the Lenders prior to the execution
and delivery hereof by any party: (i) the consolidated financial statements of
the Parent and its consolidated subsidiaries as of the end of and for its fiscal
year ended December 31, 1997, in the form filed with the SEC under the 1934 Act
as part of the Parent's Report on Form 10-K for such fiscal year, accompanied by
the opinion with respect to such consolidated financial statements of
independent public accountants of recognized national standing selected by the
Parent, which opinion is unqualified, and (ii) the condensed consolidated
financial statements of the Parent and its consolidated subsidiaries as at the
end of and for its fiscal quarter (or the portion of the fiscal year elapsed to
date) ended September 30, 1998, in the form filed with the SEC under the 1934
Act as part of the Parent's Report on Form 10-Q for such fiscal quarter.

(c) All such financial statements have been prepared in accordance with
GAAP, consistently applied (except as stated therein), and fairly present,
in all material respects, the financial position of the Parent and its
consolidated subsidiaries as of the respective dates indicated and the
consolidated results of

<PAGE> 6
their operations and cash flows for the respective periods indicated, subject
in the case of any such financial statements which are unaudited, to normal
audit adjustments, none of which will involve a Material Adverse Effect.

2.6. PROPOSED ACQUISITION. All of the information provided by the
Company to the Lenders prior to the execution and delivery hereof by any party
with respect to the proposed acquisition by the Company of Roxell, N.V., a
Belgian joint stock company, is (to the extent of the actual knowledge of the
Company) true and correct in all material respects, taking into account the fact
that the Company is not intimately familiar with the properties and business of
Roxell, N.V. and that the Company's knowledge is limited to the information
disclosed to it by Roxell, N.V. and its shareholders.

SECTION 3. RATIFICATIONS.

From and after the date the amendments to the Credit Agreement provided for in
section 1 of this Amendment become effective as provided in section 4.2 hereof,
the terms and provisions set forth in this Amendment shall modify and supersede
all inconsistent terms and provisions set forth in the Credit Agreement, and
except as expressly modified and superseded by this Amendment, the terms and
provisions of the Credit Agreement are ratified and confirmed and shall continue
in full force and effect.

SECTION 4. BINDING EFFECT.

4.1. Effectiveness of this Amendment, etc. (a) This Amendment shall
become effective and shall be binding on the parties hereto and their successors
and assigns, if and when, on or before November 20, 1998,

(i) this Amendment shall have been executed by the Borrowers and
the Administrative Agent, and counterparts hereof as so executed shall have
been delivered to the Administrative Agent;

(ii) the Acknowledgment and Consent appended hereto shall have been
executed by the Credit Parties named therein, and counterparts thereof as
so executed shall have been delivered to the Administrative Agent; and

(iii) the Administrative Agent shall have been notified by all of
the Lenders that such Lenders have executed this Amendment (which
notification may be by facsimile or other written confirmation of such
execution);

Provided, However, that (A) the amendments to the Credit Agreement provided for
in section 1 of this Amendment shall not become effective unless and until the
conditions specified in section 4.2 hereof are satisfied on the Effective Date
provided for therein; and (B) in the event that such amendments to the Credit
Agreement do not become effective during the period in which the Effective Date
may occur as provided in section 4.2, this Amendment shall automatically be
deemed void and of no force or effect except as to the payment of expenses as
provided in section 5.3 hereof. The right of any party to assign its rights or
obligations hereunder shall be subject to the limitations provided in section
13.4 of the Credit Agreement.

(b) Each Lender severally represents and warrants that (i) it has duly
authorized the execution, delivery and performance of this Amendment; (ii) it
has duly executed and delivered this Amendment; (iii) this Amendment constitutes
its valid and binding agreement; and (iv) it will fund its proportionate share
of Borrowings under the Total General Revolving Commitment, as increased by this
Amendment, provided that the conditions specified in section 4.2 of this
Amendment are met and the other conditions to any such Borrowing contained in
the Credit Agreement are also met.
<PAGE> 7
(c) The obligations of the Lenders hereunder are several, and not joint
nor joint and several. No Lender shall be responsible for any breach or default
by any other Lender hereunder.

(d) No party hereto shall be responsible for any damages for any breach or
default in its performance of its obligations hereunder, other than compensatory
damages which are the reasonably foreseeable consequence of such party's breach
or default, and any and all claims for punitive or other damages (other than
compensatory damages as aforesaid), whenever arising, and whether based on
breach of contract or any other actionable basis whatsoever, are hereby forever
waived and released.

4.2. CONDITIONS TO EFFECTIVENESS OF AMENDMENTS TO CREDIT AGREEMENT. The
amendments to the Credit Agreement provided for in section 1 of this Amendment
shall become effective if and when, on a date (the "Effective Date"), on or
prior to January 15, 1999, the following conditions shall be satisfied:

(a) REALLOCATION OF OUTSTANDING LOANS, ETC.: contemporaneously with
the Effective Date, the Company and the other Borrowers shall have made
Borrowings under the Credit Agreement as amended hereby and utilized the
proceeds thereof, together with available cash (as necessary), to prepay in
full all Loans outstanding under the Credit Agreement as in effect
immediately prior to the Effective Date (subject to appropriate netting of
amounts for transactions with Lenders who are continuing hereunder), with
the result that no Lender which is not a party to this Amendment shall
thereafter have any outstanding Loans or Commitments under the Credit
Agreement as amended hereby;

(b) AMENDMENT FEES: the Company shall have paid to the
Administrative Agent, for distribution to the Lenders, the amendment fees
heretofore agreed between the Company and the Administrative Agent;

(c) NEW NOTES: the Company and the other Borrowers shall have duly
executed and delivered to the Administrative Agent, for the accounts of the
Lenders, new General Revolving Notes, conforming to the requirements of the
Credit Agreement as amended hereby;

(d) CORPORATE RESOLUTIONS AND APPROVALS: the Administrative Agent
shall have received, in sufficient quantity for the Administrative Agent
and the Lenders, certified copies of the resolutions of the Board of
Directors of each Borrower and each other Credit Party, approving this
Amendment and each of the other Credit Documents to which such Borrower or
any such other Credit Party, as the case may be, is or may become a party,
and of all documents evidencing other necessary corporate action and
governmental approvals, if any, with respect to the execution, delivery and
performance by such Borrower or any such other Credit Party of this
Amendment or any other Credit Documents to which it is or may become a
party;

(e) INCUMBENCY CERTIFICATES: the Administrative Agent shall have
received, in sufficient quantity for the Administrative Agent and the
Lenders, a certificate of the Secretary or an Assistant Secretary of each
Borrower and of each other Credit Party, certifying the names and true
signatures of the officers of such Borrower or such other Credit Party, as
the case may be, authorized to sign this Amendment and the other Credit
Documents to which such Borrower or such other Credit Party is a party and
any other documents to which such Borrower or any such other Credit Party
is a party which may be executed and delivered in connection herewith;

(f) OPINION OF GENERAL COUNSEL OF THE COMPANY: the Administrative
Agent shall have received an opinion, addressed to the Administrative Agent
and each of the Lenders and dated

<PAGE> 8
the Effective Date or prior thereto, from the General Counsel of the
Company, substantially in the form of Exhibit A hereto and covering such other
matters incident to the transactions contemplated hereby as the Administrative
Agent may reasonably request, such opinion to be in form and substance
satisfactory to the Administrative Agent;

(g) ROXELL ACQUISITION: contemporaneously with the Effective Date and
any Borrowing on the Effective Date by the Company or any of the other Borrowers
of General Revolving Loans the proceeds of which are being used for such
purpose, the Company and its Subsidiary, Roxell Holding N.V., a Belgian joint
stock company, shall have completed the acquisition of Roxell, N. V.,
substantially as contemplated by section 2.6 hereof; and the Company shall have
notified the Administrative Agent that such acquisition has been so completed;

(h) ADDITION OF ROXELL HOLDING N.V. as a Foreign Borrowing Subsidiary:
an Election to Participate, substantially in the form attached as Exhibit B
hereto, shall have been duly executed and delivered by the Company and Roxell
Holding N.V. to the Administrative Agent; and

(i) NOTIFICATION OF EFFECTIVENESS: the Administrative Agent shall have
notified the Company and each Lender in writing that the conditions specified in
the foregoing clauses have been satisfied.

SECTION 5. MISCELLANEOUS.

5.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties made in this Amendment shall survive the execution and delivery
of this Amendment, and no investigation by the Administrative Agent or any
Lender or any subsequent Loan or issuance of a Letter of Credit shall affect the
representations and warranties or the right of the Administrative Agent or any
Lender to rely upon them.

5.2. Reference to Credit Agreement. From and after the date the
amendments to the Credit Agreement provided for in section 1 of this Amendment
become effective as provided in section 4.2 hereof, the Credit Agreement and any
and all other agreements, instruments or documentation now or hereafter executed
and delivered pursuant to the terms of the Credit Agreement as amended hereby,
are hereby amended so that any reference therein to the Credit Agreement shall
mean a reference to the Credit Agreement as amended hereby.

5.3. EXPENSES. As provided in the Credit Agreement, but without limiting
any terms or provisions thereof, the Company agrees to pay on demand all
reasonable costs and expenses incurred by the Administrative Agent in connection
with the preparation, negotiation, and execution of this Amendment, including
without limitation the costs and fees of the Administrative Agent's special
legal counsel, regardless of whether the amendments to the Credit Agreement
provided for in section 1 hereof become effective in accordance with section 4.2
hereof.

5.4. SEVERABILITY. Any term or provision of this Amendment held by a
court of competent jurisdiction to be invalid or unenforceable shall not impair
or invalidate the remainder of this Amendment and the effect thereof shall be
confined to the term or provision so held to be invalid or unenforceable.

5.5. APPLICABLE LAW. This Amendment shall be governed by and construed in
accordance with the laws of the State of Ohio.
<PAGE> 9
5.6. HEADINGS. The headings, captions and arrangements used in this
Amendment are for convenience only and shall not affect the interpretation of
this Amendment.

5.7. ENTIRE AGREEMENT. This Amendment is specifically limited to the
matters expressly set forth herein. This Amendment and all other instruments,
agreements and documentation executed and delivered in connection with this
Amendment embody the final, entire agreement among the parties hereto with
respect to the subject matter hereof and supersede any and all prior
commitments, agreements, representations and understandings, whether written or
oral, relating to the matters covered by this Amendment, and may not be
contradicted or varied by evidence of prior, contemporaneous or subsequent oral
agreements or discussions of the parties hereto. There are no oral agreements
among the parties hereto relating to the subject matter hereof or any other
subject matter relating to the Credit Agreement.

5.8. COUNTERPARTS. This Amendment may be executed by the parties hereto
separately in one or more counterparts, each of which when so executed shall be
deemed to be an original, but all of which when taken together shall constitute
one and the same agreement.

<PAGE> 10

IN WITNESS WHEREOF, this Amendment has been duly executed and delivered as
of the date first above written.

CTB, INC. COMERICA BANK

By:____________________________________ By:___________________________________
Vice President Account Officer
& Chief Financial Officer

CHORE-TIME BROCK HOLDING B. V. LaSALLE NATIONAL BANK

By: CTB, Inc., By:___________________________________
one of its Managing Directors Commercial Lending Officer

By:____________________________________
Vice President
& Chief Financial Officer

KEYBANK NATIONAL ASSOCIATION,
individually and as COOPERATIEVE CENTRALE
Administrative Agent RAIFFEISEN-BOERENLEEBANK B.A.,
"RABOBANK NEDERLAND",
By:____________________________________ NEW YORK BRANCH
Senior Vice President

By:__________________________________
Title:

BANK ONE, NA

By:____________________________________
Vice President

<PAGE> 11
ACKNOWLEDGMENT AND CONSENT

For the avoidance of doubt, and without limitation of the intent and effect
of sections 5 and 6 of the Subsidiary Guaranty and sections 6 and 7 of the
Foreign Subsidiary Guaranty (as such terms are defined in the Credit Agreement
referred to in the Amendment No. 3 to Credit Agreement (the "Amendment"), to
which this Acknowledgment and Consent is appended), the undersigned hereby
unconditionally and irrevocably (i) acknowledges receipt of a copy of the Credit
Agreement, as in effect prior to the Amendment, and the Amendment, and (ii)
consents to all of the terms and provisions of the Credit Agreement, as in
effect prior to the Amendment, as amended by the Amendment.

Capitalized terms which are used herein without definition shall have the
respective meanings ascribed thereto in the Credit Agreement referred to herein.
This Acknowledgment and Consent is for the benefit of the Lenders and the
Administrative Agent, any other person who is a third party beneficiary of the
Subsidiary Guaranty and/or the Foreign Subsidiary Guaranty, and their respective
successors and assigns. No term or provision of this Acknowledgment and Consent
may be modified or otherwise changed without the prior written consent of the
Administrative Agent, given as provided in the Credit Agreement. This
Acknowledgment and Consent shall be binding upon the successors and assigns of
the undersigned. This Acknowledgment and Consent may be executed by the
undersigned in separate counterparts, each of which shall be an original and all
of which together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the undersigned has duly executed and delivered this
Acknowledgment and Consent as of the date of the Amendment referred to herein.

<TABLE>
<S> <C>
CTB CREDIT CORPORATION FANCOM HOLDING B. V.

By: ________________________________ By: _________________________________
Title: Jan H. M. Cremers
Managing Director

CTB SALES CORPORATION FANCOM B. V.

By: ________________________________ By: _________________________________
Title: Jan H. M. Cremers
Managing Director

By: _________________________________
Har H. W. Gootzen
Managing Director

</TABLE>
<PAGE> 12

ANNEX I

INFORMATION AS TO LENDERS

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Name of Lender Commitments Domestic Lending Office Eurocurrency
Lending Office
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
KeyBank National General Revolving Key Center Key Center
Association Commitment: 127 Public Square 127 Public Square
Cleveland, Ohio 44114-1306 Cleveland, Ohio 44114-1306
$35,000,000
Notices: Eurocurrency Lending Offices and
Swing Line Revolving [use above address] Payment Offices for Eurocurrency
Commitment: Attention: Large Corporate Group Loans denominated in an
Facsimile: (216) 689-4981 Alternative Currency:
$5,000,000
Deutsche Marks:
Primary Contact: Dresdner Bank A.G.
Richard A. Pohle Juergen Ponto Platz 1
Senior Vice President D-6000 Frankfurt 11, Germany
Telephone: (216) 689-4446 Account No. 499 08 184 227
Swift Address: DRESDEFF
Contact for Borrowings, Payments, etc Account Name: KEYBANK NATIONAL
Diane Cox ASSOCIATION, CLEVELAND, OH
Telephone: (216) 689-4450
Facsimile: (216) 689-4981 French Francs:
Banque Nationale de Paris S.A.
Wiring Information: Boulevard des Italiens 16
75450 Paris Cedex 09 France
ABA # 041 001 039 Centre d'Operations Avec
Account of CTB, Inc. L'Etranger
Bank Code 30004
Branch Code 00897
Account No. 040033610
Swift Address: BNPAFRPP
Account Name: KEYBANK NATIONAL
ASSOCIATION, CLEVELAND, OH

Pounds Sterling:
Royal Bank of Scotland
Correspondent Banking Branch
P.O. box 450
5-10 Great Tower Street
London ec3P 3HX England
Sort Code: 160034
Account No. 12291629
Swift Address: RBOSGB2L
Account Name: KEYBANK NATIONAL
ASSOCIATION, CLEVELAND, OH

Dutch Guilders:
ABN AMRO Bank N. V.
Vijzelstraat 32
1017HL Amsterdam,
The Netherlands
Account No. 540433845
Swift Address: ABNANL2A
Account Name: KEYBANK NATIONAL
ASSOCIATION, CLEVELAND, OH
- ------------------------------------------------------------------------------------------------------------------------

Bank One, NA General Revolving Bank One, Indiana, Bank One, Indiana,
Commitment: National Association National Association
111 Monument Circle 111 Monument Circle
$25,000,000 Suite 1911 Suite 1911
Indianapolis, Indiana 46277-0119 Indianapolis, Indiana 46277-0119

Notices: Eurocurrency Lending Offices and
[use above address] Payment Offices for Eurocurrency
Facsimile: (317) 321-8830 Loans denominated in an
Alternative
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 13
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Eurocurrency
Name of Lender Commitments Domestic Lending Offices Lending Office
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Primary Contacts: Currency:
D. Kelly Queisser
Vice President French Francs (FRF):
Telephone: (317) 321-8226 Societe Generale
SWIFT CODE: SOGEFRPP
Back-up Contact: For account of Bank One, Indiana
Emily Martidis Account No. 001014420860
Portfolio Manager
Telephone: (317) 321-2773 Deutsche Marks (DEM):
Dresdner Bank
Contact for Borrowings,
Payments, etc.:
SWIFT CODE: DRESDEFF
Shelia Goodwin For account of Bank One, Indiana
Telephone: (317) 321-8241 Account No. 8.183.478.00
Facsimile: (317) 321-8830
Dutch Guilders (NLG):
Wiring Information: ABN-AMRO BANK
ABA # 074 0000 10 SWIFT CODE: ABNANL2A
Reference: CTB, Inc. For account of Bank One, Indiana
Account No. 540433470

English Pounds (GBP):
Lloyd's Bank
SWIFT CODE: LOYDGB2L
For account of Bank One, Indiana
Account No. 01080807
- ----------------------------------------------------------------------------------------------------------------
Comerica Bank General Revolving Comerica Bank Comerica Bank
Commitment: Comerica Tower at Detroit Center Comerica Tower at Detroit Center
500 Woodward 500 Woodward
$25,000,000 9th Floor 9th Floor
Detroit, Michigan 48226-3269 Detroit, Michigan 48226-3269

Notices: Eurocurrency Lending Offices and
[use above address] Payment Offices for Eurocurrency
Facsimile: (313) 222-9516 Loans denominated in an Alternative
Currency:
Primary Contacts:
Kathleen M. Kasperek Dutch Guilders - NLG:
Account Officer ABN-AMRO Bank, Amsterdam
Telephone: (313) 222-3808 SWIFT Code - ABNANL2A
Account # 540434299
Contact for Borrowings,
Payments, etc.: German Marks - DEM:
Beverly Jones Deutsche Bank AG-Frankfurt
Telephone: (313) 222-3805 SWIFT Code - DEUTDEFF
Facsimile: (313) 222-9516 Account # 100.9586355.0000

Wiring Information: English Pounds - GBP:
Comerica Bank Barclays Bank
ABA # 072 000 096 SWIFT Code - BARCGB22
Reference: CTB, Inc. Account # 00789887

French Francs - FRF:
Banque Nationale de Paris, Paris
SWIFT Code - BNPAFRPP
Account # 40030409
- --------------------------------------------------------------------------------------------------------------
LaSalle National Bank General Revolving LaSalle National Bank LaSalle National Bank
Commitment: One American Square One American Square
Suite 2215 Suite 2215
$25,000,000 Indianapolis, Indiana 46282 Indianapolis, Indiana 46282

Notices: Eurocurrency Lending Offices and
[use above address] Payment Offices for Eurocurrency
Facsimile: (317) 756-7021 Loans denominated in an Alternative
Currency:

</TABLE>
<PAGE> 14
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Eurocurrency
Name of Lender Commitments Domestic Lending Offices Lending Office
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Primary Contacts: Dutch Guilders (NLG):
Wesley Jost ABN AMRO Bank, Amsterdam
Commercial Loan Officer SWIFT CODE: ABNANL2A
Telephone: (317) 756-7011 For account of LaSalle National Bank
Account No. 540433918
Contact for Borrowings,
Payments, etc.: German Marks (DEM):
ABN AMRO Bank, Frankfurt
Wiring Information: SWIFT CODE: ABNADEFFFRA
For account of LaSalle National Bank
ABA # 07 1000 505 Account No. 56.01.992/002
Reference: CTB, Inc.
English Pounds (GBP):
ABN AMRO Bank, London
SWIFT CODE: ABNAGB2L
For account of LaSalle National Bank
Account No. 909904

French Francs (FRF):
Banque de Neuflize, Schlumberger
Mallet, Paris
SWIFT CODE: NSMBFRPP
For account of LaSalle National Bank
Account No. 00-12040-12882-00
- ----------------------------------------------------------------------------------------------------------------

Rabobank Nederland, General Revolving Rabobank Nederland, Rabobank Nederland,
New York Branch Commitment: New York Branch New York Branch
245 Park Avenue 245 Park Avenue
$25,000,000 New York, New York 10167-0062 New York, New York 10167-0062

Tax ID No. 13-3036591 Eurocurrency Lending Offices and
Payment Offices for Eurocurrency
Notices: Loans denominated in an Alternative
Rabobank Nederland Currency:
300 South Wacker Drive
Chicago, Illinois 60606 Dutch Guilders (NLG):
Facsimile: (312) 408-8240 Rabobank Nederland, Utrecht
SWIFT CODE: RABONL2U
Primary Contacts: Account No. 3908.17.333
Michael J. Butz
Vice President German Marks (DEM):
Telephone: (312) 408-8209 Rabobank Deutscheland, Frankfurt
SWIFT CODE: RABODEFF
Legal Documents to: Account No. 603-93775
Andrew L. Sherman
Counsel English Pounds (GBP):
Rabobank UK London Office
Legal and Tax Department SWIFT CODE: RABOGB2L
Rabobank Nederland, Account No. 1429957021
New York Branch
245 Park Avenue French Francs (FRF):
New York, New York 10167-0062 Rabobank France, Paris
Telephone: (212) 808-2513 SWIFT CODE: RABOFRPP
Facsimile: (212) 916-7880 Account No. 1019230100

Contact for Borrowings,
Payments, etc.:
Debra Rivers
Telephone: (201) 499-98175
Madeline Ricci
Telephone: (201) 499-5325
Rabo Support Services
10 Exchange Place
Jersey City, New Jersey 07302
Facsimile: (201) 499-5326

Wiring Information:

The Bank of New York
New York, NY 10167
ABA # 021 0000 18
For a/c Rabobank Nederland
a/c no. 802 6002 533
Reference: CTB, Inc.
Attn.: Debra Rivers
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 15
EXHIBIT A
FORM OF OPINION OF GENERAL COUNSEL OF THE COMPANY

________ __, 19__

The Administrative Agent
and each of the Lenders party to the
Credit Agreement referred to below
c/o KeyBank National Association
127 Public Square
Cleveland, Ohio 44114

Re: U.S.$135,000,000 Amendment No.3, dated as of
November 19, 1998, to Credit Agreement,
dated as of August 15, 1997, as amended,
with CTB, Inc. and the other Borrowers named therein

Ladies and Gentlemen:

I am the Vice President, General Counsel and Secretary of CTB, Inc., an
Indiana corporation (the "Company"), and have acted as counsel to the Company in
connection with (i) the execution and delivery of the Credit Agreement, dated as
of August 15, 1997, as amended by Amendment No. 1 thereto, dated as of March 1,
1998, Amendment No. 2 thereto, dated as of June 1, 1998, and Amendment No. 3
thereto "Amendment No. 3"), dated as of November 19, 1998 (as so amended, the
"Credit Agreement"), among the Company, the other Borrowers named therein, the
financial institutions party thereto (the "Lenders"), and KeyBank National
Association, as Administrative Agent, and (ii) the transactions contemplated
thereby. Unless otherwise indicated, capitalized terms used herein but not
otherwise defined herein shall have the respective meanings set forth in the
Credit Agreement. This opinion letter is delivered by me to you at the request
of the Company in accordance with the requirements of section 4.2(f) of
Amendment No. 3.

I have examined and relied upon originals or copies, certified or otherwise
identified to my satisfaction as being true copies, of all such records of the
Company and its Subsidiaries, all such agreements, certificates of officers of
the Company, its Subsidiaries and others, and such other documents, certificates
and corporate or other records as I have deemed necessary as a basis for the
opinions expressed in this letter.

In my examination, I have assumed the genuineness of all signatures, the
legal capacity of all natural persons, the authenticity of all documents
submitted to me as originals and the conformity to authentic original documents
of all documents submitted to me as certified or photostatic copies. As to
facts material to the opinions expressed in this letter, I have relied upon
statements and certificates of officers of the Company and of state authorities
and on the representations, warranties and statements contained in the Credit
Documents. I have assumed that the Credit Documents, together with the other
documents referred to therein, reflect the complete understanding and agreement
of the parties thereto.

I have assumed that each entity that is a party to any of the documents
referred to herein (other than the Company and its Subsidiaries) has been duly
organized or formed and is validly existing and (if applicable) in good standing
as a corporate or similar organization under the laws of its jurisdiction of
organization, and is qualified to do business and is in good standing as a
foreign corporation or other organization in each jurisdiction where by law it
is required to be so qualified; that each such document
<PAGE> 16
has been duly authorized, executed and delivered by each such entity; that
each such entity has the requisite corporate or other organizational power and
authority to perform such party's obligations under each such document to which
it is a party; and that each such entity has performed and will perform such
party's obligations thereunder.

I have investigated such questions of law for the purpose of rendering the
opinions in this letter as I have deemed necessary. I express no opinion in
this letter concerning any law other than the laws of the State of Indiana and
the federal laws of the United States of America. I assume, with your permission
and without independent review, that insofar as the law of any other states may
be applicable to any matters opined to herein, such law is identical to the laws
of the State of Indiana, but I express no opinion as to the extent to which the
law of the State of Indiana or the law of any other jurisdiction may apply.

On the basis of and in reliance on the foregoing, and subject to the
limitations, qualifications and exceptions set forth below, I am of the opinion
that:

1 CORPORATE STATUS, ETC. The Company and each of its Subsidiaries which
is a Credit Party (i) is a validly existing corporation under the laws of the
jurisdiction of its formation and has the corporate power and authority to own
its property and assets and to transact the business in which it is engaged and
presently proposed to engage and (ii) to my knowledge, is duly qualified and is
authorized to do business and is in good standing (if applicable) in each
jurisdiction where it is required to be so qualified except where the failure to
be so qualified would not have a Material Adverse Effect.

2 CORPORATE POWER AND AUTHORITY, ETC. Each Credit Party has the
corporate power and authority to execute, deliver and carry out the terms and
provisions of the Credit Documents to which it is a party and has taken all
necessary corporate action to authorize the execution, delivery and performance
of the Credit Documents to which it is a party.

3 CREDIT DOCUMENTS. Each Credit Party has duly executed and delivered
each Credit Document to which it is a party and each such Credit Document to
which it is a party constitutes the legal, valid and binding agreement or
obligation of such Credit Party enforceable against such Credit Party in
accordance with its terms, except to the extent that the enforceability thereof
may be limited by (i) applicable bankruptcy, insolvency, reorganization,
fraudulent transfer, moratorium or similar laws, and related judicial doctrines,
from time to time in effect affecting creditors' rights and remedies generally,
(ii) general principles of equity (including, without limitation, standards of
materiality, good faith, fair dealing and reasonableness, equitable defenses and
limits on the availability of equitable remedies), whether such principles are
considered in a proceeding at law or in equity, and (iii) the qualification that
certain other provisions of such Credit Documents may be unenforceable in whole
or in part under the laws (including judicial decisions) of the State of Indiana
or other applicable jurisdictions, but the inclusion of such provisions does not
affect the validity as against any Credit Party of any of such Credit Documents
as a whole, and such Credit Documents contain adequate provisions for enforcing
payment of the obligations governed or secured thereby and for the realization
of the principal rights and benefits afforded thereby, subject to the other
qualifications and limitations contained in this opinion letter.

4 NO VIOLATION. Neither the execution, delivery or performance by any
Credit Party of the Credit Documents to which it is a party nor compliance with
the terms and provisions thereof, (i) will contravene any current provision of
any State of Indiana or United States federal law, statute, rule, regulation
(including, without limitation, Regulations G, T, U and X of the Board of
Governors of the Federal Reserve System), or, to my knowledge, any order, writ,
injunction or decree of any court or governmental instrumentality applicable to
the Company or its properties and assets, (ii) will conflict or result in any
breach of, any of the terms, covenants, conditions or provisions of, or
constitute a default under, or result in the creation or imposition of (or the
obligation to create or impose) any Lien upon any

<PAGE> 17
of the property or assets of any Credit Party pursuant to the terms of any
promissory note, bond, debenture, indenture, mortgage, deed of trust, credit or
loan agreement, or any other material agreement or other instrument, of which I
have knowledge to which any Credit Party is a party or by which it or any of its
property or assets are bound or to which it may be subject or (iii) will violate
any provision of the charter, by-laws or code of regulations of any Credit
Party.

5 GOVERNMENTAL APPROVALS. No order, consent, approval, license,
authorization, or validation of, or filing, recording or registration with, or
exemption by, any Ohio or United States federal governmental or public body or
authority, or any subdivision thereof, is required to authorize or is required
as a condition to (i) the execution, delivery and performance by any Credit
Party of any Credit Document to which it is a party, or (ii) the legality,
validity, binding effect or enforceability of any such Credit Document.

6 LITIGATION. To my knowledge, there are no actions, suits or
proceedings pending or, to, my knowledge, threatened with respect to the Company
or any other Credit Party (i) that have, or could reasonably be expected to
have, a Material Adverse Effect, or (ii) which question the validity or
enforceability of any of the Credit Documents, or of any action to be taken by
any Credit Party pursuant to any of the Credit Documents to which it is a party.

7 INVESTMENT COMPANY ACT, ETC. Neither the Company nor any of the other
Credit Parties is subject to regulation with respect to the creation or
incurrence of Indebtedness under the Investment Company Act of 1940, as amended,
the Interstate Commerce Act, as amended, the Federal Power Act, as amended, the
Public Utility Holding Company Act of 1935, as amended, or any applicable state
public utility law.

This opinion letter is being furnished only to the addresses and is solely
for their benefit and the benefit of their participants and assigns in
connection with the transactions contemplated by the Credit Documents. This
opinion letter may not be relied upon for any other purpose, or relied upon by
any other person, firm or corporation for any purpose, without my prior written
consent.

Very truly yours,

Michael J. Kissane
Vice President, General Counsel
and Secretary

<PAGE> 18

EXHIBIT B

FORM OF ELECTION TO PARTICIPATE

<PAGE> 19

[Date]

KeyBank National Association,
as Administrative Agent for the Lenders party
to the Credit Agreement referred to below
127 Public Square
Cleveland, Ohio 44114
Attention: Large Corporate Group

Re: Election to Participate as a Foreign Borrowing Subsidiary
under the Credit Agreement, dated as of August 15, 1997,
as amended, to which CTB, Inc. is a party

Ladies and Gentlemen:

Reference is made to the Credit Agreement, dated as of August 15, 1997, as
amended by Amendment No. 1 thereto, dated as of March 1, 1998, Amendment No. 2
thereto, dated as of June 1, 1998, and Amendment No.3 thereto, dated as of
November 19, 1998 (as amended from time to time, the "Credit Agreement", the
terms defined therein being used herein as therein defined), among CTB, Inc.
(the "Company"), the other Borrowers named therein, the financial institutions
from time to time party thereto (the "Lenders"), and KeyBank National
Association, as Administrative Agent for such Lenders.

1. The undersigned, ROXELL HOLDING N. V., a Belgian joint stock company,
hereby elects to be a Foreign Borrowing Subsidiary for purposes of the Credit
Agreement effective from the date hereof until an Election to Terminate shall
have been delivered on behalf of the undersigned in accordance with the Credit
Agreement. The undersigned confirms that the representations and warranties set
forth in the Credit Agreement insofar as they apply to the undersigned are true
and correct as to the undersigned as of the date hereof, and the undersigned
hereby agrees to perform all the obligations of a Foreign Borrowing Subsidiary
under, and to be bound in all respects by the terms of, the Credit Agreement, to
the extent applicable to a Foreign Borrowing Subsidiary, as if the undersigned
had been an original signatory party thereto.

2. The address to which all notices to the undersigned under the Credit
Agreement should be directed is c/o the Company at its address specified in or
pursuant to the Credit Agreement.

3. There is no income, stamp or other tax of Belgium, or any taxing
authority thereof or therein, imposed by or in the nature of withholding or
otherwise, which is imposed on any payment to be made by the undersigned
pursuant to the Credit Agreement or its Notes, other than a 15% withholding tax
on payments of interest which is applicable except in the case of registered
bonds, or is imposed on or by virtue of the execution, delivery or enforcement
of its Election to Participate or of its Notes.

4. This instrument shall be construed in accordance with and governed by
the laws of the State of Ohio, United States of America.

<PAGE> 20
5. This instrument may be signed in any number of counterparts, each
of which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.

Very truly yours,

ROXELL HOLDING N. V.

By: ___________________________
Name:
Title:

The undersigned hereby confirms that (i) ROXELL HOLDING N. V. is a Foreign
Borrowing Subsidiary for purposes of the Credit Agreement described above and
(ii) the representations and warranties set forth in the Credit Agreement are
true and correct as to ROXELL HOLDING N. V. as of the date hereof.

CTB, INC.

By: ___________________________
Vice President
& Chief Financial Officer

Receipt of the above Election to Participate
is hereby acknowledged on and as of
the date set forth above.

KEYBANK NATIONAL ASSOCIATION,
as Administrative Agent

By _________________________________
Senior Vice President

<PAGE> 1

EXHIBIT 13

FINANCIAL TABLE OF CONTENTS

<TABLE>

<S> <C>
Summary Financial Information . . . . . . . . . . . . . . . . . . . . . . . 18

Management's Discussion and Analysis. . . . . . . . . . . . . . . . . . . 19-25

Independent Auditors' Report. . . . . . . . . . . . . . . . . . . . . . . . . 26

Consolidated Statements of Income . . . . . . . . . . . . . . . . . . . . . . 27

Consolidated Balance sheets . . . . . . . . . . . . . . . . . . . . . . . . . 28

Consolidated Statements of Stockholders' Equity . . . . . . . . . . . . . . . 29

Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . 30

Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . 31-43
</TABLE>

<PAGE> 2
SUMMARY FINANCIAL INFORMATION
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Company Predecessor Company
Year Ended December 31, Year Ended December 31,
(in thousands, except per share amounts) 1998 1997 1996 1995 1994 1993 1992
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>

Income Statement Data:
Net sales $272,180 $202,063 $148,853 $138,119 $140,505 $113,538 $105,509
Cost of sales 211,496 148,345 110,303 105,578 103,491 84,110 77,725
Gross profit 60,684 53,718 38,550 32,541 37,014 29,428 27,784
Selling, general and
administrative expenses 35,645 26,506 18,257 20,606 20,069 19,310 18,345
Amortization of goodwill 1,837 1,373 959 - - - -
Operating income 23,202 25,839 19,334 11,935 16,945 10,118 9,439
Interest (expense) income, net (4,153) (5,003) (5,332) 721 489 313 268
Gain on sale of Vinyl Division - 3,562 - - - - -
Joint venture loss (3,673) - - - - - -
Other non-recurring expenses - - - (1,396)(1) - - -
Income before income taxes 15,376 24,398 14,002 11,260 17,434 10,431 9,707
Income taxes 6,180 10,499 5,500 4,730 6,665 3,961 3,303
- --------------------------------------------------------------------------------------------------------------------------
Net income $ 9,196 $ 13,899 $ 8,502 $ 6,530 $ 10,769 $ 6,681(2) $ 6,404
- --------------------------------------------------------------------------------------------------------------------------
Basic earnings per share $0.73 $1.49 $1.17 (3) (3) (3) (3)
Basic weighted average shares 12,655 9,310 7,256 (3) (3) (3) (3)
Diluted earnings per share $0.71 $1.43 $1.12 (3) (3) (3) (3)
Diluted weighted average shares 12,999 9,716 7,569 (3) (3) (3) (3)

Other Financial Data:
EBITDA (4) $ 30,718(5) $ 32,085(5) $ 24,902 15,562(5) $ 20,062 $ 12,866 $ 12,262
Depreciation 5,739 4,873 4,609 3,627 3,117 2,748 2,823
Amortization (6) 2,443 1,706 1,251 - - - -
Capital expenditures 7,004 4,437 3,402 4,698 5,335 2,867 1,980
Gross profit margin 22.3% 26.6% 25.9% 23.6% 26.3% 25.9% 26.3%
EBITDA margin 11.3% 15.9% 16.7% 11.3% 14.3% 11.3% 11.6%

Cash Flow Data:
Net cash flows from
operating activities $ 2,475 $ 17,412 $ 11,714 $ 11,263 $ 12,730 $ 5,496 $ 9,884
Net cash flows from
investing activities (11,565) (42,104) (106,606) (4,646) (5,278) (2,773) (1,958)
Net cash flows from
financing activities 8,284 25,670 95,150 (3,354) (4,757) (4,445) (5,497)
- --------------------------------------------------------------------------------------------------------------------------
At December 31, At December 31,
1998 1997 1996 1995 1994 1993 1992
- --------------------------------------------------------------------------------------------------------------------------
Balance Sheet Data:
Working capital $ 40,910 $ 26,318 $ 10,773 $ 22,150 $ 18,891 $ 15,072 $ 14,294
Total assets 195,126 67,641 103,351 58,045 54,355 44,651 41,386
Debt 71,365 49,164 65,150 - - 40 344
Total stockholders' equity 76,825 73,546 13,741 40,841 37,202 30,902 29,059
- --------------------------------------------------------------------------------------------------------------------------
(1) Non-recurring costs related to the CTB Acquisition.

(2) Includes increase in net income of $211 for cumulative effect of change in accounting method
for adopting SFAS No. 109, "Accounting for Income Taxes."

(3) Due to changes in the Company's capital structure resulting from the CTB Acquisition, historical
net income per share or dividends per share is not meaningful and therefore is not presented.

(4) EBITDA represents earnings before interest, income taxes, depreciation and amortization.

(5) EBITDA for the years ending December 31, 1998, 1997 and 1995 excludes a non-recurring charge for
write-down and losses on a joint venture investment of $3,613, the gain on sale of the Vinyl Division of
$3,562 and non-recurring costs related to the CTB Acquisition of $1,396, respectively.

(6) With respect to the year ended December 31, 1998, comprised of amortization of goodwill of
$1,837 and amortization of deferred financing costs of $606. With respect to the year ended December 31,
1997, comprised of amortization of goodwill of $1,373 and amortization of deferred financing costs of
$333. With respect to the year ended December 31, 1996, comprised of amortization of goodwill of $959
and amortization of deferred financing costs of $292.
</TABLE>

<PAGE> 3
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

The following table shows the percentage relationship to net sales of items
derived from the Consolidated Statements of Income and the percentage change
from year to year.

<TABLE>
<CAPTION>
Percentage
Increase (Decrease)
Percentage of Net Sales -------------------
------------------------ 1998 1997
1998 1997 1996 vs. 1997 vs. 1996

<S> <C> <C> <C> <C> <C>
Net sales 100.0% 100.0% 100.0% 35% 36%
Cost of sales 77.7 73.4 74.1 43 34
Gross profit 22.3 26.6 25.9 13 39
Selling, general and administrative expenses 13.1 13.1 12.3 34 45
Amortization of goodwill 0.7 0.7 0.6 34 43
Operating income 8.5 12.8 13.0 (10) 34
Interest expense, net (1.5) (2.5) (3.6) (17) (6)
Gain on sale of Vinyl Division - 1.8 - - -
Joint venture loss (1.3) - - - -
Other non-recurring expenses - - - - -
Income before income taxes 5.7 12.1 9.4 (37) 74
Income taxes 2.4 5.2 3.7 (41) 91
Net income 3.3 6.9 5.7 (34) 63

</TABLE>

1998 COMPARED TO 1997

Net sales increased 34.7% to $272.2 million for the twelve months ended December
31, 1998 compared to $202.1 million in the corresponding period of 1997. The
increase reflects the Fancom Acquisition, the Kansas City Grain Systems Division
Acquisition, the Sibley Industries, Inc. acquisition, and the STACO, Inc.
acquisition that were completed in May 1997, June 1997, July 1998, and
September 1998, respectively. The increase also reflects a strong domestic
market for egg production equipment and success in the Company's bundled package
of products strategy which has led to domestic market share gains in the poultry
sector. Further gains can be attributed to Mexican poultry market strength and
revenues of $31.7 million from the Charoen Pokphand (C.P.) project poultry
buildings. The continued weakness in overseas economies, particularly in Asia
and Brazil, along with global weakness in the hog market, all contributed
negatively to the revenue line during the twelve-month period. Sales of the
Company's products to markets outside the U.S. and Canada were $68.7 million in
1998, an increase of $3.0 million or 4.5%.

Gross profit increased 13.0% to $60.7 million in the twelve months ended
December 31, 1998 or 22.3% of net sales compared to $53.7 million in the
corresponding period of 1997 or 26.6% of net sales. Gross profit dollars
increased due to higher sales levels in 1998. The gross profit margin decrease
of 4.3 percentage points was partly attributable to lower margins relating to
the sales of C.P. project poultry buildings at essentially no margin under
projects expected to last into the second quarter of 1999, sales declines in
higher-margin hog sector products, sales increases in lower-margin products, and
the continued weakness in overseas economies, particularly in Asia, which has
reduced the Company's exports of higher-margin products to customers in the
region and customers that supply the region. Manufacturing inefficiencies
associated with the implementation of a fully-integrated enterprise resource
planning system negatively affected dollars and margins.

Selling, general and administrative expenses increased 34.5% or $9.1
million to $35.6 million in the twelve months ended December 31, 1998 from $26.5
million in the corresponding period of 1997. As a percent of net sales,
selling, general and administrative expenses were 13.1% in the twelve months
ended December 31, 1998 and 13.1% in the corresponding period of 1997. The
dollar increase is primarily attributable to the increased size of the Company
resulting from the Kansas City Grain Systems Division Acquisition, the Fancom
Acquisition, the Sibley Industries, Inc. acquisition, and the STACO, Inc.
acquisition; targeted investments in certain key areas within the Company; and
the effect of our implementation of the fully- integrated enterprise resource
planning system partially offset by lower bonuses and profit sharing expense due
to lower-than-expected performance.

<PAGE> 4

Amortization of goodwill increased to $1.8 million in the twelve months
ended December 31, 1998 or 33.8% from $1.4 million in the corresponding period
for 1997. The increase is attributable to the amortization of goodwill purchased
in the Fancom acquisition, the Kansas City Grain Systems Division acquisition,
the Sibley Industries, Inc. acquisition, and the STACO, Inc. acquisition, offset
by the goodwill sold in the Vinyl Division Divestiture.

Operating income decreased 10.2% or $2.6 million to $23.2 million in the
twelve months ended December 31, 1998 compared to $25.8 million in the
corresponding period of 1997. Operating income margins decreased to 8.5% of net
sales in the twelve months ended December 31, 1998 from 12.8% of net sales in
the corresponding period of 1997. The decrease in operating income was
attributable to higher selling, general and administrative expenses offset
somewhat by higher gross profit dollars.

Net interest expense decreased to $4.2 million in 1998 or 17.0% from $5.0
million in 1997. The decrease is due to the full impact in 1998 of the decrease
in debt from the net proceeds of the Offering offset somewhat by, $8.5 million
of purchases of treasury stock, $6.9 million of debt related to the Sibley and
Staco acquisitions and $3.6 million invested in the Rota Brock joint venture,
among other factors.

Other expense for 1998 includes a $0.5 million expense for joint venture
losses and a $3.1 million write-off of an impaired joint venture investment.
Other income for 1997 included a pre-tax gain of $3.6 million for the sale of
the Vinyl Division.

Net income decreased 33.8% or $4.7 million to $9.2 million in the twelve
months ended December 31, 1998 from $13.9 million for the corresponding period
of 1997. The decrease was due to lower operating income and joint venture
related charges in 1998 and the $1.1 million after-tax gain on sale related to
the divestiture of the Company's Vinyl Division in 1997 offset somewhat by lower
interest expense and a lower effective tax rate, primarily a result of
non-deductible goodwill in 1997 related to the Vinyl Division Divestiture.

The weighted average common and common equivalent shares outstanding on a
diluted basis during 1998 was 13.0 million shares compared to 9.7 million shares
in 1997, an increase of 33.8%. The diluted shares outstanding at December 31,
1998 was 12.5 million shares, a decrease of 0.8 million shares or 6.3% compared
to 13.3 million diluted shares outstanding at December 31, 1997. The decrease in
diluted shares outstanding at year end is primarily attributable to the
repurchase of 1.0 million shares in treasury stock during 1998 offset somewhat
by the issuance of 0.1 million shares in partial payment of the Sibley
Industries, Inc. and STACO, Inc. acquisitions.

The above factors caused diluted earnings per share to decrease 50.3% to
$0.71 from $1.43 in 1997.

1997 COMPARED TO 1996

Net sales increased 36.0% to $202.1 million in 1997 compared to $148.9
million in 1996. Revenues grew due to the Fancom Acquisition and the Kansas City
Grain Systems Division Acquisition, as well as through strength in the Company's
core feeding products and successful market penetration of its watering and
ventilation products. Strength in the domestic hog sector more than offset the
continued softness in the domestic poultry market. Heavy demand for both
commercial and farm grain storage also contributed to the increase in net sales.
Approximately $1.9 million of the increase was generated from the sale of
poultry buildings the Company had built as part of a large project for which the
Company is also supplying complete systems. The Vinyl Division Divestiture was
responsible for a $4.3 million decrease in revenues in 1997 as compared to 1996.
Sales of the Company's products to markets outside the U.S. and Canada were
$65.7 million in 1997, an increase of $27.1 million or 70.0%.

Gross profit increased to $53.7 million in 1997 or 26.6% of net sales
compared to $38.6 million in 1996 or 25.9% of sales. The increase in gross
profit margin was attributable to improvements in manufacturing and procurement
costs and the higher-margin products obtained in the Fancom Acquisition offset
somewhat by sales increases in lower-margin watering and ventilation products.
Also negatively affecting the gross profit margin were sales of products into
Brazil through the Company's sales and distribution facility opened in February
1997, as well as the sale of poultry buildings.

Selling, general and administrative expenses increased 45.0% or $8.2
million to $26.5 million in 1997 from $18.3 million in 1996. As a percent of net
sales, selling, general and administrative expenses increased to 13.1% in 1997
from 12.3% in 1996. The dollar increase was attributable to the Kansas City
Grain Systems Division Acquisition, the Fancom Acquisition and targeted
investments

<PAGE> 5
in certain key areas within the Company. The increase as a percent of sales was
due primarily to Fancom's higher level of selling, general and administrative
expenses as a percent of sales compared to other areas of the Company. In
addition, the 1996 expenses were net of a $0.6 million gain on sale of an asset.

Amortization of goodwill increased 43.0% or $0.4 million to $1.4 million in
1997 from the $1.0 million in 1996. The increase was attributable to the
goodwill associated with the Fancom Acquisition and Kansas City Grain Systems
Division Acquisition offset somewhat by the goodwill sold in the Vinyl Division
Divestiture.

Operating income increased 34.0% or $6.5 million to $25.8 million in 1997
compared to $19.3 million in 1996. Operating income margins decreased to 12.8%
of net sales in 1997 from 13.0% of net sales in 1996. The increase in operating
income and decrease in operating income margins were attributable to the changes
in gross margins as well as selling, general and administrative expenses and
amortization of goodwill.

Net interest expense decreased to $5.0 million in 1997 or 6.0% from $5.3
million in 1996. The decrease was due to the decrease in debt as a result of
cash flow provided by operations, the Vinyl Division Divestiture and net
proceeds of the Offering offset by debt incurred to finance the Fancom
Acquisition and the Kansas City Grain Systems Division Acquisition.

Income taxes increased to $10.5 million in 1997 as compared to $5.5 million
in 1996, primarily as a result of increased income before taxes. The effective
tax rate for 1997 was 43.0% up from 39.3% in 1996. The increase was primarily
due to non-deductible goodwill related to the Vinyl Division Divestiture in
addition to non-deductible goodwill from the Fancom Acquisition.

Net income increased 63.0% or $5.4 million to $13.9 million in 1997 from
$8.5 million in 1996. The increase was due to higher operating income, gain from
the Vinyl Division Divestiture and lower interest expense offset by higher
taxes.

The weighted average common and common equivalent shares outstanding on a
diluted basis during 1997 was 9.7 million shares compared to 7.6 million diluted
shares in 1996, an increase of 28.0%. The diluted shares outstanding at December
31, 1997 was 13.3 million shares, an increase of 5.7 million shares or 74.0%
compared to 7.6 million shares outstanding at December 31, 1996. The increase in
diluted shares outstanding was primarily attributable to the Company's initial
public offering of 5.0 million shares of common stock and the exchange of all
outstanding preferred stock for 0.6 million common shares, both of which
occurred August 21, 1997.

The above factors caused diluted earnings per share to increase 27.0% to
$1.43 in 1997 from $1.12 in 1996.

PRO FORMA RESULTS OF OPERATIONS

The following summarizes certain operating results of the Company for 1996
and 1997 on a pro forma basis giving effect to the following transactions as if
they had occurred on January 1, 1996: (i) the Kansas City Grain Systems Division
Acquisition, (ii) the Fancom Acquisition, (iii) the Vinyl Division Divestiture,
(iv) the repayment of amounts outstanding under the Old Credit Agreement with
the proceeds of borrowings under the New Credit Agreement and a portion of the
net proceeds of the Offering, (v) the Preferred Stock Exchange, (vi) the
Preferred Stock Redemption, and (vii) the Offering. The impact of the
acquisitions of Sibley Industries, Inc. and Staco, Inc. in 1998 was not material
to the financial statements.

For 1997, net sales increased approximately 8.0% to approximately $226.2
million compared to approximately $208.5 million in 1996. Operating income
increased approximately 14.0% to approximately $29.2 million compared to
approximately $25.5 million in 1996. Net income increased approximately 22.0% to
approximately $15.7 million compared to approximately $12.9 million in 1996. Pro
forma diluted earnings per share were approximately $1.17 in 1997 and
approximately $0.97 in 1996, an increase of approximately 22.0% on pro forma
diluted weighted average shares outstanding of 13.3 million shares in both
years.

FINANCIAL POSITION

Changes in the financial position of the Company from December 31, 1997 to
December 31, 1998 were due primarily to operational changes.

Total assets increased $27.5 million from $167.6 million at December 31,
1997 to $195.1 million at December 31, 1998. Accounts receivable increased by
$14,5 million from December 31, 1997 to December 31, 1998 due to the addition of
Sibley Industries, Inc. and STACO, Inc., both acquired in the second half of
1998, and an increase in days sales outstanding due, in part, to payment terms
and delays in receipt under the C.P. project. At December 31, 1998, construction
costs in excess of

<PAGE> 6
billings for the poultry project buildings were $5.1 million compared to zero
at December 31, 1997 due to planned higher levels of construction activity on
the poultry building project. Inventories at December 31, 1998 increased by $4.3
million from December 31, 1997. The increase was due to higher inventory levels
and $2.7 million of additional inventory due to the Sibley Industries, Inc. and
STACO, Inc. acquisitions. Net property, plant and equipment increased from $46.4
million at December 31, 1997 to $51.0 million at December 31, 1998.
Approximately $3.1 million of the increase is attributed to the purchase of
assets in the acquisitions of Sibley Industries, Inc. and STACO, Inc. The
remainder of the increase is due to additions of operational assets offset
somewhat by additional accumulated depreciation for the period. Net intangibles
increased $1.4 million from December 31, 1997 to December 31, 1998 due to the
purchased goodwill in the acquisitions of Sibley Industries, Inc. and STACO,
Inc., and additional goodwill from the Earn-out Amount calculated pursuant to
the CTB, Inc. acquisition offset somewhat by current period amortization of
goodwill and loan costs.

Total liabilities increased $24.2 million from $94.1 million at December
31, 1997 to $118.3 million at December 31, 1998. Accounts payable and accrued
liabilities increased $2.8 million due primarily to the Sibley and Staco
acquisitions. Debt increased $22.2 million from $49.2 million at December 31,
1997 to $71.4 million at December 31, 1998 due to revolver borrowings to support
working capital needs primarily related to the C.P. poultry project, for
treasury stock purchases, for the Sibley Industries, Inc. and STACO, Inc.
acquisitions, the Rota Brock investment, and other working capital needs. The
current portion of the accrued Earn-Out increased by $3.9 million due to a $3.3
million reclassification from long-term accrued Earn-out, a $0.3 million change
in estimate of the accrued Earn-out Amount, and a $0.3 million Earn-Out related
to the Sibley transaction.

Total stockholders' equity increased $3.3 million due to net income for the
period offset by net treasury stock purchases, stock options exercised and
changes in cumulative translation adjustment.

LIQUIDITY AND CAPITAL RESOURCES

As of December 31, 1998, the Company had $40.9 million of working capital,
an increase of $14.6 million from working capital as of December 31, 1997. Net
cash provided from operating activities for the twelve months ended December 31,
1998 was $2.5 million. Net cash provided by operating activities for the twelve
months ended December 31, 1997 was $17.4 million. The change was primarily due
to the increases in accounts receivable, construction costs incurred in excess
of billings and inventories, offset to some extent by increases in accounts
payable, accruals and other liabilities.

For the twelve months ended December 31, 1998, cash used in investing
activities was $11.6 million, which was used for the acquisitions of Sibley
Industries, Inc. and STACO, Inc., the Rota Brock joint venture investment, and
the acquisition of fixed assets offset slightly by the sale of assets. For the
twelve months ended December 31, 1997, cash used in investing activities was
$42.1 million, which was used primarily for the Fancom and Kansas City Grain
Systems Division acquisitions offset by the sale of the Vinyl Division.

For the twelve months ended December 31, 1998, net cash provided by
financing activities was $8.3 million. During this period there was a net $16.6
million increase in cash flows from debt activity offset by a net $8.3 million
use of cash for treasury stock activities. For the twelve months ended December
31, 1997, net cash provided by financing activities was $25.7 million. Issuance
of common stock provided $63.5 million while the redemption of preferred stock
used $15.0 million. Proceeds of debt provided $130.3 million for use in
acquisition financing and working capital needs while payments on debts totaled
$153.3 million.

The Company believes that existing cash, cash flows from operations and
available borrowings will be sufficient to support its working capital, capital
expenditures and debt service requirements for the foreseeable future. The
January 1999, acquisition of Roxell N.V. required an amendment to the credit
facility. The Company believes the amended facility will not only be sufficient
to fund the acquisition but, also, to support its working capital, capital
expenditure and debt service requirements for the foreseeable future.

In October 1997, the Company's Board of Directors authorized the repurchase
of up to 500,000 shares of Company stock. As of December 31, 1997, no shares had
been repurchased. During 1998, the Company's Board of Directors increased the
share repurchase authorization to 1,500,000 shares. As of December 31, 1998, the
Company has repurchased 985,618 shares for approximately $8.5 million. During
1998, stock options exercised were 169,632 shares for $1.4 million, and shares

<PAGE> 7
used for purchase of Sibley Industries, Inc. and STACO, Inc. were 81,696 shares
for $1.1 million and 45,671 shares for $0.6 million, respectively.

SEASONALITY

Sales of agricultural equipment are seasonal, with poultry, swine and egg
producers purchasing equipment during prime construction periods in the spring,
summer and fall, and grain producers and processors traditionally purchasing
storage bins in the summer and fall in conjunction with the harvesting season.
The Company's net sales and net income have historically been lower during the
first and fourth fiscal quarters as compared to the second and third quarters as
distributors and dealers increase inventory in anticipation of seasonal demand.

IMPACT OF INFLATION

The Company attempts to minimize the impact of inflation through cost
reductions and by improving productivity. In addition, the Company principally
uses the last-in, first-out (LIFO) method of accounting for inventories (whereby
the cost of products sold approximates current costs), which substantially
includes the impact of inflation in costs of sales. The Company does not believe
that inflation has had a material effect on its results of operations for the
periods presented.

YEAR 2000 COMPLIANCE

The "Year 2000 (Y2K) Issue" refers to the inability of certain computers,
information systems and microprocessors to recognize and process the century
designation in data fields causing potential improper information processing,
invalid calculations, erroneous reporting, or at worst, system or equipment
failures which could have a materially adverse impact on the Company. This is a
Year 2000 Readiness Disclosure under the Year 2000 Information and Readiness
Disclosure Act.

STATE OF READINESS - The Company is assessing the impact of the Year 2000
with respect to its information technology (IT) systems and non-IT systems and
equipment as well as its potential exposure to significant third-party risks.
The Company's methodology includes; (i) the identification of systems, equipment
and third-party relationships; (ii) assessment of Y2K compliance issues related
to the systems, equipment and third parties; (iii) correction and testing; (iv)
documentation of findings/corrective actions; and (v) contingency planning.
Accordingly, the Company has initiated a plan to confirm Y2K compliance or
replace/modify existing systems and equipment as required and to assure itself
that critical third parties are also addressing the issue.

With respect to IT systems, the Company has completed an assessment of its
three major systems and determined that they will not present significant
problems in Y2K compliance. The major systems have all been installed within the
past 36 months (two of the systems in 1998) and have been certified as
substantially Y2K compliant, or the software developers are in the process of
certifying Y2K compliance. These systems were installed in response to the need
for integrated systems providing improved management information and not for
compliance with Y2K. Testing has commenced and will continue with completion
expected by April 30, 1999. Documentation is also expected to be completed by
this date.

Assessment of non-major IT systems and equipment, including related
software, has been completed. Correction, testing and documentation are expected
to be completed by May 31, 1999.

Major non-IT equipment, which is primarily manufacturing equipment, has
been identified, assessed and tested in the United States with the determination
that the equipment does not employ microprocessors with date sensitive
operations, and thus does not pose a Y2K issue. Major non-IT equipment outside
the United States will be assessed and tested with completion expected by April
30, 1999. Other non-IT equipment is also expected to be assessed and tested by
April 30, 1999.

The Company has identified major and/or critical third-party relationships
and expects to complete a survey and assessment of third-party readiness by
April 15, 1999. Based upon the responses received, additional follow up and
third-party testing will be performed as necessary. The results of this
assessment and testing will be a major factor in the eventual contingency plans
developed. However, there can be no guarantee that the systems of other
companies on which the Company's systems rely will be converted in a timely
manner or that the failure to convert by another company would not have a
materially adverse effect on the Company.

COST OF YEAR 2000 ISSUE - As of December 31, 1998, the Company has incurred
costs of less than $50,000 in year 2000 compliance. The Company is currently in
the process of estimating the future cost of Y2K. It is not expected to exceed
$250,000.

<PAGE> 8

RISKS OF YEAR 2000 ISSUE - The Company has not completed its assessment of
the most reasonably likely worst case Y2K scenario. However, given the Company's
efforts to minimize the Y2K failure of its internal systems and the limited
concern of its non-IT equipment, the Company believes the worst case scenario
would occur if its primary raw material suppliers or its electricity suppliers
experience a Y2K failure which results in the Company's inability to receive
critical raw material or to suffer a power outage.

While contingency plans have not yet been prepared, the identification and
development of an expanded supplier base may be necessary depending upon the
responses to the Company's third-party survey. A power outage would require the
Company to assess the likely duration of the failure and the availability of
possible alternative power sources to enable the continuation of production.

CONTINGENCY PLANS - Because not all occurrences of Y2K failure can be
projected, anticipated or controlled, the Company will develop contingency plans
that will enable production to continue. Contingency plans are expected to be
completed by June 30, 1999. As the Company develops its contingency plans, the
costs associated with those plans (i.e. significant inventory stockpiling or the
arrangement of alternative power sources) will be assessed vis-a-vis the cost of
the most reasonably likely worst case scenario. Consequently, the contingency
plan costs and certain mitigating factors, including seasonally lower first
quarter business sales and production levels, may not warrant the full
implementation of the plans.

NOTE TO COMPANY'S YEAR 2000 READINESS DISCLOSURE - The costs and dates on
which the Company intends to complete its Y2K analysis and correction are based
on management's best estimates. These estimates were derived utilizing numerous
assumptions of future events and the availability of resources. However, there
can be no guarantee that these estimates will be achieved, and actual results
could differ materially from those plans. Factors that might cause such material
differences include, but are not limited to, the availability and cost of
alternative suppliers should they be required, the retention of personnel or the
availability of new personnel competent with Y2K issues, the ability to locate
and correct all relevant computer codes, and similar uncertainties.

It is currently unknown which problems the Company will face for partial or
complete non-compliance because it could depend on numerous factors (such as the
nature of the problem and how quickly it could be corrected). At worst, such
problems could have a materially adverse impact on the Company.

EURO CONVERSION

The Company has European-based operations that will be required to transact
business in the Euro currency no later than January 1, 2002. This will require
implementation of changes to systems to accommodate Euro transactions. The
Company is currently assessing the anticipated impact of Euro conversion on its
operations. A preliminary assessment indicates that the cost of implementation
will not be significant and will be accomplished prior to the required date.

NEW ACCOUNTING PRONOUNCEMENTS

Effective June 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" (SFAS 133). This statement establishes
accounting and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts (collectively referred to as
derivatives), and for hedging activities. It requires that an entity recognize
all derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. This statement is
effective for the Company's fiscal year beginning 2000. The Company is
evaluating SFAS 133 to determine its impact on the consolidated financial
statements.

FORWARD-LOOKING STATEMENTS

In addition to historical information, this report contains
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements include, but are
not limited to, discussion of sales growth, market share gains, ability to
leverage distribution capabilities and brand names, rising demand for and
production of meat protein, eggs and grain, increased demand for the company's
equipment used in the production of such products, operating margin improvement,
strategies for serving markets outside of the United States, efforts to lower
shipping costs and reduce import duties to make pricing more competitive, costs
of winding down and dissolving Rota Brock joint venture

<PAGE> 9
operations, the ability to grow through acquisitions, the adequacy and
availability of liquidity and capital resources to meet the company's needs,
seasonality of the Company's business, construction progress, and the timing of
completion and impact on gross margin of building construction projects, the
successful and timely resolution of the enterprise resource planning system
implementation issues and related costs, and costs and dates related to the
Company's completion of its Year 2000 analysis and Euro conversion. These
forward-looking statements involve factors, risks and uncertainties which may
cause actual results to differ materially from those expressed or implied. The
factors that could cause actual results to differ materially include, but are
not limited to, the following: (1) risks associated with the agricultural
industry such as feed and grain price fluctuation, crop yields, demand, weather
conditions, and outbreaks of disease; (2) risks associated with acquisitions
such as incurring significantly higher-than- anticipated capital expenditures
and operating expenses, failing to assimilate the operations and personnel of
acquired businesses, losing customers, entering markets in which the Company has
no or limited experience, disrupting the Company's ongoing business, dissipating
the Company's management resources and the possibility the Company will not
complete contemplated acquisitions; (3) risks common to international operations
including unexpected changes in tariffs and other trade barriers, difficulties
in staffing and managing foreign operations, political and economic instability,
and fluctuations in currency exchange rates; and (4) other risks including, but
not limited to, those detailed in the Company's prospectus filed with its
registration statement with the Securities and Exchange Commission (SEC) on
August 20, 1997, as well as periodic reports filed with the SEC.

<PAGE> 10
INDEPENDENT AUDITORS' REPORT

TO THE STOCKHOLDERS AND BOARD OF DIRECTORS OF CTB INTERNATIONAL CORP.:

We have audited the accompanying consolidated balance sheets of CTB
International Corp. and its subsidiaries as of December 31, 1998 and 1997, and
the related consolidated statements of income, stockholders' equity and cash
flows for each of the three years in the period ended December 31, 1998. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of the Company and its
subsidiaries at 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.

DELOITTE & TOUCHE LLP

Chicago, Illinois
March 8, 1999
<PAGE> 11

CONSOLIDATED STATEMENTS OF INCOME

YEARS ENDED DECEMBER 31, 1998, 1997 and 1996

<TABLE>
<CAPTION>
(in thousands, except per share amounts) 1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
NET SALES $272,180 $202,063 $148,853
COST OF SALES 211,496 148,345 110,303
-------- -------- --------
Gross profit 60,684 53,718 38,550
OTHER OPERATING EXPENSE:
Selling, general and administrative expenses 35,645 26,506 18,257
Amortization of goodwill 1,837 1,373 959
-------- -------- --------
OPERATING INCOME 23,202 25,839 19,334
OTHER INCOME (EXPENSE):
Interest expense, net (4,153) (5,003) (5,332)
Gain on sale of Vinyl Division -- 3,562 --
Joint venture loss (3,673) -- --
-------- -------- --------

INCOME BEFORE INCOME TAXES 15,376 24,398 14,002
INCOME TAXES 6,180 10,499 5,500
-------- -------- --------
NET INCOME $ 9,196 $ 13,899 $ 8,502
-------- -------- --------
EARNINGS PER SHARE:

Basic: Earnings per share $ 0.73 $ 1.49 $ 1.17
Weighted average shares 12,655 9,310 7,256
-------- -------- --------
Diluted: Earnings per share $ 0.71 $ 1.43 $ 1.12
Weighted average shares 12,999 9,716 7,569
-------- -------- --------
</TABLE>

See notes to consolidated financial statements.

<PAGE> 12
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1998 and 1997

<TABLE>
<CAPTION>
(in thousands, except share and per share amounts) 1998 1997

<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 608 $ 1,161
Accounts receivable, less allowance for
doubtful accounts of $1,122 and $657, respectively 38,368 23,875
Construction costs in excess of billings on
uncompleted contracts 5,120 -
Inventories 29,657 25,352
Deferred income taxes 1,743 1,912
Prepaid expenses and other current assets 1,509 3,222

-------- --------
Total current assets 77,005 55,522

PROPERTY, PLANT AND EQUIPMENT - Net 50,974 46,407
INTANGIBLES - Net 66,715 65,328
OTHER ASSETS 432 384
-------- --------
TOTAL ASSETS $195,126 $167,641
-------- --------

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 10,711 $ 10,598
Current portion of long-term debt 1,646 1,245
Current portion of accrued Earn-Out 5,554 1,688
Accrued liabilities 14,542 11,810
Deferred revenue 3,642 3,863
--------- --------
Total current liabilities 36,095 29,204

LONG-TERM DEBT 69,719 47,919
DEFERRED INCOME TAXES 7,889 9,369
ACCRUED POSTRETIREMENT
BENEFIT COST AND OTHER 2,740 2,435
ACCRUED EARN-OUT 1,760 5,062
COMMITMENTS AND CONTINGENCIES (See Note 11)
MINORITY INTEREST 98 106
STOCKHOLDERS' EQUITY:
Common stock, $0.01 par value;
40,000,000 shares authorized; 12,924,990 shares issued 129 129
Preferred stock - 6.0% cumulative, $0.01 par value;
4,000,000 shares authorized;
0 shares issued and outstanding
Additional paid-in capital 76,897 78,440
Treasury stock, at cost; 1998 - 688,619 shares; (5,390) -
1997 - 0 shares
Reduction for carryover of predecessor cost basis (26,964) (26,871)
Accumulated other comprehensive income (loss):
Foreign currency translation adjustment 556 (553)
Retained earnings 31,597 22,401
--------- --------
Total stockholders' equity 76,825 73,546
--------- --------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 195,126 $167,641
--------- --------
</TABLE>

See notes to consolidated financial statements.
<PAGE> 13
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

YEARS ENDED DECEMBER 31, 1998, 1997 and 1996

<TABLE>
<CAPTION>
(in thousands, except share amounts)
Additional
Comprehensive Common Stock Preferred Stock Paid-in
1998 Income Shares Amount Shares Amount Capital
- ---- ------------- -------------------- ------------------ -----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1998 12,924,990 $129 -- $ -- $78,440
TREASURY STOCK
Purchased
Stock Options Exercised (1,275)
Acquisitions (268)
REDUCTION FOR CARRYOVER OF
PREDECESSOR COST BASIS
COMPREHENSIVE INCOME:
NET INCOME $ 9,196
FOREIGN CURRENCY
TRANSLATION ADJUSTMENT 1,109
-------
COMPREHENSIVE INCOME $10,305
======= ---------- ---- ---- ----- --------
BALANCE, DECEMBER 31, 1998 12,924,990 $129 -- $ -- $76,897
---------- ---- ---- ----- -------
</TABLE>

<TABLE>
<CAPTION>
(in thousands, except share amounts)
Reduction for Accumulated
Carryover of Other
Treasury Stock Predecessor Comprehensive Retained
1998 Shares Amount Cost Basis Income Earnings Total
- ---- -------------------- ----------- ------------- ------------ -------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1998 -- $ -- ($26,871) ($ 553) $22,401 $73,546
TREASURY STOCK
Purchased 985,618 ($8,484) (8,484)
Stock Options Exercised (169,632) 1,415 140
Acquisitions (127,367) 1,679 1,411
REDUCTION FOR CARRYOVER OF
PREDECESSOR COST BASIS (93) (93)
COMPREHENSIVE INCOME:
NET INCOME 9,196 9,196
FOREIGN CURRENCY
TRANSLATION ADJUSTMENT 1,109 1,109
COMPREHENSIVE INCOME
---------- ------ --------- ----- ------- -------
BALANCE, DECEMBER 31, 1998 688,619 ($5,390) ($26,964) $ 556 $31,597 $ 76,825
---------- ------ --------- ----- ------- -------
</TABLE>

<TABLE>
<CAPTION>
(in thousands, except share amounts)
Additional
Comprehensive Common Stock Preferred Stock Paid-in
1997 Income Shares Amount Shares Amount Capital
- ---- ------------- -------------------- ------------------ -----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1997 7,255,980 $ 73 24,000 $ -- $29,927
ISSUANCE OF COMMON STOCK 21,224 231
ISSUANCE OF PREFERRED STOCK 69 69
EFFECTS OF THE OFFERING:
Redemption of 15,000
shares of preferred stock (15,000) (15,000)
Exchange of preferred stock
for common stock 647,786 6 (9,069) (6)
Issuance of common stock -
net of expenses 5,000,000 50 63,219
REDUCTION FOR CARRYOVER OF
PREDECESSOR COST BASIS
COMPREHENSIVE INCOME:
NET INCOME $13,899
FOREIGN CURRENCY
TRANSLATION ADJUSTMENT (496)
--------
COMPREHENSIVE INCOME $13,403
======== ---------- ---- ---- ----- -------
BALANCE, DECEMBER 31, 1997 12,924,990 $129 -- $ -- $78,440
---------- ---- ---- ----- -------
</TABLE>

<TABLE>
<CAPTION>
(in thousands, except share amounts)
Reduction for Accumulated
Carryover of Other
Treasury Stock Predecessor Comprehensive Retained
1997 Shares Amount Cost Basis Income Earnings Total
- ---- -------------------- ----------- ------------- ------------ -------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1997 -- $ -- (524,704) ($ 57) $8,502 $13,741
ISSUANCE OF COMMON STOCK 231
ISSUANCE OF PREFERRED STOCK 69
EFFECTS OF THE OFFERING:
Redemption of 15,000
shares of preferred stock (15,000)
Exchange of preferred stock
for common stock --
Issuance of common stock -
net of expenses 63,219
REDUCTION FOR CARRYOVER OF
PREDECESSOR COST BASIS (2,167) (2,167)
COMPREHENSIVE INCOME:
NET INCOME 13,899 13,899
FOREIGN CURRENCY
TRANSLATION ADJUSTMENT (496) (496)
COMPREHENSIVE INCOME
-------- ---------- -------- ----- ------- -------
BALANCE, DECEMBER 31, 1997 -- $ -- ($26,871) ($553) $22,401 $73,546
-------- ---------- -------- ----- ------- -------
</TABLE>

<TABLE>
<CAPTION>
(in thousands, except share amounts)
Additional
Comprehensive Common Stock Preferred Stock Paid-in
1996 Income Shares Amount Shares Amount Capital
- ---- ------------- -------------------- ------------------ -----------
<S> <C> <C> <C> <C> <C> <C>
INITIAL CAPITALIZATION,
JANUARY 1, 1996 600,000 $ 6 24,000 $ -- $29,994
EFFECTS OF 12.0933-FOR-ONE
STOCK SPLIT (See Note 2) 6,655,980 67 (67)
REDUCTION FOR CARRYOVER OF
PREDECESSOR COST BASIS
COMPREHENSIVE INCOME:
NET INCOME $8,502
FOREIGN CURRENCY
TRANSLATION ADJUSTMENT (57)
---------
COMPREHENSIVE INCOME $8,445
========= ---------- --- ------ ----- -------
BALANCE, DECEMBER 31, 1996 7,255,980 $73 24,000 $ -- $29,927
========= ---------- --- ------ ----- -------
</TABLE>

<TABLE>
<CAPTION>
(in thousands, except share amounts)
Reduction for Accumulated
Carryover of Other
Treasury Stock Predecessor Comprehensive Retained
1996 Shares Amount Cost Basis Income Earnings Total
- ---- -------------------- ----------- ------------- ------------ -------
<S> <C> <C> <C> <C> <C> <C>
INITIAL CAPITALIZATION,
JANUARY 1, 1996 -- $ -- $ -- $ -- $ -- $30,000
EFFECTS OF 12.0933-FOR-ONE
STOCK SPLIT (See Note 2) --
REDUCTION FOR CARRYOVER OF
PREDECESSOR COST BASIS (24,704) (24,704)
COMPREHENSIVE INCOME:
NET INCOME 8,502 8,502
FOREIGN CURRENCY
TRANSLATION ADJUSTMENT (57) (57)
COMPREHENSIVE INCOME
--------- ---------- -- ---- ------ ------ -------
BALANCE, DECEMBER 31, 1996 -- $ -- (24,704) ($57) $8,502 $13,741
========= ---------- ------- ------ ------ -------

</TABLE>

See notes to consolidated financial statements.

<PAGE> 14
CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
(in thousands) 1998 1997 1996

<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 9,196 $ 13,899 $ 8,502
Adjustments to reconcile net income to net
cash flows
from operating activities:
Depreciation 5,739 4,873 4,609
Amortization 2,443 1,706 1,251
Equity in loss from joint ventures 3,673 - -
Gain on sale of assets (232) (46) (574)
Gain on sale of Vinyl Division - (3,562) -
Deferred income taxes (1,794) (441) (63)
Changes in operating assets and liabilities
(net of effects from acquisitions):
Accounts receivable (13,199) (4,345) 2,226
Construction costs
in excess of billings (5,120) - -
Inventories (1,318) 3,108 (967)
Prepaid expenses and other assets 1,741 (1,636) 1,381
Accounts payable, accruals and
other liabilities 1,346 3,856 (4,651)
--------- -------- -------
Net cash flows from operating activities 2,475 17,412 11,714
--------- -------- -------

CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property, plant and equipment (7,004) (4,437) (3,402)
Acquisitions, net of cash acquired (1,452) (45,913) -
Investment in joint venture (3,613) - -
Proceeds from sale of Vinyl Division - 8,158 -
Proceeds from sale of assets 504 88 1,537
Acquisition of CTB, Inc., net of cash acquired - - (104,741)
--------- -------- -------
Net cash flows from investing activities (11,565) (42,104) (106,606)
--------- -------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of treasury stock (8,484) - -
Issuance of common stock 140 63,532 6,000
Issuance of preferred stock - 69 24,000
Redemption of preferred stock - (15,000) -
Proceeds from long-term debt 90,878 130,348 109,400
Payments on long-term debt (74,250) (153,279) (44,250)
--------- -------- -------
Net cash flows from financing activities 8,284 25,670 95,150
--------- -------- -------
NET (DECREASE) INCREASE IN CASH AND
CASH EQUIVALENT S (806) 978 258
NET EFFECT OF TRANSLATION ADJUSTMENT 253 (75) -
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1,161 258 -
--------- -------- -------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 608 $ 1,161 $ 258
--------- -------- -------
</TABLE>

Supplemental Disclosures of Cash Flow information
Non-cash investing and financing activities:
In 1997 and 1998, the Company recorded liabilities pursuant to acquisition
agreements of $6,750,000 and $564,000. The Company also issued common stock
with a fair value of $1,411,000 and a note payable of $1,012,000 in 1998 in
connection with certain acquisitions.

See notes to consolidated financial statements.

<PAGE> 15
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

On January 4, 1996, CTB International Corp. (the "Company"), formerly CTB
Holdings, Inc., through its wholly-owned subsidiary, CTB Ventures, Inc. ("CTB
Ventures" or "CTB"), corporations formed by affiliates of American Securities
Capital Partners, L.P. ("ASCP"), acquired all of the outstanding stock of CTB,
Inc. (the "Predecessor Company") in a leveraged buyout transaction for an
aggregate purchase price of approximately $117.8 million, including acquisition
costs of approximately $2.3 million and cash acquired of approximately $13.1
million (the "Acquisition"). The purchase price was adjusted from $117.8 million
up to $124.6 million at December 31, 1997, and, finally, from $124.6 million to
$124.9 million at December 31, 1998 to recognize an accrued liability for the
estimated Earn-Out Amount as discussed in Note 11 to the consolidated financial
statements.

In connection with the Acquisition, shareholders of the Predecessor Company
exchanged $9.9 million in shares of stock of the Predecessor Company for an
equal value of shares of common and preferred stock of the Company. Accordingly,
at the date of the Acquisition, the Company was owned 67.9% by affiliates of
ASCP and certain new management investors, with the remaining 32.1% owned by
former stockholders of the Predecessor Company. The Acquisition has been
accounted for using the purchase method of accounting to the extent of 67.9%
change in ownership with the remaining 32.1% valued at historical book value. To
the extent of the change in ownership, the purchase price has been allocated to
the assets and liabilities of the Predecessor Company based on their fair values
as of the Acquisition date. The fair values of assets and liabilities were based
on independent appraisals and estimates by management. The Company has recorded
an adjustment ("reduction for carryover of predecessor cost basis") to reduce
the Predecessor Company shareholders' investment in the Company to the
historical cost basis of their investment in the Predecessor Company.

The following summarizes the purchase price allocation:
<TABLE>
<CAPTION>

(in thousands)
- -------------
<S> <C>
Current assets $ 32,380
Property, plant and equipment 37,814
Intangibles and other assets 44,664
Liabilities assumed (30,041)
--------
Total 84,817
Reduction for carryover of predecessor cost basis 26,964
--------
Total purchase price $111,781
--------
</TABLE>

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF BUSINESS - The Company is a designer, manufacturer and marketer of
agricultural equipment for the poultry, swine and egg production markets and
grain storage and handling market. The Company markets its products on a
worldwide basis primarily under the

CHORE-TIME(R), BROCK(R), FANCOM(R), SIBLEY(TM) and STACO(R) names.

PRINCIPLES OF CONSOLIDATION - The consolidated financial statements include
the accounts of CTB International Corp. and its wholly-owned and majority-owned
subsidiaries. All intercompany accounts and transactions have been eliminated.

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

CASH EQUIVALENTS - The Company considers all highly liquid investments
purchased with a maturity of three months or less to be cash equivalents.

INVENTORIES - Inventories are stated at the lower of cost or market using
the last-in, first-out (LIFO) method, except for the inventories of Fancom
Holding B.V. and its consolidated subsidiaries, which are stated at the lower of
cost or market using the first-in, first-out (FIFO) method.

PROPERTY, PLANT AND EQUIPMENT - Property, plant and equipment is stated at
cost. Depreciation is provided using straight-line and accelerated methods over
the estimated useful lives of individual assets. The estimated useful lives
range from 10 to 40 years, or the life of the lease if
<PAGE> 16
shorter, for buildings and improvements, and from three to 10 years for
machinery and equipment.

GOODWILL - Goodwill represents costs in excess of the fair value of net
assets acquired and is amortized using the straight-line method over 40 years,
except for Fancom Holding B.V. and its consolidated subsidiaries which is over
25 years. The Company periodically assesses the recoverability of goodwill based
on its expectations of future profitability and undiscounted cash flow of the
related operations. These factors, along with management's plans with respect to
the operations, are considered in assessing the recoverability of goodwill. If
the Company determines, based on such measures, that the carrying amount is
impaired, the goodwill will be written down to its recoverable value with a
corresponding charge to earnings. During the periods presented no such
impairment was incurred.

DEFERRED FINANCE COSTS - Costs associated with the issuance of debt are
being amortized over the life of the related debt. Amortization costs are
included in interest expense.

INCOME TAXES - The Company provides for income taxes under the asset and
liability method of accounting for deferred income taxes. Deferred tax assets
and liabilities are recorded based on the expected tax effects of future taxable
income or deductions resulting from differences in the financial statement and
tax bases of assets and liabilities. An allowance is provided whenever
management believes it is more likely than not that tax benefits will not be
utilized.

REVENUE RECOGNITION OF DEFERRED REVENUE AND PRODUCT WARRANTIES - Sales of
products and services are recorded based upon shipment of product and
performance of services. Egg laying and handling system projects, which
generally do not exceed one year, require predetermined payment intervals and,
in some instances, customer prepayments. Such revenue is deferred and recognized
at the date that the product is shipped or the service is performed.

The Company recognizes revenue on construction contracts using the
percentage-of-completion accounting method determined in each case by the ratio
of cost incurred to date on the contract to management's estimate of the
contract's total cost. Contract cost includes all direct material, subcontract
and labor costs and those indirect costs related to contract performance.
Provisions for estimated losses on incomplete contracts are recorded in the
period in which such losses are determined. Changes in estimated revenues and
costs are recognized in the periods in which such estimates are revised.

Depending on the product, the Company provides its customers with a one- to
five-year warranty, from the date of purchase, or longer for certain components.
Estimated warranty costs are accrued at the time of sale and have not differed
materially from actual product warranty costs. Warranty expenses for the years
ended December 31, 1998, 1997, and 1996 were approximately $1,635,000;
$1,583,000, and $1,171,000, respectively.

CONCENTRATION OF CREDIT RISK - Financial instruments which potentially
subject the Company to concentration of credit risk consist principally of trade
receivables. The Company's customers are not concentrated in any specific
geographic region, but are concentrated in the agricultural industry. No single
customer accounted for a significant amount of the Company's sales in 1998, 1997
or 1996, and there were no significant accounts receivable from a single
customer at December 31, 1998, 1997 or 1996. The Company reviews a customer's
credit history before extending credit. The Company establishes an allowance for
doubtful accounts based upon factors surrounding the credit risk of specific
customers, historical trends and other information. To reduce credit risk, the
Company generally receives down payments on large orders. In order to minimize
the risk of loss on export sales, the Company insures certain foreign trade
receivables.

RESEARCH AND DEVELOPMENT - Research and development expenditures are
charged to operations as incurred. Total research and development expenses for
1998, 1997 and 1996 were approximately $5,785,000; $4,377,000 and $3,555,000,
respectively.

FOREIGN CURRENCY TRANSLATION - The Company has determined the local
currency to be the functional currency of all foreign subsidiaries. Assets and
liabilities of non-U.S. subsidiaries are translated at current exchange rates,
and related revenues and expenses are translated at average exchange rates in
effect during the period. Resulting translation adjustments are recorded without
tax effects as a component of stockholders' equity. Transaction gains and losses
on intercompany receivables and payables that are due currently are recorded in
earnings.

INTEREST RATE SWAP AGREEMENTS - The Company enters into interest rate swaps
in managing its interest rate risk and holds such
<PAGE> 17
instruments for purposes other than trading. In these swaps, the Company agrees
with other parties to exchange, at specific intervals, the difference between
fixed and floating interest amounts calculated on an agreed-upon notional
principal amount. Because some of the Company's interest-bearing liabilities are
floating rate obligations, interest rate swaps in which the Company pays the
fixed rate and receives the floating rate are used to reduce the impact of
market interest rate fluctuation on the Company's net income. The differential
to be paid or received on interest rate swap agreements entered into to reduce
the impact of changes in interest rates is recognized as an adjustment to
interest expense related to the hedged liability over the life of the agreement.
In the event of early extinguishment of a designated debt obligation, any
realized or unrealized gain or loss from the swap would be recognized in income,
coincident with the extinguishment.

FORWARD EXCHANGE CONTRACTS - The Company enters into foreign currency
forward exchange contracts on a limited basis. Contracts entered into are for
significant outstanding accounts receivable in currencies other than the U.S.
dollar for which timing of the receipt of payment can be reasonably estimated.
The purpose of the Company's hedging activities is to protect the Company from
the risk that the eventual dollar net inflows resulting from the sale of
products to foreign customers will be adversely affected by changes in foreign
currency exchange rates. Option contracts that are designated as hedges are
marked to market with realized and unrealized gains and losses deferred and
recognized in earnings as an adjustment to the assets and liabilities being
hedged. The Company's foreign exchange contracts do not subject the Company's
results of operations to risk due to exchange rate movements because gains and
losses on the contracts generally offset gains and losses on the assets and
liabilities being hedged.

No contracts were entered into during the years ended December 31, 1998 and
1997. All contracts outstanding at December 31, 1996 had a term of three months
or less. Differences between the contract rate and the fair value for contracts
outstanding at December 31, 1996 were insignificant.

IMPAIRMENT OF LONG-LIVED ASSETS - Management reviews long-lived assets and
the related intangible assets for impairment of value whenever events or changes
in circumstances indicate the carrying amount of such assets may not be
recoverable. If the Company determines it is unable to recover the carrying
value of the assets, the assets will be written down using an appropriate
method. Management does not believe current events or circumstances provide
evidence that suggest asset values have been impaired during the periods
presented, except for the impairment charge recorded in 1998 related to a joint
venture investment. See Note 3.

EARNINGS PER COMMON SHARE - Earnings per common share ("EPS") are computed
by dividing net income by the weighted average number of shares of common stock
(basic) plus common stock equivalents (diluted) outstanding during the year.
Common stock equivalents consist of stock options and have been included in the
calculation of weighted average shares outstanding using the treasury stock
method.

The basic weighted average common shares outstanding reconciles to diluted
weighted average common shares outstanding as follows:

<TABLE>
<CAPTION>
(in thousands) 1998 1997 1996
<S> <C> <C> <C>
Basic weighted average shares 12,655 9,310 7,256
Dilutive effect of stock options 344 406 313
- -------------------------------- ----------------------------
Diluted weighted average shares 12,999 9,716 7,569
- -------------------------------- ----------------------------
</TABLE>

In conjunction with the Offering (see Note 15), the Company's Board of
Directors approved a 12.0933-for- one common stock split effective August 21,
1997. All agreements concerning stock options and other commitments payable in
shares of the Company's common stock provide for the issuance of additional
shares due to the stock split. An amount equal to the par value of the common
shares issued was transferred from additional paid-in capital to the common
stock account. This transfer has been reflected in the Consolidated Statements
of Stockholders' Equity for the year ended December 31, 1996. All references to
number of shares and per share information in the Company's consolidated
financial statements have been adjusted to reflect the stock split on a
retroactive basis.

NEW ACCOUNTING PRONOUNCEMENTS - During 1998, the Company adopted Statements
of Financial Accounting Standards No. 130, "Reporting Comprehensive Income," No.
131, "Disclosures about Segments of an Enterprise and Related Information," and
No. 132, "Employer's Disclosures about Pensions and
<PAGE> 18
Other Postretirement Benefits." These statements establish standards for
reporting and display of information and, accordingly, have no impact on the
Company's reported financial position, results of operations and cash flows.

Effective June 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" (SFAS 133). This statement establishes
accounting and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts (collectively referred to as
derivatives), and for hedging activities. It requires that an entity recognize
all derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. This statement is
effective for the Company's fiscal year beginning January 1, 2000. The Company
is evaluating SFAS 133 to determine its impact on the consolidated financial
statements.

RECLASSIFICATIONS - Certain reclassifications have been made to conform the
prior years' financial statements with the current year presentation.

3. BUSINESS COMBINATIONS

On May 1, 1997, the Company acquired all the capital stock of Fancom Holding
B.V. ("Fancom Acquisition"). Based in The Netherlands, Fancom is a manufacturer
and marketer of climate control systems and software applications for the
agricultural equipment industry. The purchase price of $12.6 million, net of
cash acquired and including expenses, was financed through borrowings.

On June 23, 1997, the Company acquired substantially all of the assets of
Butler Manufacturing Company's Grain Systems Division ("Kansas City Grain
Systems Division Acquisition"). Based in Kansas City, Missouri, Kansas City
Grain Systems Division manufactures grain storage bins and markets grain
storage, conditioning and handling systems for grain producers and processors
throughout the world. The purchase price of $33.3 million, net of cash acquired
and including expenses, was financed through borrowings.

Both transactions were accounted for under the purchase method of
accounting. Accordingly, the purchase prices have been allocated to the acquired
assets and liabilities based on their fair market values as of the dates of
acquisition, with the remainder charged to goodwill which is being amortized on
a straight-line basis over 25 years for Fancom and over 40 years for Kansas City
Grain Systems Division. Fancom's and Kansas City Grain Systems Division's
financial statements subsequent to the acquisitions are consolidated and
included in the Company's Consolidated Balance Sheets as of December 31, 1997
and 1998 and the Consolidated Statements of Income and Consolidated Statements
of Cash Flows for the years ended December 31, 1997 and 1998. The purchase
prices have been allocated as follows:

<TABLE>
<CAPTION>
(in thousands)
- --------------
<S> <C>
Current asset $23,779
Property, plant and equipment 12,927
Intangibles and other assets 25,651
Long-term debt assumed (5,854)
Liabilities assumed (10,590)
--------
Total purchase price $ 45,913
--------
</TABLE>

The following summarizes the unaudited pro forma consolidated operating
results for the years ended December 31, 1997 and 1996 reflecting the allocation
of the purchase price and related financing of the Fancom acquisition and Kansas
City Grain Systems Division Acquisition, assuming the acquisitions had occurred
at January 1, 1996. Net sales for 1997 and 1996 would have been approximately
$230.8 million and $217.4 million, respectively. Operating income for 1997 and
1996 would have been approximately $29.6 million and $26.8 million,
respectively. Net income for 1997 and 1996 would have been approximately $15.1
million and $10.0 million, respectively. Pro forma basic earnings per share for
1997 and 1996 would have been approximately $1.62 and $1.38, respectively. Pro
forma diluted earnings per share for 1997 and 1996 would have been approximately
$1.55 and $1.32, respectively.

On May 29, 1998, the formation of Rota Brock Ltda. was completed. Rota
Brock Ltda. was a 50/50 joint venture between CTB, Inc. and Rota Industria de
Maquinas Agricolas, Brazil, pursuant to the joint venture agreement entered into
February 9, 1998. The joint venture was to produce commercial grain storage
silos and feed bins in addition to seed storage and grain and seed handling
equipment in Brazil. The Company contributed $3.6 million to the joint venture
in 1998. On January 22, 1999 the parties agreed to terminate and liquidate the
joint venture due to business and general economic conditions in Brazil. The
Company recognized $0.5 million as its
<PAGE> 19
share of operating losses in 1998 and wrote off its remaining investment of $3.1
million in the joint venture in the fourth quarter of 1998 as a result of the
impairment in value of the investment. The impairment charge reflects a number
of assumptions and estimates, including estimates of future cash flow, made by
the Company based in part on estimates provided by independent liquidators. The
Company believes these estimates are reasonable and any differences are not
expected to be material.

On July 7, 1998, CTB International Corp. acquired Sibley Industries, Inc.
of Anderson, Missouri. Sibley Industries is a leading manufacturer of poultry
brooders, units that provide warmth to enhance the growing environment of young
birds, as well as heaters and handling equipment for livestock. The purchase
price of $1.8 million, net of cash acquired and including expenses, was financed
through the issuance of 81,696 shares of the Company's treasury stock and cash
installments of $0.3 million per year for four years beginning March 31, 1999.
The purchase agreement includes an earn-out provision which requires the Company
to pay up to an additional $1.2 million over four years should certain sales
targets be met. During 1998, $274,000 of the contingent purchase price was
earned and is payable March 31, 1999.

On September 25, 1998, CTB International Corp. acquired STACO, Inc. of
Schaefferstown, Pennsylvania. STACO, Inc. is a leading manufacturer of feeders
and other equipment for the swine-raising industry. The purchase price of $2.0
million, net of cash acquired and including expenses, was financed through
borrowings and the issuance of 45,671 shares of the Company's treasury stock.

The Sibley Industries, Inc. and STACO, Inc. transactions were accounted for
under the purchase method of accounting. Accordingly, the purchase prices have
been allocated to the acquired assets and liabilities based on their fair market
values as of the dates of acquisition, with the remainder charged to goodwill
which is being amortized on a straight-line basis over 40 years. The financial
statements subsequent to the acquisitions are consolidated and included in the
Company's Consolidated Balance Sheet as of December 31, 1998 and the
Consolidated Statements of Income and Consolidated Statements of Cash Flows for
the period ended December 31, 1998. The purchase prices have been allocated as
follows:

(in thousands)
<S> <C>

Current assets $ 4,309
Property, plant and equipment 3,145
Intangibles and other assets 2,909
Long-term debt assumed (4,561)
Liabilities assumed (1,927)
-------
Total purchase price $ 3,875
-------
Note due sellers (1,012)
Value of stock issued (1,411)
-------
Cash paid for acquisitions $ 1,452
-------
</TABLE>

Unaudited pro forma net sales for 1998 and 1997 would have been approximately
$280.8 million and $215.2 million assuming the acquisitions of Sibley
Industries, Inc. and Staco, Inc. had occurred on January 1, 1997. Unaudited pro
forma net income and basic and diluted pro forma earnings per share would not
have been materially different from amounts reported.

4. BUSINESS DISPOSITION

On May 29, 1997 the Company sold substantially all assets (other than accounts
receivable) relating to its PVC deck, dock and fence business for approximately
$8.2 million to a subsidiary of Royal Group Technologies Limited. The sale
resulted in an approximate $3.6 million pre-tax gain with a related tax expense
of approximately $2.5 million. In conjunction with the sale, the Company entered
into a joint venture with the acquirer to produce certain extruded PVC
agricultural equipment component parts for the Company for a period of five
years.

5. CONTRACTS IN PROCESS

Construction contracts in process consist of the following:

(in thousands) 1998 1997
-------- -------
<S> <C> <C>
Costs incurred on
uncompleted contracts $ 27,589 $ 2,228

Estimated loss (455) (326)
-------- -------
27,134 1,902
Less billings to date 20,802 1,902
-------- -------
Costs in excess of billings on
uncompleted contracts $ 6,332 $ -
-------- -------
</TABLE>

The above costs relate to the portion of the contracts for construction of
poultry buildings and exclude amounts related to the sale of the Company's
equipment. Revenue recognized on the building portion of the contracts was $31.7
million and $1.9 million in 1998 and 1997.

<PAGE> 20

6. INVENTORIES

Inventories consist of the following:

<TABLE>
<CAPTION>
(in thousands) 1998 1997
- -------------- ---- ----
<S> <C> <C>
Raw material $ 7,941 $ 7,878
Work in process 2,829 3,872
Finished goods 18,987 13,602
------- -------
29,757 25,352
LIFO valuation allowance (100) -
------- -------
Total $29,657 $25,352
======= =======
</TABLE>

Approximately 83.0% and 81.0% of the Company's inventories are stated on
the LIFO basis at December 31, 1998 and 1997, respectively.

7. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consist of the following:
<TABLE>
<CAPTION>
(in thousands) 1998 1997
- -------------- ---- ----
<S> <C> <C>

Land and improvements $ 2,725 $ 2,576
Buildings and improvements 20,869 18,853
Machinery and equipment 39,022 31,322
Construction in progress 2,829 2,405
------- -------
65,445 55,156
Less accumulated depreciation (14,471) (8,749)
------- -------
Total $50,974 $46,407
======= =======
</TABLE>

8. INTANGIBLES

Intangibles consist of the following:

<TABLE>
<CAPTION>
(in thousands) 1998 1997
- -------------- ---- ----
<S> <C> <C>

Goodwill $69,997 $66,099
Accumulated amortization (4,197) (2,251)
------- -------
Goodwill - net 65,800 63,848
------- -------
Deferred finance costs 2,105 2,105
Accumulated amortization (1,190) (625)
------- -------
Deferred finance costs - net 915 1,480
------- -------
Total $66,715 $65,328
======= =======
</TABLE>

9. ACCRUED LIABILITIES

Accrued liabilities consist of the following:

<TABLE>
<CAPTION>
(in thousands) 1998 1997
- -------------- ---- ----
<S> <C> <C>

Salaries, wages, and benefits $ 5,300 $ 4,843
Warranty 1,986 1,484
Income taxes 1,019 1,804
Other 6,237 3,679
------- -------
Total $14,542 $11,810
======= =======
</TABLE>

10. LONG-TERM DEBT

Long-term debt consists of the following:
<TABLE>
<CAPTION>
(in thousands) 1998 1997
- -------------- ---- ----
<S> <C> <C>

Revolving line of credit $65,695 $45,700

Term loans payable to bank
and other 5,670 3,464
------- -------
71,365 49,164
Less current portion 1,646 1,245
------- -------
Total $69,719 $47,919
======= =======
</TABLE>

Effective August 21, 1997, in conjunction with the Offering, the Company
entered into a revolving credit facility totaling $90,000,000 which includes a
$5,000,000 swingline facility and a $10,000,000 sublimit for trade and standby
letters of credit ("Credit Agreement"). The Credit Agreement replaced a previous
credit agreement. There is no mandatory principal amortization prior to the
maturity date in 2003; however, the Company is subject to certain financial and
business covenants customary for credit facilities of this type. At December 31,
1998, the Company had approximately $20,675,000 of availability under the Credit
Agreement. Borrowings under the Credit Agreement bear interest at rates ranging
from 0.25% to 0.625% over LIBOR, depending upon certain financial ratios. At
December 31, 1998, the rates range from 5.50% to 6.25%.

Under the Credit Agreement, CTB is required to maintain a minimum net worth
of not less than 90.0% of the sum of its net worth at June 30, 1997 and the net
proceeds of the Offering. The minimum net worth is to be increased quarterly by
an amount equal to 50.0% of the quarterly earnings of CTB. This covenant limits
the dividends CTB can pay to the Company and, therefore, the dividends the
Company can pay to its stockholders. The Company was in compliance with all debt
covenants at December 31, 1998.

The term loans bear interest at rates ranging from 4.15% to 9.0% and
certain amounts are collateralized by named assets of Fancom and Sibley.

Interest paid was approximately $3,387,000; $4,936,000 and $5,080,000 in
1998, 1997, and 1996, respectively.

In conjunction with the debt agreements, the Company maintains an interest
rate swap agreement which effectively converts $22.5 million of the revolver
debt into approximately 6.13% fixed rate debt. The swap has quarterly
amortization and expires on June 30, 2001.

<PAGE> 21
The carrying value of debt approximates fair value because the floating
interest rates reflect market rates. The fair value of interest rate swaps was
($191,000), $208,000 and $626,000 at December 31, 1998, 1997 and 1996,
respectively.

The aggregate maturities of long-term debt at December 31, 1998 are as
follows:
<TABLE>
<CAPTION>
(in thousands) Term Loans Revolver Total
- -------------- ---------- -------- --------
<S> <C> <C> <C>
1999 $ 1,646 - $ 1,646
2000 1,292 - 1,292
2001 475 - 475
2002 440 - 440
2003 422 65,695 66,117
Thereafter 1,395 - 1,395
------- ------- --------
Total $ 5,670 $65,695 $71,365
------- ------- --------
</TABLE>
11. COMMITMENTS AND CONTINGENCIES

Pursuant to the Stock Purchase Agreement, the Company agreed to make
certain contingent payments to the Predecessor Company stockholders (the
"Earn-Out Amount") based on a calculation of cumulative Earnings Before
Interest, Taxes, Depreciation and Amortization ("EBITDA") calculated in
accordance with the Stock Purchase Agreement. The Earn-Out Amount is determined
based on cumulative EBITDA for the three-year period ended December 31, 1998.
The cumulative EBITDA target is subject to adjustment in the event of any
merger, acquisition, divestiture or other extraordinary transaction. An
amendment to the Stock Purchase Agreement to give effect to the Kansas City
Grain Systems Division Acquisition, the Fancom Acquisition and the Vinyl
Division Divestiture revised the EBITDA target from $89.5 million to $103.4
million.

The Earn-out amount recorded under the terms of the Stock Purchase
Agreement as amended has been calculated as $7,040,000.

The Company is obligated to pay the Earn-Out Amount in three installments
beginning on April 5, 1999. The first installment is equal to 50.0% of the
actual Earn-Out Amount, and the second and third installments are each equal to
25.0% of the actual Earn-Out Amount. Interest will accrue at the prime rate as
of December 31, 1998, which was 7.75%.

The Company has a Management Incentive Compensation Plan whereby certain
employees receive annual bonuses based upon achievement of certain financial
goals, including EBITDA targets.

12. PROFIT SHARING

The Company has a qualified defined contribution profit-sharing retirement plan
that covers substantially all employees who are not participants in certain
defined benefit plans. The plan provides that Company contributions to the
profit-sharing trust be made in amounts as determined by the Company's Board of
Directors. Contributions are allocated to participants on the basis of
proportionate compensation at the close of each fiscal year. Benefits to
participants are limited to funds in their individual accounts. The Company
recorded expenses of approximately $920,000; $1,334,000 and $1,403,000 in 1998,
1997 and 1996, respectively.

The profit-sharing plan has a 401(k) provision which allows participants to
contribute a percentage of their pre-tax compensation to the plan within
Internal Revenue Code limits. Upon authorization of the Board of Directors, the
Company may make matching contributions. Matching contributions made by the
Company approximated $407,000; $370,000 and $337,000 in 1998, 1997 and 1996,
respectively.

13. PENSION PLANS

The Company has a defined benefit pension plan covering employees at a specified
domestic business unit acquired in 1997. The benefits for this plan are based on
years of service and stated amounts for each year of service. Net pension
expense includes the following components:

<TABLE>
<CAPTION>
(in thousands) 1998 1997
- -------------- ------ ------
<S> <C> <C>
Service cost $ 64 $ 27
Interest cost 64 30
Net amortization and deferral 58 29
---- ----
Net periodic pension cost $186 $ 86
---- ----
</TABLE>
Summary information of the Company's plan is as follows:
<PAGE> 22
<TABLE>
<CAPTION>

(in thousands) 1998 1997
------ -----
<S> <C> <C>
Change in benefit obligation

Benefit obligation at
beginning of year $ 886 $ 783

Service cost 64 27

Interest cost 64 30

Actuarial loss 34 46
------ -----
Benefit obligation at end of year 1,048 886
------ -----
Change in plan assets

Fair value of plan assets
at beginning of year -

Actual return on plan assets (3)
------
Employer contribution 86

Fair value of plan assets at
end of year 83 -
------ -----
Funded status (965) (885)

Unrecognized net actuarial loss 83 46

Unrecognized prior service cost 696 754
------ -----
Accrued benefit cost $ (186) $ (86)
------ -----
</TABLE>

The projected benefit obligation for the domestic plan was determined using
a weighted average discount rate of 6.75% and 7.25% in 1998 and 1997. The
benefit multiplier increase was increased $1.00 per year until the participant's
normal retirement date. The expected rate of return on plan assets was 9.00%.

The major part of the foreign pension obligations is covered by a mandatory
pension plan, which is a multiemployer plan as defined in SFAS No. 87,
"Employers' Accounting for Pension." The benefits for foreign pension plans are
based on years of service and compensation levels for the covered employees. Net
pension expense for these plans, which were acquired in the Fancom Acquisition
in 1997, was $248,000 and $93,000 in 1998 and 1997, respectively. The projected
benefit obligation at December 31, 1998 for certain ancillary plans was
approximately $330,000.

The company's policy for funded plans is to make contributions equal to or
greater than the requirements prescribed by the Employee Retirement Income
Security Act (ERISA) or the respective government law.

14. POSTRETIREMENT HEALTH CARE BENEFIT PLANS

The Company provides medical and dental benefit programs for retired employees.
Substantially all of the Company's U.S. employees become eligible for these
benefits upon retirement.

The Company has unfunded postretirement plans and uses the minimum
amortization method for recognizing gains and losses for postretirement benefits
as prescribed by SFAS No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions."

Summary information of the Company's plan is as follows:

<TABLE>
<CAPTION>
(in thousands) 1998 1997
------ -----
<S> <C> <C>
Change in benefit obligation

Benefit obligation at
beginning of year $ 1,706 $ 1,884

Service cost 154 162

Interest cost 124 141

Plan participants' contributions 85 81

Actuarial loss (gain) 616 (474)

Benefits paid (124) (88)
------- -------
Benefit obligation at end of year 2,561 1,706
------- -------
Fair value of plan assets at
end of year - -
------- -------
Funded status (2,561) (1,706)

Unrecognized net actuarial (gain) (73) (556)

Unrecognized prior service cost 166 8
------- -------
Accrued benefit cost $ (2,468) $ (2,254)
------- -------
</TABLE>

The accumulated postretirement benefit obligation was determined using
relevant actuarial assumptions and the timing of the Company's medical and
dental plans. The effect of a 1.0% annual increase in the assumed medical
inflation rate on the accumulated postretirement benefit obligation and the
related expense would be insignificant.

Measurement of the accumulated post-retirement obligation was based on a
6.75% discount rate at December 31, 1998 and 7.25% at December 31, 1997. Medical
trend rates were assumed at 12.0% (under age 65) and 8.0% (over age 65) which
trend down to 6.0%.

The Company funds medical and dental costs as incurred. The components of
net periodic postretirement benefit expense are as follows:

(in thousands) 1998 1997 1996
------- ------- -------
<S> <C> <C> <C>
Service cost $ 154 $ 161 $ 158

Interest cost 118 134 109

Net amortization and deferral (22) - -
------- ------- -------
Total $ 250 $ 295 $ 267
======= ======= =======
</TABLE>

15. STOCKHOLDERS' EQUITY

In August 1997, the Company completed an initial public offering of 5,000,000
shares of its common stock at an offering price of $14.00 per share (the
"Offering"). The net proceeds of the Offering were used to repay debt incurred
in connection with the Fancom Acquisition and the Kansas City Grain Systems
Division Acquisition, to redeem 15,000

<PAGE> 23
shares of preferred stock, and to repay a portion of the Company's outstanding
debt. Immediately prior to the Offering, a 12.0933-for-one stock split of the
Company's common shares was effected. Concurrent with the Offering, 9,069
outstanding shares of existing preferred stock were exchanged for 647,786 shares
of common stock.

16. STOCK OPTION PLANS

Executives and other key employees have been granted options to purchase
common shares of the Company. In each case, the option price equals the fair
market value of the common shares on the day of the grant. An option's maximum
term is ten years. Options granted vest (i) in seven years or over an
accelerated period of five to six years should certain annual or cumulative
earnings targets be met, or (ii) over an elapsed time of three years to six
years from the grant date.

In accordance with the provisions of SFAS No. 123, "Accounting for
Stock-Based Compensation," the Company has elected to apply the accounting
prescribed by APB Opinion No. 25 and related interpretations in accounting for
its stock option plan. If the Company had elected to recognize compensation cost
based on the fair value of the options granted at grant date as prescribed by
SFAS No. 123, net income and earnings per share for the years ended December 31,
1998, 1997 and 1996 would have been reduced to the pro forma amounts indicated
in the table below:

(in thousands) 1998 1997 1996
- -------------- ---- ---- ----
<S> <C> <C> <C>
Net income:
As reported $9,196 $13,899 $8,502
Pro forma 8,964 13,798 8,477
Net income per share - basic:
As reported $ .73 $ 1.49 $ 1.17
Pro forma .71 1.48 1.17
Net income per share - diluted:
As reported .71 1.43 1.12
Pro forma .69 1.42 1.12
</TABLE>

The fair value of each option grant is estimated on the date of grant
using the Black Scholes option-pricing model with the following assumptions:

<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Volatility 30-35% 30% 0%
Expected dividend yield 0% 0% 0%
Risk-free interest rate 4.31-5.73% 3-6.51% 36-6.00%
Expected life of options 6 years 5.33-6 years 5 years
</TABLE>

The weighted average fair value of options granted during 1998, 1997 and
1996 was $5.72, $3.75 and $.30 per share, respectively.

Changes in shares under option are summarized below:

(in thousands) 1998 1997 1996
- -------------- ------------------ ------------------ ------------------
Weighted Weighted Weighted
Number Average Number Average Number Average
of Exercise of Exercise of Exercise
Shares Price Shares Price Shares Price
------ -------- ------ -------- ------ --------
<S> <C> <C> <C> <C> <C> <C>
Outstanding beginning of year 836,716 $ 3.46 725,600 $ 1.24 - -
Granted 350,000 13.81 203,025 12.00 761,880 $1.22
Exercised (169,632) .83 - - - -
Forfeited (88,326) 13.46 (91,909) 4.77 (36,280) .83
Outstanding end of year 928,758 6.90 836,716 3.46 725,600 1.24
Exercisable end of year 285,868 $ 2.28 293,822 $ 1.72 130,608 $ .83
</TABLE>
<PAGE> 24

Options outstanding and exercisable at December 31, 1998 are summarized below:

Options Outstanding Options Exercisable
---------------------------------------------- ---------------------------
Exercise Number Remaining Weighted Avg. Number Weighted Avg.
Prices Outstanding Contractual Life Exercise Price Exercisable Exercise Price
- ------------ ----------- ---------------- -------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
$0.83-$4.96 476,152 7.0 $ 0.95 251,216 $ 1.07
$6.38-$7.63 20,000 9.8 $ 6.75 - -
$10.92-$14.25 432,606 8.9 $13.44 34,652 $ 11.11
- ------------- ----------- ---------------- -------------- ----------- --------------
928,758 285,868
----------- -----------
</TABLE>

17. INCOME TAXES

The elements of the provision for income taxes are as follows:

(in thousands) 1998 1997 1996
- ------------- ---- ---- ----
<S> <C> <C> <C>
Current:
U.S. federal $5,965 $ 8,492 $4,628
State 1,019 1,521 909
Foreign 990 927 26
------ ------- ------
Total current 7,974 10,940 5,563
====== ======= ======

Deferred:
U.S. federal (1,613) (404) (55)
State (230) (58) (8)
Foreign 49 21 -
------ ------- ------
Total deferred (1,794) (441) (63)
====== ======= ======
Provision for income taxes $6,180 $10,499 $5,500
====== ======= ======
</TABLE>

Income taxes paid were approximately $8,778,000; $11,069,000 and $6,055,000
in 1998, 1997 and 1996, respectively.

A reconciliation of the net effective tax for consolidated operations to
the U.S. statutory federal income tax is as follows:

(in thousands) 1998 1997 1996
- ------------- ---- ---- ----
<S> <C> <C> <C>

U.S. tax at federal statutory rate $5,376 $8,539 $4,901
Increase (decrease) in tax resulting from:
State income taxes, net of U.S. tax benefit 512 930 591
FSC benefit (228) (468) (316)
Goodwill 361 473 336
Gain on sale of Vinyl Division - 769 -
Other, net 159 256 (12)
------ ------- ------
Provision for income taxes $6,180 $10,499 $5,500
====== ======= ======
</TABLE>

<PAGE> 25

Deferred tax assets and liabilities are as follows:

<TABLE>
<CAPTION>
(in thousands) 1998 1997 1996
- -------------- -------- -------- ---------
<S> <C> <C> <C>
Deferred tax assets - current:
Accrued liabilities $ 1,654 $ 1,244 $ 1,151
Inventories (1,760) 459 507
Allowance for doubtful accounts receivable 375 209 180
Foreign joint venture losses 1,474 -- --
Other -- -- 25
-------- -------- --------
Total current $ 1,743 $ 1,912 $ 1,863
-------- -------- --------

Deferred tax assets (liabilities) - non-current:
Property, plant and equipment $ (8,619) $ (8,220) $ (8,577)
Goodwill (422) (141) --
Foreign losses 696 -- --
Accrued postretirement benefit cost 1,087 822 754
Other (631) (1,830) (1,770)
-------- -------- --------
Total non-current $ (7,889) $ (9,369) $ (9,593)
-------- -------- --------
Total deferred income tax $ (6,146) $ (7,457) $ (7,730)
-------- -------- --------
</TABLE>

18. SEGMENTS

Due to the business combinations which occurred in 1997 and 1998, the
Company's internal financial reporting has been organized primarily on the basis
of the legal entities arising from acquisitions, while the management of the
operations has been primarily along functional lines of manufacturing, sales and
marketing. The Company believes its operating segments have similar economic
characteristics and meet the aggregation criteria of Financial Accounting
Standard No. 131, "Disclosures about Segments of an Enterprise and Related
Information." Accordingly, the Company is reporting only one operating segment.

United States and foreign operations, which include subsidiaries in The
Netherlands and Brazil, are shown below. Net sales amounts are based on the
location of the selling entity.

<TABLE>
<CAPTION>
(in thousands) 1998 1997 1996
- -------------- -------- -------- ---------
<S> <C> <C> <C>
Net sales:
United States $240,348 $177,439 $148,089
The Netherlands 29,987 21,105 46
Other 1,845 3,519 718
Long-lived assets:
United States 104,340 99,694 74,125
The Netherlands 13,542 12,212 52
Other 239 213 --
-------- -------- --------
</TABLE>

Sales by product line are as follows:

<TABLE>
<CAPTION>
(in thousands) 1998 1997 1996
- -------------- -------- -------- --------
<S> <C> <C> <C>
Animal agriculture $134,444 $113,625 $ 80,419
Egg production 36,429 31,280 31,132
Grain systems 69,602 50,651 28,373
Buildings 31,705 1,902 --
Other -- 4,605 8,929
-------- -------- --------
Total $272,180 $202,063 $148,853
-------- -------- --------
</TABLE>
<PAGE> 26
19. QUARTERLY FINANCIAL DATA (Unaudited)

(in thousands, except per share amounts) Three Months Ended
- ---------------------------------------- ------------------
1998 March 31 June 30 September 30 December 31
<S> <C> <C> <C> <C>
-------- -------- ------------ -----------
Sales $ 46,778 $ 70,464 $ 91,138 $ 63,800

Gross profit $ 11,045 $ 14,498 $ 21,085 $ 14,056

Gross margin 23.6% 20.5% 23.1% 22.0%

Operating income $ 3,095 $ 5,933 $ 10,713 $ 3,461

Operating income margin 6.6% 8.4% 11.7% 5.4%

Net income $ 1,387 $ 2,911 $ 5,611 $ (713)

Basic earnings per share $ 0.11 $ 0.23 $ 0.45 $ (0.06)

Basic weighted average shares 12,837 12,797 12,607 12,384

Diluted earnings per share $ 0.11 $ 0.22 $ 0.43 $ (0.06)

Diluted weighted average shares 13,208 13,184 12,950 12,658
-------- -------- ------------ -----------
</TABLE>

(in thousands, except per share amounts) Three Months Ended
- ---------------------------------------- ------------------
1997 March 31 June 30 September 30 December 31
-------- -------- ------------ -----------
<S> <C> <C> <C> <C>
Sales 31,520 $ 50,644 $ 71,740 $ 48,159

Gross profit 7,604 13,701 20,590 11,823

Gross margin 24.1% 27.1% 28.7% 24.5%

Operating income 2,815 6,956 $ 12,186 $ 3,882

Operating income margin 8.9% 13.7% 17.0% 8.1%

Net income $ 918 $ 4,649 $ 6,375 $ 1,957

Basic earnings per share $ 0.13 $ 0.64 $ 0.65 $ 0.15

Basic weighted average shares 7,256 7,259 9,733 12,925

Diluted earnings per share $ 0.12 $ 0.61 $ 0.63 $ 0.15

Diluted weighted average shares 7,636 7,652 10,149 13,360
-------- -------- ------------ -----------

</TABLE>

The total quarterly income per common share may not equal the annual amount
because net income per common share is calculated independently for each
quarter.

<PAGE> 27
20. RELATED PARTY TRANSACTIONS

Under the terms of the purchase agreement, the Company is required to pay
annual management fees of $300,000 plus expenses to ASCP. Such expense has been
charged to operations during 1998, 1997 and 1996. Additionally, other fees paid
by the Company to ASCP include $750,000 in connection with the Acquisition on
January 4, 1996; $503,000 in connection with the acquisitions of Fancom and the
Kansas City Grain Systems Division; and $350,000 in connection with the
Offering.

The Earn-Out Amount of $7,040,000 (see Note 11) recorded as of December 31,
1998, under the terms of the purchase agreement will be paid to the Predecessor
Company shareholders, certain of whom are current directors and officers of the
Company.

21. SUBSEQUENT EVENTS

ROXELL ACQUISITION - On January 12, 1999 the Company acquired Roxell N.V.
(Roxell) of Maldegem, Belgium. Roxell is a leading manufacturer and marketer of
automated feeding and watering systems, as well as feed storage bins for the
poultry and swine production markets. The purchase price of 1.277 billion
Belgian francs (net of cash acquired), or approximately $37.0 million at then
current exchange rates, was paid in cash and financed through German
Mark-denominated borrowings under the Company's amended credit facility.

CREDIT AGREEMENT AMENDMENT - In conjunction with the closing of the Roxell
acquisition, the Company entered into an amendment to its existing credit
facility. The facility as amended provides the Company $135.0 million in
borrowing capability. There is no mandatory principal amortization prior to
maturity in 2004; however, the Company remains subject to certain financial and
business covenants customary for credit facilities of this type. Borrowings
under the amended agreement bear interest at rates ranging from 0.55% to 1.225%
over LIBOR, depending upon certain financial ratios.

BRAZIL DEVALUATION - In January 1999, the Brazilian government allowed its
currency, the Real, to float freely in the foreign exchange markets. This
triggered a significant devaluation in the Real relative to the U.S. dollar. The
Company anticipates that 1999 net earnings could be negatively impacted as a
result of a non-cash charge for unrealized foreign exchange losses. The
potential charge relates to U.S. dollar- denominated debt owed to CTB by
Chore-Time Brock Ltda., its Brazilian subsidiary.
<PAGE> 28
MANAGEMENT INFORMATION

<TABLE>
<S> <C> <C>
BOARD OF DIRECTORS Jan H.M. Cremers
Managing Director,
J. Christopher Chocola G. Howard Collingwood Fancom B.V.
President and CTB, Inc. Vice President,
Chief Executive Officer Corporate Operations Brian D. Dawes
of the Company CTB, Inc. Vice President and
General Manager,
Caryl M. Chocola Floor Systems
Private Investor
Randy S. Eveler
Michael G. Fisch CTB, Inc. Vice President and
Chairman of the Board Corporate Controller
of the Company
President, Michael J. Kissane
American Securities Capital Partners, L.P. Vice President, General
Counsel and Secretary
Larry D. Greene
President, Complex Tooling Mark A. Lantz
& Molding Incorporated CTB, Inc. Vice President and
General Manager,
Frank S. Hormance Cage Systems
President and Chief Operating Officer,
AMETEX, Inc. George W. Murdoch
CTB, Inc. Executive Vice President
David L. Horing and General Manager,
Managing Director, Chore-Time International
American Securities Capital Partners, L.P.
Mark W. Neal
Charles D. Klain CTB, Inc. Vice President and
Managing Director, Treasurer
American Securities Capital Partners, L.P.
Michael D. Smith
CTB, Inc. Vice President,
Business and Information Technology
CORPORATE OFFICERS
Don J. Steinhilber
J. Christopher Chocola Vice President and
President and Chief Financial Officer
Chief Executive Officer
Roger W. Townsend
Gary L. Anderson CTB, Inc. Executive Vice President
President, and General Manager,
Sibley Industries, Inc. Brock Grain and

</TABLE>

<ARTICLE> 5

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 608
<SECURITIES> 0
<RECEIVABLES> 38,368
<ALLOWANCES> 1,122
<INVENTORY> 29,657
<CURRENT-ASSETS> 77,005
<PP&E> 65,445
<DEPRECIATION> 14,471
<TOTAL-ASSETS> 195,126
<CURRENT-LIABILITIES> 36,095
<BONDS> 0
0
0
<COMMON> 129
<OTHER-SE> 76,696
<TOTAL-LIABILITY-AND-EQUITY> 195,126
<SALES> 272,180
<TOTAL-REVENUES> 272,180
<CGS> 211,496
<TOTAL-COSTS> 211,496
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 568
<INTEREST-EXPENSE> 4,153
<INCOME-PRETAX> 15,376
<INCOME-TAX> 6,180
<INCOME-CONTINUING> 9,196
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,196
<EPS-PRIMARY> 0.73
<EPS-DILUTED> 0.71

</TABLE>