CHEMI TROL CHEMICAL CO, 10-K/A, 1998-05-14

CHEMI TROL CHEMICAL CO
10-K/A, 1998-05-14
FABRICATED PLATE WORK (BOILER SHOPS)

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<PAGE> 1

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K/A

<TABLE>
<S> <C>
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
</TABLE>

Commission file number 0-18797

CHEMI-TROL CHEMICAL CO.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S> <C>
Ohio 34-4439286
------------------------------------ ------------------------------------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
2776 C.R. 69, Gibsonburg, Ohio 43431
------------------------------------ ------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>

Registrant's telephone number, including area code:

(419)665-2367

Securities registered pursuant to Section 12(b) of the Act:

None

Securities pursuant to Section 12(g) of the Act:

Common stock, without par value
----------------------------------

Title of Class

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 [ ].

The aggregate market value (based upon the closing price) of the voting
stock held by non-affiliates of the registrant as of March 4, 1998:

Common Stock, without par value -- $29,534,834

The number of shares outstanding of the issuer's classes of common stock as of
March 1, 1998:

Common Stock, Without Par Value -- 2,004,930 shares

DOCUMENTS INCORPORATED BY REFERENCE:

None

[ ] 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.

The Exhibit Index is located at page 38 of this filing. This document
contains 101 pages.
<PAGE> 2

PART I

ITEM 1. BUSINESS

(a) General Development of Business

Chemi-Trol Chemical Co. ("the Company") was incorporated under the laws of
the State of Ohio in 1952.

(b) Financial Information About Industry Segments

The sales and operating profit of each industry segment and the
identifiable assets attributable to each industry segment for the three years
ended December 31, 1997 are set forth in Note 13 (Information pertaining to
industry segments) of the Notes to Financial Statements, which note is
incorporated herein by reference.

PRESENT ORGANIZATION

The Company is organized on an operational basis into two divisions: Tank
Division, located in Fremont, Ohio and the Chemical Group, located in
Gibsonburg, Ohio. Each division is headed by a General Manager who reports
directly to the Company's executive officers in Gibsonburg, Ohio. In addition
the Company has a Leasing and Finance Division for the purpose of offering to
its qualified customers two alternate methods of financing the purchase of its
tank products. In 1997, consistent with the Company's prior practice, income and
expense of the Leasing and Finance Division are recorded either in the Tank
Division or in unallocated corporate income and expense.

The Company announced on December 6, 1996 it had retained McDonald &
Company to advise it in connection with the possible sale of two of its non-core
businesses, the Cal-Van Tools and the Cory Orchard & Turf Divisions. After a
strategic review of the Company's business segments Chemi-Trol's Board of
Directors determined that to maximize future growth and profitability it should
concentrate on its Chemical and Tank Segments, which offer the best opportunity
for sustained earnings growth for the Company.

On March 25, 1997, the Company sold its Cory Orchard and Turf Division to
Terra International, Inc. for approximately $4.8 million under an asset purchase
agreement.

On November 18, 1997, the Company completed the sale of certain assets of
its Cal-Van Tools Division to Eagle Tools, Inc. (Eagle), an Affiliate of Horizon
Tool, Inc. Eagle purchased inventory, machinery, equipment, fixtures, dies and
the Cal-Van Tools name for a cash payment of $1.5 million and a note of
approximately $2.3 million. Chemi-Trol retained and is currently collecting
accounts receivable of approximately $4.8 million. Real estate with an
approximate cost of $1.7 million and a carrying value of approximately $900,000
was also retained by Chemi-Trol and is being leased to Eagle under a one-year
lease expiring November 1998.

AGREEMENT FOR ACQUISITION OF THE COMPANY

On February 20, 1998 the Company and Harsco (NYSE:HSC) executed an
Agreement and Plan of Merger providing for the acquisition of the Company by
Harsco for approximately $46 million or $23.00 per share. Completion of the
transaction is subject to the affirmative vote of holders of at least 66 2/3 of
the outstanding shares of common stock of the Company and the expiration or
early termination of the applicable waiting period for antitrust review of the
transaction, among other conditions. The Company anticipates closing the
transaction in the Spring of 1998.

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<PAGE> 3

TANK DIVISION

PRODUCTS

Through its Tank Division, the Company manufactures steel pressure tanks
for above ground and underground storage of liquefied petroleum gas ("LPG") and
anhydrous ammonia ("NH3") at its plant located in Fremont, Ohio. The steel tanks
are manufactured in sizes ranging from 120 gallon water capacity to 1990 gallon
water capacity for LPG tanks and from 250 gallon water capacity to 2050 gallon
water capacity for NH3 tanks. Approximately 95% of the tanks manufactured by the
Company are for the storage of LPG. The Tank Division accounted for 75%, 72%,
and 71% of the Company's total revenues for 1997, 1996 and 1995, respectively.

MARKETING AND DISTRIBUTION

Sales of the Company's tanks are made directly by the Company to either
regional independent dealers or major multi-state marketers within a marketing
radius of approximately 1,000 miles from Fremont, Ohio. The 20 largest
industrial customers of the Company accounted for approximately one third of the
net sales of this division for its fiscal year ended December 31, 1997.

The Company stimulates sales through the efforts of its own sales
personnel, personal telephone calls to existing and potential customers, direct
mail advertising, publication and distribution of catalogues, advertisements in
trade journals and attendance at various trade shows. Sales of the Company's
tanks to major multi-state marketers are made by the Tank Division's sales
manager from its principal office located in Fremont, Ohio. Sales to independent
dealers are made through Company salesmen and independent sales representative
organizations. Each of the independent sales organizations is assigned an
exclusive territory and are compensated by commissions based upon sales in their
respective territory under agreements terminated with notice by either party.

The Company transports its steel tanks to its customers by means of its own
truck fleet.

FINANCING OF CUSTOMER ACCOUNTS

Sales of this division's products are normally made on a net basis. The
Company does, however, offer to its qualified customers two alternate methods of
financing the purchase of its steel tanks, which are explained under "Leasing
and Finance Division," on page 4.

RAW MATERIALS AND SUPPLIES

Steel plate is the major raw material used by the Company in the
manufacture of steel pressure tanks. The Company purchases steel plate from a
variety of domestic and foreign sources. Although the Company believes that it
will be able to obtain its steel plate requirements from multiple sources on a
competitive basis, the inability of the Company to obtain a satisfactory supply
of steel plate could have a materially adverse effect on its tank manufacturing
operations.

BACKLOG

The dollar amounts of backlog of the Tank Division believed to be firm as
of March 1, 1998 and 1997 were $4,560,000 and $4,514,000, respectively. All of
the 1998 backlog is expected to be filled during 1998.

COMPETITION

The markets for the Company's steel tanks are highly competitive and the
Company competes with other companies having a higher total sales volume and
greater financial resources than the Company. The competition in these markets
is based primarily on service and price. Two of the Company's largest
competitors are Trinity Industries, Inc. of Dallas, Texas and American Welding
and Tank Co. of Harrisburg, Pennsylvania.

2
<PAGE> 4

REGULATIONS

The manufacture of steel pressure tanks by the Company is subject to close
regulation. The American Society of Mechanical Engineers ("ASME") prescribes
minimum standards and specifications relating to (i) the size and chemical
properties of steel plate, (ii) the manufacturing process (including welding
procedures and testing) and (iii) the pressure capacity of steel tanks and
valves. These standards are enforced by the National Board of Boiler and
Pressure Vessels Inspectors, which commissions inspectors who perform
independent inspection through insurance companies. These inspectors inspect all
phases of the manufacturing process as well as the finished product. Steel tanks
manufactured by the Company must be certified by these inspectors to be in
compliance with the regulations prescribed by the ASME, and all propane vessels
are registered with the National Board of Boiler and Pressure Vessels Inspectors
prior to their sales to the customers of the Company. Although the manufacture
of steel pressure tanks is subject to close regulation, the Company may be held
liable, by warranty or otherwise, for damages resulting from tank failure,
including damages to the environment.

CHEMICAL GROUP

PRODUCTS AND SERVICES

The Chemical Group's operations are divided into two divisions: the
Contracting Division & CADCO, the material distribution division.

The Contracting Division is comprised of the pavement marking and the
vegetation management departments. The pavement marking department provides,
under contract, various forms of pavement marking. These services include fast
dry alkyd, fast dry water-borne, and polyester paint striping, the installation
of preformed plastic and the measurement, determination and marking of
"no-passing" zones on highways. The vegetation management department applies
under contract various types of vegetation control materials including selective
herbicides for weed, brush and grass control, as well as nonselective herbicides
for total vegetation control.

The CADCO division sells herbicides, adjuvants, plant growth regulators,
sprayers, pavement marking products and other related equipment and products.

The Chemical Group accounted for 25%, 28% and 29% of the Company's revenues
for 1997, 1996 and 1995, respectively.

MARKETING AND DISTRIBUTION

Sales of the products and services offered by the Chemical Group are made
throughout 21 states in the midwestern, eastern and southern parts of the United
States. Approximately 95% of the total net sales of the Chemical Group are to
various state, county, municipal and township highway departments, drainage
commissions and toll road authorities. The balance of the net sales of this
division are derived primarily from public utilities, pipeline companies,
railroads, general contractors and other industrial, commercial and
noncommercial users. During the past three years, approximately 90% of the net
sales of this division were derived from contracts entered into with various
governmental authorities located in the states of Ohio, West Virginia, Michigan,
Indiana, New York, Kentucky and Tennessee.

The work performed by the Chemical Group is seasonal inasmuch as warm dry
weather is needed to apply pavement marking and vegetation control materials.
The season in the Company's general area of operations is from April 1 through
November 30. This season is extended on occasions when the Company is able to
obtain contracts in Southern states where the more favorable weather conditions
allow work to be performed December through March.

The Chemical Group's highway operations with various governmental
authorities are generally conducted under fixed price contracts awarded by the
governmental authorities for a fixed period of time ranging from a few months to
two years. These contracts generally require the Company to comply with
standards and specifications relating to (i) the type and amount of chemicals,
paints and polyesters used by the Company, (ii) the type, size and number of
applicating units used by the Company, (iii) the training, work experience and
licensing of the

3
<PAGE> 5

personnel used by the Company and (iv) the method of application of chemicals,
paints, polyesters and plastics used by the Company.

The Company owns the equipment it uses in its operation of the Chemical
Group.

SUPPLIES

The principal supplies used by the pavement marking department are paint,
polyester, glass beads, and preformed plastic materials. The Company obtains
these materials from a wide range of suppliers. Herbicides used in vegetation
management and CADCO material sales are obtained from a wide range of suppliers.
The Company does not believe that the loss of any one source of supply would
have a material effect on its business.

BACKLOG

The dollar amounts of backlog of the Chemical Group believed to be firm as
of March 1, 1998 and 1997 were approximately $6,011,000 and $2,909,000,
respectively. Dollar amounts of backlog can vary significantly based upon the
timing of bid lettings and the division's success in obtaining contracts and are
not necessarily indicative of the results for the year. All of the contracts
comprising the 1998 backlog are expected to be completed during 1998.

COMPETITION

The business done by the Chemical Group is highly competitive. Most
contracts are awarded on the basis of price, reputation, experience and ability
to perform. The number of competitors is greatly reduced as the size of the job
and the complexity of tasks to be performed are increased. Generally, the
competitors of the Company are local companies operating in a particular
geographical area. Although reliable statistics are not available, the Company
believes that based on annual net sales of the Chemical Group, it is one of the
larger contractors in the states in which it operates in the application of
highway vegetation control materials and of highway pavement marking and
striping materials.

Since the Company obtains all of its public contracts through competitive
bidding, there can be no assurance that the Company will retain all of its
present contracts after their respective dates of expiration nor is there any
assurance that the Company's record of obtaining additional contracts will
continue. Although the Company believes that its relationship with its customers
is good, loss of existing contracts due to expiration or cancellation could have
a materially adverse effect on the Company's net sales and net income.

REGULATIONS

Much of the Chemical Group's business is oriented to highway safety
considerations. Regulations applicable to the various public authorities with
whom the Company contracts affect the demand and specifications for highway
striping and vegetation control performed by the Company.

LEASING AND FINANCE DIVISION

Through the Company's Leasing and Finance Division, its qualified customers
are offered two alternate methods of financing the purchase of the Company's
steel tanks (the "Tank Finance Plan" and the "Tank Lease Plan").

Under the Tank Finance Plan, the Company finances 90% of the sales price
over a 24 to 48 month period at an effective annual interest rate which during
1997 was approximately 10.25%. The Company retains a security interest in the
tanks as additional security for the payment of the financed amount. The
installment paper evidencing the customer's obligation is either held by the
Company as an investment, sold with recourse for the principal amount thereof to
the Company's profit sharing plan or pledged as collateral for borrowings over a
like period. In 1997, the Company did not borrow under the latter arrangement
but sold with recourse $1,672,000 in notes to the Company's profit sharing plan.
For the fiscal year ended December 31, 1997, approximately 15% of the total net
sales of the Tank Division were sold to customers under the Tank Finance Plan.

4
<PAGE> 6

Under the Tank Lease Plan, leases of liquid propane gas tanks to customers
for noncancellable terms of five or ten years are recorded as sales at
inception. The present value of the minimum payments is included in net sales
and the cost of the tanks is charged to cost of sales. Estimated residual values
of the leased tanks are not significant. During the fiscal year ended December
31, 1997, the Leasing and Finance Division invested in approximately $395,220 in
customer sales type leases. Approximately 1% of the total net sales of the Tank
Division for the fiscal year ended December 31, 1997 were made under the Tank
Lease Plan.

In 1997, consistent with the Company's prior practice, income and expense
of the Leasing and Finance Division are recorded in the Tank Division and in
unallocated corporate income and expense.

PATENTS, LICENSES, FRANCHISES AND CONCESSIONS

The Company does not own any patents nor is it licensed under any patent
licenses. It does not hold any franchises or concessions from any governmental
body.

EMPLOYEES

The following table sets forth information with respect to the Company's
317 employees:

<TABLE>
<CAPTION>
DIVISION PERMANENT SEASONAL
-------- --------- --------
<S> <C> <C>
Corporate Staff............................................. 14 0
Tank Division............................................... 150 0
Chemical Group.............................................. 43 110
--- ---
Total............................................. 207 110
=== ===
</TABLE>

Employees at the Company's Tank Division Plant in Fremont, Ohio are subject
to a collective bargaining agreement between the Company and the United
Steelworkers of America, AFL-CIO-CLC, Local 1915. The current agreement will
expire April 30, 1999.

Seasonal employees in the Company's Chemical Group are subject to a
collective bargaining agreement between the Company and Laborers International
Union Local 480, which will expire March 1, 1999.

The Company believes that its relations with its Union and other employees
is good, and does not anticipate problems in negotiating new collective
bargaining agreements.

ENERGY AND ENVIRONMENT

The Company consumes electricity, propane gas, natural gas and various
fuels in manufacturing, in selling its products and services and in lighting and
heating the facilities it operates. Although the Company has never experienced
any significant interruptions of its operations due to shortages of energy,
there can be no assurance that a serious curtailment of the availability of such
fuels or acceptable substitutes would not adversely affect the Company's
operations.

Federal, state and local authorities are considering various legislation
and regulations related to environmental and energy matters. The Company is not
aware of any presently existing legislation relating to such matters which has
or will have a materially adverse effect upon the Company's operations or which
will require material capital expenditures in the next two years; however, the
Company cannot predict the effect of future legislation or regulations.

5
<PAGE> 7

ITEM 2. PROPERTIES

The following table lists the materially important physical properties used
in its operations together with certain information regarding such properties:

<TABLE>
<CAPTION>
LAND BUILDING
DESCRIPTION AND LOCATION (1) (ACRES) (SQ. FT.) USE
---------------------------- ------- --------- ---
<S> <C> <C> <C>
Land and buildings 80 30,400 Administrative offices of the Company;
2776 & 2780 CR 69 Chemical Group offices; maintenance and
Gibsonburg, Ohio 43431 storage for spraying, striping and
traffic survey equipment (2)
Land and buildings 6.28 45,000 Former Tank Division facility; currently
2098 West State Street being held for lease or sale
Fremont, Ohio 43420
Land and buildings 10.76 91,050 Former Cal-Van Tools Division warehouse
1500 Walter Avenue & offices; currently being leased
Fremont, Ohio 43420
Land and building 16.10 68,800 Tank Division offices; manufacture of
721 Graham Drive propane and anhydrous ammonia tanks.
Fremont, Ohio 43420 Operations commenced during the second
quarter of 1993 (See note 6 to the
financial statements for mortgage
information) (2)
</TABLE>

- ---------------

(1) The Company believes that its properties are adequately maintained, are in
good condition and are suitable and adequate for its business as presently
conducted.

(2) The Company believes these facilities are being used to approximately 75 to
100 percent of their capacity.

ITEM 3. LEGAL PROCEEDINGS

The Company, along with fourteen other parties, has been designated in a
letter dated July 13, 1995, as a potentially responsible party ("PRP") by the
United States Environmental Protection Agency (the "EPA") at the County Line
Landfill, Fremont, Ohio under the Comprehensive Environmental Response,
Communication and Liability Act of 1980, as amended. The EPA is requesting that
the PRPs initiate an Engineering and Evaluation and Cost Analysis ("EECA") to
evaluate what future response activities may be necessary at the site, which was
a licensed landfill from 1969 to 1984. In response to the EPA's request, the
PRPs retained an expert to develop a preliminary engineering evaluation which
proposed a sampling plan and appropriate contaminant trigger levels. Because the
EPA was unwilling to accept the PRP's proposed sampling plan and action levels,
the PRPs declined to undertake the EECA. The EPA has not notified the PRPs of
what further action it may take. There is no volumetric ranking of the parties
available. Although the EPA takes a position that any PRP is liable jointly and
severally for response costs, the Company is only one of many parties believed
to have used the site. There is also no information as to the extent and nature
of any necessary future response action at the site. During the period in
question the Company maintained various insurance policies and management is
exploring the availability of coverage of claims which may arise. Because of the
preliminary state of this matter and lack of information, it is not possible to
estimate the financial impact or range of probable financial impact on the
Company. During the year ended December 31, 1995, the Company expensed $9,132,
its portion of the expenses of the preliminary engineering evaluation. Since
1995 the Company has not reflected any amount or accrued expenses to cover any
future cost of additional evaluation or remediation relating to the site. While
the ultimate outcome of this matter cannot now be predicted, the Company
believes, based on the facts now known to it, that costs arising out of this
matter will not have a material adverse effect on the Company's financial
position, but could have a material impact on results of operations or cash
flows for a particular quarter or annual period.

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

No matters were submitted to a vote of the Company's shareholders during
the last quarter of the period covered by this report.

PART II

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

(a) Market Information.

The Company's common stock trades on the NASDAQ Small Cap Market under the
symbol CTRL. The Company believes the range of high and low sales prices for
1997 and 1996 is as follows:

<TABLE>
<CAPTION>
1997
- ---------------------------------------------------------------------------------------
1ST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER
----------- ----------- ----------- -----------
<S> <C> <C> <C>
$9.25 - $11.00 $10.00 - $13.00 $11.75 - $14.50 $12.50 - $22.00
</TABLE>

<TABLE>
<CAPTION>
1996
- ---------------------------------------------------------------------------------------
1ST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER
----------- ----------- ----------- -----------
<S> <C> <C> <C>
$12.0625 - $10.50 $11.625 - $9.375 $11.75 - $9.25 $13.125 - $10.00
</TABLE>

(b) Numbers of Holders of Common Stock

There were 302 shareholders of record on March 1, 1998. Management believes
the number of holders of Chemi-Trol's Common Shares at March 1, 1998, including
persons holding through a nominee holder, was approximately 700.

<TABLE>
<CAPTION>
1997 1996
-------------------------- --------------------------
QUARTER ENDED QUARTER ENDED
-------------------------- --------------------------
3/31 6/30 9/30 12/31 3/31 6/30 9/30 12/31
---- ---- ---- ----- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Dividends declared were $.36 per common share
in 1997 and 1996............................. $.09 $.09 $.09 $.09 $.09 $.09 $.09 $.09
</TABLE>

The Company has paid a cash dividend on its Common Shares each year since its
incorporation in 1952.

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<PAGE> 9

ITEM 6. SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------------------------
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Operating results:
Revenues from continuing
operations............... $50,348,978 $46,556,082 $47,804,671 $47,612,229 $42,695,793
Income from continuing
operations............... 2,057,274 1,313,471 1,371,449 1,306,137 775,705
Income (loss) from
discontinued operations
(a)...................... (916,813) (55,188) 103,256 303,582 5,031
Net Income.................. 1,140,461 1,258,283 1,474,705 1,609,719 896,731(b)
Income (loss) per common
share (c):
Continuing operations.... 1.03 .66 .69 .65 .39
Discontinued
operations............. (.46) (.03) .05 .15 --
Net income per common
share.................... .57 .63 .74 .80 .45(b)
At Year-end
Total Assets................ 34,719,538 47,423,367 48,592,539 45,917,360 41,186,807
Long-Term Debt.............. 1,920,222 3,329,267 9,789,973 7,235,827 8,761,989
Working Capital............. 11,317,456 11,945,525 14,430,716 12,218,263 12,174,075
Cash Dividends Declared Per
Common Share (c)............ $ .360 $ .360 $ .360 $ .327 $ .298
</TABLE>

- ---------------

(a) See Footnote #2, Discontinued Operations, in Item 8. Financial Statements
for further information relating to the gain or loss from discontinued
operations.

(b) Effective January 1, 1993, the Company changed its method of accounting for
income taxes form the deferred method to the liability method required by
FASB Statement 109, "Accounting for Income Taxes". The cumulative effect of
adopting statement 109 as of January 1, 1993 was to increase net income by
$115,995, or $.06 per share.

(c) Share data has been computed on the basis of the weighted average number of
common shares outstanding during each period in accordance with SFAS. No 128
"Earnings per Share" and restated for the 10% stock dividends in March 1995
and 1994.

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

LIQUIDITY AND CAPITAL RESOURCES

Liquidity is the measure of a company's ability to generate adequate funds
to meet its needs. Funds can be generated internally from operations or
externally by borrowing. Primary measures of liquidity include the amount of
working capital, the working capital ratio and the ability to borrow funds. As
shown in the following chart, the Company's ability to borrow funds remains
strong as evidenced by the working capital ratio, the unused commitment for term
financing and the unpledged notes and leases at December 31, 1997.

<TABLE>
<CAPTION>
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Working capital....................................... $11,317,456 $11,945,525 $14,430,716
Working capital ratio................................. 2.3 to 1 1.6 to 1 1.9 to 1
Unused commitment for term financing of customer notes
and leases.......................................... $ 7,000,000 $ 4,780,500 $ 2,076,500
Unpledged notes and leases from Tank customers........ $ 6,016,264 $ 1,407,022 $ 1,310,185
</TABLE>

During 1997 both working capital and the working capital ratio increased as
proceeds from the sale of the Cory Orchard and Turf Division and the sale, late
in the year, of the Cal-Van Tools Division improved the

8
<PAGE> 10

Company's overall liquidity. In 1997 cash flow provided by discontinued
operations was $2,412,214 from operating activities and $6,299,533 from the cash
proceeds from the sales of discontinued operations.

The decreases in working capital and working capital ratio in 1996 were
largely the result of the balloon payment on the mortgage note, which is secured
by the Tank Production facility and was due in October of 1997. The Company
elected to refinance this note on a long-term basis and paid an additional
$1,500,000 towards principal late in 1997.

A substantial amount of the Company's working capital over the past three
years has been provided from operations. Long-term borrowings of $3,379,808 in
1996 and $8,300,500 in 1995 were used to finance customer sales type leases or
notes receivable for the purchase of steel tanks produced by the Company's Tank
Division, pursuant to the arrangements described under ITEM 1 BUSINESS Leasing
and Finance Division. This financing has been arranged through area banks. The
Company has a commitment to provide term financing for tank notes and leases
extended to customers for amounts up to $7,000,000, of which all $7,000,000 was
available at year end. The total amounts borrowed with collateral under the
lease and finance plans at December 31, 1997 were $-0- and $1,548,210,
respectively.

Due to the seasonal nature of the operations of the Company's Chemical
Group and extension of fall payment terms in the Tank division, the Company has
an uneven cash flow pattern. Operations of the Chemical Group begin
approximately mid-April and run through November. There are substantial cash
requirements in the second quarter for this division associated with inventory
build up and the purchase of equipment and supplies. Since the majority of the
contracts performed by this division are for political subdivisions and the
contracts stretch over the entire summer season, a fair percentage of the
payments are not received until mid-September and October. This creates a cash
shortage from June to October which has made it necessary for the Company to
borrow short-term funds. For this reason, the Company has arranged a short-term
borrowing line of $15,750,000 through local banks. In 1997 the Company used
amounts ranging from month-end amounts of $2,965,000 to $-0- at year end of its
short-term credit line.

Cash flows used by financing activities were $11,027,501 in 1997 and
$3,128,022 in 1996 compared to cash flows provided by financing activities of
$809,704 in 1995. The elimination of short term borrowings and the payments of
long term debt were the primary use of cash by financing activities in 1997.

Capital expenditures during 1997 increased slightly to $890,864 from the
previous year expenditures of $821,059. Expenditures during 1995 included the
addition of a 31,750 square foot warehouse to provide Cal-Van with better
storage of its inventory and a more efficient production layout.

<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- ----------
<S> <C> <C> <C>
Capital expenditures............................ $890,864 $821,059 $1,747,523
</TABLE>

Capital expenditures are budgeted at $1,913,485 for 1998 and includes
budgeted additions of $1,331.000 in machinery and equipment at the Tank
Division. The Company intends to make these expenditures with funds provided
from operations.

RESULTS OF OPERATIONS

The following is management's discussion and analysis of certain
significant events affecting the Company's earnings and financial condition
during the years included in the accompanying financial statements. The
Company's continuing operations are in two operating segments in separate
industries. The Tank Division produces and sells steel pressure tanks for the
storage of liquid propane gas and anhydrous ammonia primarily to customers in
the U. S. and Canada. The Chemical Group operations involve the sale and
application of highway pavement marking and vegetation control materials
primarily in the northeastern quarter of the U. S. In March of 1997 the Company
sold its Cory Orchard and Turf Division and in November of 1997 the Company
completed the sale of certain assets of its Cal Van Tools Division. Accordingly,
these operations, have been reclassified and reported as discontinued
operations.

Except for historical information, all of the statements, expectations and
assumptions contained in the following are forward looking statements that
involve a number of risks and uncertainties, including possible

9
<PAGE> 11

adverse weather conditions. Although the Company has made its best efforts to be
accurate in making these forward-looking statements it is possible that the
assumptions made by management may not materialize.

(a) 1997 versus 1996

Revenues from continuing operations increased by 7.9% to record levels of
$51,199,519 and resulted in operating profit increasing by 61.2% to $3,528,274
from 1996 levels of $2,188,471. The increase in operating profit was led by
record performance of the Company's Tank Division.

1997 revenues of the Tank division increased by 12.7% to $38,509,519 while
operating profits increased by 19.8% to $5,057,046 from $4,221,715 in 1996. Both
revenues and profits were at record levels. The increase in revenues was
comprised of a 13.3% increase in net sales and a reduction of 9.8% in interest
and financing income. The increase in net sales was the result of a 16.0%
increase in units shipped which was partially offset by a lower net average
selling price. Demand for the division's products and the division's geographic
sales area continued to increase and were responsible for the increase in net
sales. Selling and general administrative expenses decreased slightly by 1.6%.

The Chemical Group finished the year with a strong fourth quarter and while
sales for the year were down by 4.8% to $12,633,559 operating profits increased
by 13.3% to $764,904, the highest level during the past five years. 1997 was
also the third consecutive year the division has increased operating profit over
the prior year level. During 1997, the Group continued to concentrate on better
margin sales and cost controls to increase overall profitability. More selective
bidding and the loss of some very low margin sales resulted in sales in the
Contract Division decreasing by 4.3% and sales in CADCO, the material sales
division, decreasing by 6.5%. Gross profits in the Contract Division were down
slightly, by 1.1%, largely as a result of the reduction in sales. Gross profits
in the CADCO Division rebounded sharply by 36.8% due to the concentration on
higher margin sales. These factors combined to increase the Group's gross profit
by 4.3%. Selling and general administrative expenses decreased by 8.0% from 1996
levels largely as a result of decreases in the sales staff made possible by the
continuing trend toward bidding of work in the Contract Division.

For the Company as a whole, net sales from continuing operations increased
by 8.1%, while cost of sales increased by the lesser rate of 6.9% resulting in
higher gross profits and margins. Selling expenses decreased by 7.0% while
general and administrative expenses increased by 4.9%. Interest expense
decreased sharply, by 44.4%, as the proceeds from the sale of discontinued
operations were used to significantly lower average borrowings during the year.
Interest and financing income decreased by 3.7% as the investment in tank
customer notes and leases continued to decrease. The effective income tax rate
increased from 40.0% in 1996 to 41.7% in 1997 largely as a result of increased
state and local taxes. The Company reported income from continuing operations of
$2,057,274, or $1.03 per share, in 1997 an increase of 56.6% over income from
continuing operations of $1,313,471, or $.66 per share, in 1996.

In March of 1997, the Company sold its Cory Orchard & Turf division
("Cory") and in November of 1997 sold certain assets of the Cal-Van Tools
division ("Cal-Van"). See Note 2 to the financial statements for a further
discussion of these transactions. Operating results through the dates of sale of
these divisions are classified as discontinued operations. After provision for
applicable income taxes, the Company reported a loss from operations of
discontinued operations of $310,863, or $.16 per share, compared to a loss of
$55,188, or $.03 per share, in 1996. The sale of Cory resulted in a net gain
after income taxes of $270,000 while the sale of Cal-Van resulted in a net loss
of approximately $876,000 after a tax credit of $610,000. After provision for
applicable income taxes, the Company reported a combined loss on disposal of the
divisions of $605,950, or $.30 per share. After applicable tax credits, the
total loss from discontinued operations for 1997 was $916,813 compared to a loss
of $55,188 in 1996.

The Company reported net income of $1,140,461 or $.57 per share in 1997
compared to net income of $1,258,283 or $.63 per share in 1996.

10
<PAGE> 12

(b) 1996 versus 1995

Despite the fact that the Company's revenues for the first half were down
record sales in both the third and fourth quarters resulted in total revenues
decreasing only slightly, by 2.9%, from last year's record levels. 1996 Income
from Continuing Operations decreased by 4.2% to $1,313,471 or $.66 per share.

Revenues of the Tank Division, which accounted for 72.0% of the total
Company revenues, decreased by 1.2% from the prior year record level, while
operating profit increased by 1.2%. The decline in revenues was comprised of a
.9% decrease in net sales to $33,291,086 and a 13.3% decrease in interest and
financing income. Cost of sales decreased at the higher rate of 2.0% and
resulted in an increase of 7.1% in gross profit. Increases of 9.0% in selling
expense and 15.9% in general and administrative expenses combined to result in
operating profit increasing at the lesser rate of 1.2%.

Net sales of the Chemical Group decreased by 6.7%, while operating profit
increased by 17.4%. The decrease in sales was comprised of a 6.6% decrease in
sales of the Contract Division and a 7.1% decrease in sales of the material
sales division, CADCO. An emphasis on better margins and more selective bidding
caused sales to decrease somewhat, but was responsible for the increase in gross
and operating profits. The increase in the Group's operating profit was largely
the result of increased gross profits of 22.0% in the Contract Division, which
accounted for 80.2% of the Group's sales during the year. Selling and general
administrative increased by 3.3% over the prior year levels largely as a result
of a $19,700 increase in bad debt expense.

For the Company as a whole, net sales decreased by 2.6%, while cost of
sales decreased by 3.9% bettering margins and resulting in an increase in gross
profit of 7.9%. Selling expenses increased by 6.1% during the year. General and
administrative expenses increased by 11.8% largely as a result of increased bad
debt expenses. Interest and financing income decreased by 15.1% largely as a
result of reductions in the average balances of notes and leases receivable
outstanding during the year. Interest expense increased by 4.5% as average
borrowings to fund working capital needs increased over the prior year levels.
The effective income tax rate increased from 39.7% in 1995 to 40.0% in 1996.
Income from continuing operations decreased by 4.2% to $.66 per share from $.69
per share in 1995. Discontinued operations reported a loss of $55.188 or $.03
per share compared to income of $103,256 or $.05 per share in 1995. For the
year, net income decreased by 14.7% to $1,258,283, or $.63 per share.

IMPACT OF INFLATION AND CHANGING PRICES ON SALES AND INCOME FROM OPERATIONS

The rate of inflation during recent years has not been such an important
consideration but the Company uses the following procedures to help monitor its
effects. First, selling prices of the Company's products are carefully and
constantly scrutinized so that selling prices reflect current costs. Price
increases can only be instituted, of course, to the extent that the Company's
prices remain competitive within the business segments in which the Company
operates. As a result, the Company constantly monitors alternative suppliers to
assure the lowest possible costs. The Chemical Group can reasonably account for
inflation in bidding on fixed price contracts because a majority of the
contracts are bid early in the year with completion dates during the current
year. Labor rates are generally established prior to the bid and these are
generally fixed for the duration of the contract. Materials necessary to perform
a contract can be price protected by purchasing under early order programs or by
purchasing sufficient quantities of the materials necessary to complete the
contract at the time it is awarded. This allows these costs to be considered at
the time a bid is prepared. The Company uses the LIFO method of accounting for
the cost of goods sold for the majority of its products. This charges current
costs to the results of operations for both financial reporting and income tax
purposes and during periods of inflation results in improved cash flow due to
lower income taxes paid by providing a closer matching of revenues and expenses.
Finally, increasing of productivity levels in all of the Company's operating
divisions has helped to lessen the effects of inflation in the past and will
continue to be part of the Company's objective for controlling the effects of
inflation in the future.

ENVIRONMENTAL

11
<PAGE> 13

County Line Landfill, Fremont, Ohio under the Comprehensive Environmental
Response, Communication and Liability Act of 1980, as amended. The EPA is
requesting that the PRPs initiate an Engineering and Evaluation and Cost
Analysis ("EECA") to evaluate what future response activities may be necessary
at the site, which was a licensed landfill from 1969 to 1984. In response to the
EPA's request, the PRPs retained an expert to develop a preliminary engineering
evaluation which proposed a sampling plan and appropriate contaminant trigger
levels. Because the EPA was unwilling to accept the PRP's proposed sampling plan
and action levels, the PRPs declined to undertake the EECA. The EPA has not
notified the PRPs of what further action it may take. There is no volumetric
ranking of the parties available. Although the EPA takes a position that any PRP
is liable jointly and severally for response costs, the Company is only one of
many parties believed to have used the site. There is also no information as to
the extent and nature of any necessary future response action at the site.
During the period in question the Company maintained various insurance policies
and management is exploring the availability of coverage of claims which may
arise. Because of the preliminary state of this matter and lack of information,
it is not possible to estimate the financial impact or range of probable
financial impact on the Company. During the year ended December 31, 1995, the
Company expensed $9,132, its portion of the expenses of the preliminary
engineering evaluation. Since 1995 the Company has not reflected any amount or
accrued expenses to cover any future cost of additional evaluation or
remediation relating to the site. While the ultimate outcome of this matter
cannot now be predicted, the Company believes, based on the facts now known to
it, that costs arising out of this matter will not have a material adverse
effect on the Company's financial position, but could have a material impact on
results of operations or cash flows for a particular quarter or annual period.

IMPACT OF YEAR 2000

The Company has developed and initiated its plans to address the possible
exposures related to the impact of the Year 2000 on its software and computer
systems. Key financial information and operational systems have been assessed
and detailed plans have been implemented to address modifications required prior
to December 31, 1999. The Company expects these modifications will be completed
and tested by that time. The financial impact of making the required changes
will be comprised of internal costs, the costs required to upgrade and replace
systems and equipment in the normal course of business, and is not expected to
be material to the Company's consolidated financial position or results of
operations. The Company currently does not have any direct interface systems
with suppliers or customer. However, the Company, has initiated communications
with its significant suppliers or customers to ensure they have appropriate
plans to resolve Year 2000 issues where failure of their systems could adversely
affect the Company's results of operations.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See ITEM 14 for an index to financial statements and financial statement
schedule.

12
<PAGE> 14

REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Shareholders
Chemi-Trol Chemical Co.

We have audited the accompanying balance sheets of Chemi-Trol Chemical Co.
as of December 31, 1997 and 1996, and the related statements of income,
shareholders' equity and cash flows for each of the three years in the period
ended December 31, 1997. Our audits also included the financial statement
schedule listed in the index at Item 14(a). These financial statements and
schedule are the responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements and schedule based on our
audits.

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

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Chemi-Trol Chemical Co. at
December 31, 1997 and 1996, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1997 in conformity
with generally accepted accounting principles. Also, in our opinion, the related
financial statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.

/s/ ERNST & YOUNG LLP

Toledo, Ohio
February 6, 1998,
except for note 15
as to which the date is
February 20, 1998

13
<PAGE> 15

CHEMI-TROL CHEMICAL CO.

BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31
--------------------------
1997 1996
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash...................................................... $ 1,516,078 $ 112,506
Trade receivables, less allowance of $255,000 in 1997 and
$210,000 in 1996:
Accounts................................................ 7,461,453 8,722,015
Notes (Note 6).......................................... 3,133,760 3,498,027
----------- -----------
10,595,213 12,220,042
Net investment in sales-type leases (Note 3).............. 450,834 684,120
Inventories (Notes 1 and 4)............................... 3,104,151 3,738,694
Prepaid expenses and deferred income taxes (Note 8)....... 1,074,763 1,008,913
Current assets of discontinued operations (Note 2)........ 3,122,103 14,345,775
----------- -----------
Total current assets........................................ 19,863,142 32,110,050
Property and equipment, at cost (Notes 5 and 6)............. 17,648,832 17,054,756
Less accumulated depreciation............................... 9,121,805 8,321,253
----------- -----------
Net property and equipment.................................. 8,527,027 8,733,503
Other assets:
Trade notes receivable, less current portion (Note 6)..... 3,200,482 3,165,486
Other note receivable (Note 2)............................ 2,085,783 --
Net investment in sales-type leases (Note 3).............. 779,398 1,254,330
Other..................................................... 263,706 216,266
----------- -----------
Total other assets.......................................... 6,329,369 4,636,082
Noncurrent assets, principally, property, plant and
equipment of discontinued operations (Note 2)............. -- 1,943,732
----------- -----------
$34,719,538 $47,423,367
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable (Note 6).................................... $ -- $ 2,964,916
Accounts payable.......................................... 4,428,316 6,067,381
Dividends payable......................................... 180,444 180,444
Income taxes.............................................. 281,912 230,485
Accrued liabilities:
Insurance............................................... 497,185 495,437
Compensation............................................ 708,501 677,289
Profit-sharing.......................................... 272,922 209,064
Other................................................... 160,566 162,564
Long-term debt due within one year (Note 6)............... 1,368,915 7,300,679
Current liabilities of discontinued operations (Note 2)... 646,925 1,876,266
----------- -----------
Total current liabilities................................... 8,545,686 20,164,525
Long-term debt (Note 6)..................................... 1,920,222 3,329,267
Deferred income taxes (Note 8).............................. 512,000 876,000
Other long-term liabilities................................. 1,063,707 794,337
Shareholders' equity:
Common stock, without par value; 6,000,000 shares
authorized, 2,004,930 shares issued
and outstanding (Note 7)................................ 4,590,767 4,590,767
Retained earnings......................................... 18,087,156 17,668,471
----------- -----------
Total shareholders' equity.................................. 22,677,923 22,259,238
----------- -----------
$34,719,538 $47,423,367
=========== ===========
</TABLE>

See accompanying notes.

14
<PAGE> 16

CHEMI-TROL CHEMICAL CO.

STATEMENTS OF INCOME

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-----------------------------------------
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Revenues:
Net sales......................................... $50,348,978 $46,556,082 $47,804,671
Interest and financing income..................... 850,541 883,208 1,040,868
----------- ----------- -----------
51,199,519 47,439,290 48,845,539
Costs and expenses:
Cost of sales..................................... 43,764,588 40,925,918 42,585,113
Selling........................................... 1,071,137 1,151,647 1,085,034
General and administrative........................ 2,280,105 2,174,286 1,944,182
Interest.......................................... 555,415 998,968 955,761
----------- ----------- -----------
47,671,245 45,250,819 46,570,090
----------- ----------- -----------
Income from continuing operations before income
taxes............................................. 3,528,274 2,188,471 2,275,449
Income taxes (Note 8):
Federal:
Current........................................ 1,289,000 730,000 631,000
Deferred....................................... (131,000) 3,000 120,000
State and local................................... 313,000 142,000 153,000
----------- ----------- -----------
1,471,000 875,000 904,000
----------- ----------- -----------
Income from continuing operations................... 2,057,274 1,313,471 1,371,449
Discontinued operations (Note 2):
Income (loss) from discontinued operations, net of
income taxes................................... (310,863) (55,188) 103,256
Loss on disposal of divisions, net of income tax
credits........................................ (605,950) -- --
----------- ----------- -----------
Income (loss) from discontinued operations.......... (916,813) (55,188) 103,256
----------- ----------- -----------
Net income.......................................... $ 1,140,461 $ 1,258,283 $ 1,474,705
----------- ----------- -----------
Income (loss) per common share (Note 7):
Continuing operations............................. $ 1.03 $ .66 $ .69
Discontinued operations (Note 2):
Income (loss) from operations.................. (.16) (.03) .05
Loss on disposal of divisions.................. (.30) -- --
----------- ----------- -----------
Net income per common share......................... $ .57 $ .63 $ .74
=========== =========== ===========
</TABLE>

See accompanying notes.

15
<PAGE> 17

CHEMI-TROL CHEMICAL CO.

STATEMENTS OF SHAREHOLDERS' EQUITY

YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

<TABLE>
<CAPTION>
RETAINED
SHARES AMOUNT EARNINGS TOTAL
--------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Balance -- January 1, 1995............... 1,822,796 $2,792,174 $18,179,042 $20,971,216
Net income............................. 1,474,705 1,474,705
Cash dividends -- $.36 per share (Note
7).................................. (721,774) (721,774)
10% stock dividend issued.............. 182,134 1,798,593 (1,798,593) --
Cash dividend issued for fractional
shares.............................. (1,418) (1,418)
--------- ---------- ----------- -----------
Balance -- December 31, 1995............. 2,004,930 4,590,767 17,131,962 21,722,729
Net income............................. 1,258,283 1,258,283
Cash dividends -- $.36 per share (Note
7).................................. (721,774) (721,774)
--------- ---------- ----------- -----------
Balance -- December 31, 1996............. 2,004,930 4,590,767 17,668,471 22,259,238
Net income............................. 1,140,461 1,140,461
Cash dividends -- $.36 per share (Note
7).................................. (721,776) (721,776)
--------- ---------- ----------- -----------
Balance -- December 31, 1997............. 2,004,930 $4,590,767 $18,087,156 $22,677,923
========= ========== =========== ===========
</TABLE>

See accompanying notes.

16
<PAGE> 18

CHEMI-TROL CHEMICAL CO.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
------------------------------------------
1997 1996 1995
------------ ----------- -----------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Income from continuing operations................... $ 2,057,274 $ 1,313,471 $ 1,371,449
Adjustments to reconcile net income to net cash
provided by operating activities:
Notes receivable from product sales............... (5,637,645) (4,876,255) (7,476,136)
Collections from customers on notes receivable.... 4,336,463 5,145,795 4,681,181
Notes receivable sold............................. 1,671,710 2,001,692 2,348,145
Proceeds from sales-type leases................... 1,103,438 1,600,771 2,023,828
Additions to net investment in sales-type
leases......................................... (395,220) (279,234) (1,283,777)
Depreciation...................................... 1,069,192 1,064,628 962,987
Provision for deferred income taxes............... (131,000) 3,000 120,000
Gain on sale of property and equipment............ (31,644) (14,185) (33,232)
Changes in operating assets and liabilities:
Accounts receivable............................ 1,260,562 (2,065,417) 516,790
Inventories.................................... 634,543 1,744,837 (1,790,794)
Prepaid expenses............................... (73,850) 34,045 117,111
Other assets................................... (47,440) (29,067) (30,479)
Accounts payable............................... (1,639,065) 419,600 571,725
Income taxes payable........................... 51,427 81,856 43,132
Accrued liabilities............................ 364,190 301,843 (234,058)
------------ ----------- -----------
Net cash provided by continuing operations.......... 4,592,935 6,447,380 1,907,872
Cash flow provided by (used in) discontinued
operations........................................ 2,412,214 (2,391,137) (1,574,240)
------------ ----------- -----------
Net cash provided by operating activities........... 7,005,149 4,056,243 333,632
INVESTING ACTIVITIES
Proceeds from sale of discontinued operations....... 6,299,533 -- --
Additions to property and equipment................. (890,864) (821,059) (1,747,523)
Proceeds from disposals of property and equipment... 59,792 26,331 66,871
Discontinued operations, principally purchases of
equipment......................................... (42,537) (101,978) (380,361)
------------ ----------- -----------
Net cash provided by (used in) investing
activities........................................ 5,425,924 (896,706) (2,061,013)
FINANCING ACTIVITIES
Payments of long-term debt.......................... (7,340,809) (7,243,141) (4,791,733)
Net borrowings under line of credit................. (2,964,916) 1,457,085 (1,992,169)
Cash dividend payments.............................. (721,776) (721,774) (705,386)
Proceeds from long-term borrowings.................. -- 3,379,808 8,300,500
Payments in lieu of issuing fractional shares....... -- -- (1,418)
------------ ----------- -----------
Net cash provided by (used in) financing
activities........................................ (11,027,501) (3,128,022) 809,794
------------ ----------- -----------
Increase (decrease) in cash......................... 1,403,572 31,515 (917,587)
Cash at beginning of year........................... 112,506 80,991 998,578
------------ ----------- -----------
Cash at end of year................................. $ 1,516,078 $ 112,506 $ 80,991
============ =========== ===========
</TABLE>

See accompanying notes

17
<PAGE> 19

CHEMI-TROL CHEMICAL CO.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1997

1. SIGNIFICANT ACCOUNTING POLICIES

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 amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

CREDIT PRACTICES

Credit terms are granted and periodically revised based on general industry
practices and evaluations of the customers' credit reports, payment history and
financial condition. The Company retains a security interest in products sold on
the installment basis. Credit losses are provided for in the financial
statements and consistently have been within management's expectations.

INVENTORY VALUATION

Substantially all inventories are valued at the lower of cost, determined
by the last-in, first-out (LIFO) method, or market.

NOTES RECEIVABLE

Notes receivable are due in installments from customers for sales of liquid
propane gas tanks. The notes are issued for three or four year terms and bear
interest based on the prevailing interest rate. At December 31, 1997, the
carrying value of notes receivable approximates their fair value based on the
Company's current incremental lending rates.

LEASES

Leases of liquid propane gas tanks to customers for noncancellable terms of
five or ten years are recorded as sales at inception. The present value of the
minimum payments is included in net sales, and the cost of the tanks is charged
to cost of sales. Estimated residual values of the leased tanks are not
significant. The leases are financed through notes payable to banks with terms
similar to the leases. The obligations to the banks are included in long-term
debt. Interest income computed at the rates implicit in the leases is recognized
on the interest method.

REVENUE RECOGNITION

Revenues for product sales are recognized when goods are shipped to
customers in accordance with their purchase orders. Contracts within the
Chemical segment are typically completed by December 31 of each year. On an
interim basis, these contracts are accounted for based on percentage completion.

DEPRECIATION

Depreciation is provided on the straight-line method over the estimated
useful lives of the assets.

NET INCOME PER COMMON SHARE

In 1997, the Company adopted SFAS No. 128, "Earnings per Share." The
standard replaces the calculation of primary and fully diluted earnings per
share with basic and diluted earnings per share. Amounts presented in all years
reflect the requirements of the new standard. Basic net income per common share
is based on the weighted average number of shares outstanding of 2,004,930,
after giving retroactive effect to the 10% stock

18
<PAGE> 20
CHEMI-TROL CHEMICAL CO.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

1. SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
dividend issued in March 1995. Shareholders' rights have not been considered to
have a dilutive effect as conditions to the exercisability of such rights have
not been satisfied (see Note 7). The Company has no other potentially dilutive
securities.

RECLASSIFICATIONS

Certain 1996 financial statement amounts have been reclassified to conform
to the 1997 financial statement presentation.

2. DISCONTINUED OPERATIONS

On March 25, 1997, the Company sold its Cory Orchard and Turf Division to
Terra International, Inc. for approximately $4.8 million under an asset purchase
agreement. The sale resulted in a net gain of $270,000 after income taxes of
$180,000. The gain also includes the effects of LIFO quantity liquidations of
$167,000.

On November 18, 1997, the Company completed the sale of certain assets of
its Cal-Van Tools Division to Eagle Tools, Inc. (Eagle), an affiliate of Horizon
Tool, Inc. Eagle purchased inventory, machinery, equipment, fixtures, dies and
the Cal-Van Tools name for a cash payment of $1.5 million and a note of
approximately $2.3 million. Chemi-Trol retained and is currently collecting
accounts receivable of approximately $4.8 million. Real estate with an
approximate cost of $1.7 million and a carrying value of approximately $900,000
was also retained by Chemi-Trol and is being leased to Eagle under a one-year
lease expiring November 1998. The sale resulted in a net loss of approximately
$876,000 after a tax credit of $610,000. The loss includes income from the
liquidation of LIFO quantities amounting to $259,000.

Summary operating results of the discontinued Cory Orchard and Turf and the
Cal-Van Tools segments for the years ended December 31 are as follows:

<TABLE>
<CAPTION>
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Revenues:
Cal-Van Tools............................. $12,468,638 $17,337,739 $15,527,740
Cory Orchard and Turf..................... 917,235 5,675,097 6,675,197
----------- ----------- -----------
$13,385,873 $23,012,836 $22,202,937
=========== =========== ===========
Income (loss) before income taxes:
Cal-Van Tools............................. $ (462,270) $ 4,768 $ 64,381
Cory Orchard and Turf..................... (71,593) (96,956) 106,875
----------- ----------- -----------
(533,863) (92,188) 171,256
Income taxes (credit)....................... (223,000) (37,000) 68,000
----------- ----------- -----------
Net income (loss)........................... $ (310,863) $ (55,188) $ 103,256
=========== =========== ===========
</TABLE>

Interest on borrowings under the Company's general credit facilities was
allocated to discontinued operations based on the ratio of net assets of the
discontinued Cory Orchard and Turf and the Cal-Van Tools segments to the total
net assets of the Company plus existing debt under the Company's general credit
facilities. Interest expense allocated to discontinued operations during the
years ended December 31, 1997, 1996 and 1995 was $248,253, $578,682 and
$435,448, respectively.

19
<PAGE> 21
CHEMI-TROL CHEMICAL CO.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

2. DISCONTINUED OPERATIONS -- (CONTINUED)
Assets and liabilities of the discontinued segments at December 31, 1997
and 1996 are as follows:

<TABLE>
<CAPTION>
1997 1996
---------- -----------
<S> <C> <C>
Accounts receivable.............................. $2,699,753 $ 7,239,832
Inventory........................................ 422,350 6,973,983
Prepaid expenses................................. -- 131,960
---------- -----------
Total current assets............................. 3,122,103 14,345,775
Property, plant and equipment (net).............. -- 1,918,222
Other long-term assets........................... -- 25,510
---------- -----------
Total assets..................................... $3,122,103 $16,289,507
========== ===========
Accounts payable................................. $ 177,932 $ 1,291,780
Accrued liabilities.............................. 468,993 584,486
---------- -----------
Total liabilities................................ $ 646,925 $ 1,876,266
========== ===========
</TABLE>

Two customers of the discontinued Cal-Van Tools segment approximated $2.3
and $5.3 million of total Company accounts receivable at December 31, 1997 and
1996, respectively.

The financial statements of the Company and the related notes to financial
statements have been restated to reflect the Cal-Van Tools and Cory Orchard and
Turf segments as discontinued operations.

3. NET INVESTMENT IN SALES-TYPE LEASES

The components of the net investment in sales-type leases at December 31
are as follows:

<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Minimum lease payments receivable................. $1,472,528 $2,309,775
Unearned financing income......................... 242,296 371,325
---------- ----------
Net investment.................................... 1,230,232 1,938,450
Current portion................................... 450,834 684,120
---------- ----------
Noncurrent portion................................ $ 779,398 $1,254,330
========== ==========
</TABLE>

At December 31, 1997 minimum lease payments receivable for each of the five
subsequent years are as follows: 1998 -- $569,000; 1999 -- $424,000;
2000 -- $281,000; 2001 -- $137,000 and 2002 -- $61,000.

At December 31, 1997 the carrying value of sales-type leases approximates
fair value based on the Company's current incremental lending rates.

20
<PAGE> 22
CHEMI-TROL CHEMICAL CO.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

4. INVENTORIES

Inventories are comprised of the following at December 31:

<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Manufacturing inventories:
Raw materials and supplies...................... $2,039,185 $2,198,548
Work in process................................. 6,118 14,611
Finished goods.................................. 358,913 532,098
Purchased inventory held for resale............... 440,039 640,913
Materials used in contracting..................... 259,896 352,524
---------- ----------
$3,104,151 $3,738,694
========== ==========
</TABLE>

Under the LIFO method, inventories have been reduced by approximately
$1,063,000 and $998,000 at December 31, 1997 and 1996, respectively, from
amounts which would have been reported under the first-in, first-out method.

5. PROPERTY AND EQUIPMENT

Property and equipment is comprised of the following at December 31:

<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Land and land improvements...................... $ 1,136,924 $ 1,136,924
Buildings....................................... 4,068,859 4,068,859
Machinery and equipment......................... 7,595,586 7,380,017
Automobiles and trucks.......................... 4,656,204 4,448,038
Construction in process......................... 191,259 20,918
----------- -----------
$17,648,832 $17,054,756
=========== ===========
</TABLE>

6. DEBT

The Company has a $15,000,000 bank line of credit available for revolving
loans with interest payable at the bank's prime rate less .5% (8.0% and 7.75% at
December 31, 1997 and 1996, respectively); no revolving loans at December 31,
1997 ($2,964,916 at December 31, 1996) were outstanding. Under this credit
arrangement, the Company may convert, on or before May 2, 1998, up to $7,000,000
of revolving loans to term loans, payable over thirty-six or sixty months with
interest at an annual rate equal to the yield for U. S. Treasury obligations of
similar maturity plus a specified number of basis points. Converted term loans
reduce the line of credit available for revolving loans. No conversions were
made for the year ended December 31, 1997. Revolving loans are secured by
accounts receivable and inventory; term loans are secured as described below.

The credit agreement, amended as of May 2, 1997, contains provisions which
require the Company to, among other things, maintain minimum debt to net worth
and current ratios, minimum tangible net worth and certain working capital
levels.

The Company also has a $750,000 unused line of credit available for
short-term borrowings with interest payable at a rate to be determined.

21
<PAGE> 23
CHEMI-TROL CHEMICAL CO.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

6. DEBT -- (CONTINUED)
Long-term debt outstanding at December 31 consists of the following:

<TABLE>
<CAPTION>
1997 1996
---------- -----------
<S> <C> <C>
7.43% -- 7.75% (6.63% -- 9.35% in 1996), term
loans due in varying monthly amounts with a
final maturity in December 1999, secured by
trade notes receivable of approximately
$1,548,000 at December 31, 1997................ $1,548,210 $ 7,194,941

8.04% mortgage note due in monthly installments
of $40,237 with a final maturity in May 2002,
secured by tank production facility with a net
book value of $3,911,000 at December 31,
1997........................................... 1,740,927 3,435,005
---------- -----------
3,289,137 10,629,946
Amount due within one year....................... 1,368,915 7,300,679
---------- -----------
$1,920,222 $ 3,329,267
========== ===========
</TABLE>

Annual maturities of long-term debt for the five years subsequent to
December 31, 1997 are as follows: 1998 -- $1,369,000; 1999 -- $887,000;
2000 -- $415,000; 2001 -- $449,000 and 2002 -- $169,000.

At December 31, 1997, the carrying value of long-term debt approximates
fair value based on the Company's current incremental borrowing rates.

7. COMMON STOCK

In March 1995, the Company issued a 10% stock dividend. Income and cash
dividends per common share amounts for all years presented in the statements of
income and shareholders' equity have been adjusted to reflect the stock
dividend.

The Company has adopted a Shareholders' Rights Plan designed to ensure that
all of the Company's shareholders receive fair and equal treatment in the event
of any proposal to acquire control of the Company. Under the Rights Plan, each
right will entitle shareholders to buy one one-hundredth of a share of common
stock of the Company at an exercise price of $42.97 (as adjusted for the 10%
stock dividend issued in March 1995). The rights will be exercisable only if a
person or group acquires beneficial ownership of 20 percent or more of the
Company's common stock or announces a tender or exchange offer after which such
person or group would beneficially own 30 percent or more of the common stock
without the prior approval of the Company's Board of Directors, or if they
determine that any person is an "Adverse Person." Under certain circumstances,
the rights will become exercisable for common stock or other assets or
securities of the Company or common stock of the surviving corporation in a
merger involving the Company. In such event, the rights would entitle the
holders thereof to purchase such stock at 50% of the then-current market value
of the stock.

The Board of Directors of Chemi-Trol Chemical Co., except as otherwise
provided in the Rights Plan, will generally be able to redeem the rights at one
cent per right at any time during a 10-day period following any of the events
which result in the rights becoming exercisable. During this 10-day period, the
Board may also extend the time during which it may redeem the rights. The rights
are not exercisable until the expiration of the redemption period and will
expire upon the earlier to occur of May 27, 2003 or their redemption in
accordance with provisions of the plan.

22
<PAGE> 24
CHEMI-TROL CHEMICAL CO.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

8. INCOME TAXES

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax liabilities and assets as of December 31 are as
follows:

<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Deferred tax assets:
Accrued insurance............................... $ 425,000 $ 289,000
Inventories..................................... 228,000 156,000
Accrued compensation............................ 192,000 149,000
Allowance for doubtful accounts................. 119,000 129,000
Warranty reserve................................ 85,000 34,000
Other........................................... 108,000 18,000
---------- ----------
Total deferred tax assets......................... 1,157,000 775,000
Deferred tax liabilities:
Property and equipment.......................... 962,000 1,054,000
Prepaid expenses................................ -- 54,000
Sales-type leases............................... 5,000 10,000
---------- ----------
Total deferred tax liabilities.................... 967,000 1,118,000
---------- ----------
Net deferred tax assets (liabilities)............. $ 190,000 $ (343,000)
========== ==========
</TABLE>

Net deferred tax assets (liabilities) are included in the balance sheets at
December 31 as follows:

<TABLE>
<CAPTION>
1997 1996
-------- ---------
<S> <C> <C>
Current assets...................................... $702,000 $ 533,000
Noncurrent liabilities.............................. 512,000 876,000
-------- ---------
Net deferred tax assets (liabilities)............... $190,000 $(343,000)
======== =========
</TABLE>

The effective income tax rate differs from the statutory U. S. federal
income tax rate for the following reasons and by the following percentages:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
----------------------
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Statutory U. S. federal income tax rate............. 34.0% 34.0% 34.0%
Increase resulting from:
State and local income taxes, net of federal tax
effect......................................... 5.8 4.3 4.5
Non-deductible expenses........................... 1.9 1.7 1.6
Other............................................. -- -- (.4)
---- ---- ----
Effective income tax rate........................... 41.7% 40.0% 39.7%
==== ==== ====
</TABLE>

9. EMPLOYEES' RETIREMENT PLAN

The Company has a profit-sharing plan which provides retirement benefits
for full-time employees. The plan provides for Company contributions at the
discretion of the Board of Directors of an amount not to exceed that deductible
for federal income tax purposes. Costs charged to continuing operations amounted
to $273,000 in 1997, $209,000 in 1996 and $222,000 in 1995.

23
<PAGE> 25
CHEMI-TROL CHEMICAL CO.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

10. SALE OF NOTES WITH RECOURSE

The Company has a contingent liability of approximately $2,691,000 at
December 31, 1997 for customers' installment notes sold with recourse to the
Chemi-Trol Chemical Company Profit Sharing Plan. The credit risk associated with
these notes is minimal as the Company retains a security interest in the product
sold on the installment basis.

11. SUPPLEMENTAL CASH FLOW INFORMATION

Supplemental cash flow information for the years ended December 31 is as
follows:

<TABLE>
<CAPTION>
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
Cash paid for interest.............. $ 812,485 $1,574,702 $1,144,411
---------- ---------- ----------
Cash paid for income taxes.......... $1,299,671 $ 753,143 $ 615,483
========== ========== ==========
</TABLE>

The Company received a promissory note for approximately $2.3 million in
November 1997 from the purchase of its Cal-Van Tools Division.

12. ENVIRONMENTAL

13. INFORMATION PERTAINING TO INDUSTRY SEGMENTS

The Company has two operating segments which are in separate industries.
The Tank division produces and sells steel pressure tanks for the storage of
liquid propane gas and anhydrous ammonia to customers in the U.S. and Canada.
The operations of the Chemical division involve the sale and application of
highway pavement marking and vegetation control materials in the U.S. Total
revenues by segment include sales to unaffiliated customers, as reported in the
Company's income statement. Operating profit (total revenues less operating
expenses) excludes general corporate expenses, interest expense, corporate
interest income, corporate other

24
<PAGE> 26
CHEMI-TROL CHEMICAL CO.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

13. INFORMATION PERTAINING TO INDUSTRY SEGMENTS -- (CONTINUED)
income and income taxes. Corporate assets include cash investments, notes
receivable from sale of discontinued operations, administrative offices, and
real estate held for lease.

The following summarizes the Company's continuing operations and
identifiable assets:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------------------------
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Revenues:
Tank........................... $38,509,519 $34,171,719 $34,599,551
Chemical....................... 12,633,559 13,264,996 14,221,281
Corporate interest............. 56,441 2,575 24,707
----------- ----------- -----------
Total revenues................... $51,199,519 $47,439,290 $48,845,539
=========== =========== ===========
</TABLE>

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------------------------
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Operating profit:
Tank........................... $ 5,057,046 $ 4,221,715 $ 4,172,778
Chemical....................... 764,094 674,526 574,587
----------- ----------- -----------
Total operating profit........... 5,821,140 4,896,241 4,747,365
General corporate expenses....... (1,793,893) (1,711,377) (1,540,862)
Interest expense................. (555,415) (998,968) (955,761)
Corporate interest income........ 56,442 2,575 24,707
----------- ----------- -----------
Income from continuing operations
before income taxes............ $ 3,528,274 $ 2,188,471 $ 2,275,449
=========== =========== ===========
Identifiable assets:
Tank........................... $21,976,117 $25,346,790 $28,449,834
Chemical....................... 3,337,997 3,058,300 3,346,820
Corporate assets............... 6,283,321 2,728,770 2,859,573
Discontinued operations........ 3,122,103 16,289,507 13,936,312
----------- ----------- -----------
Total assets..................... $34,719,538 $47,423,367 $48,592,539
=========== =========== ===========
Depreciation:
Tank........................... $ 598,222 $ 576,549 $ 565,731
Chemical....................... 349,417 324,944 296,098
Corporate assets............... 121,553 163,135 101,158
----------- ----------- -----------
Total depreciation............... $ 1,069,192 $ 1,064,628 $ 962,987
=========== =========== ===========
Capital expenditures:
Tank........................... $ 334,308 $ 261,848 $ 581,785
Chemical....................... 517,870 347,026 439,773
Corporate assets............... 38,686 212,185 725,965
----------- ----------- -----------
Total capital expenditures....... $ 890,864 $ 821,059 $ 1,747,523
=========== =========== ===========
</TABLE>

25
<PAGE> 27
CHEMI-TROL CHEMICAL CO.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

14. YEAR 2000 ISSUES (UNAUDITED)

The Company has assessed its current computer software for proper
functioning with respect to dates in the year 2000 and thereafter. The year 2000
issue and related costs are not expected to have a material impact on the
operations of the Company.

15. SALE OF COMPANY

On December 19, 1997, the Company announced it had entered into a
nonbinding letter of intent for the sale by merger of the Company to Harsco
Corporation ("Harsco"). On February 20, 1998, the Company executed a Plan and
Agreement of Merger with Harsco and a newly formed subsidiary of Harsco. The
transaction is contingent upon approval by the shareholders of the Company. If
shareholder approval is obtained, the Company anticipates that the transaction
will close in the spring of 1998.

26
<PAGE> 28

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

The following information as of March 1, 1998 is furnished with respect to
each director, each executive officer and certain significant employees:

<TABLE>
<CAPTION>
DIRECTOR
OFFICES AND POSITIONS CONTINUOUSLY CURRENT TERM
NAME AGE HELD WITH THE COMPANY SINCE THROUGH JULY
---- --- --------------------- ------------ ------------
<S> <C> <C> <C> <C>
Robert W. Woolf................ 55 Director, Chairman of the Board, President 1987 2000
and Chief Executive Officer
John P. Simcox................. 48 Director, Vice President and General 1990 1998
Manager -- Tank Division
Kevin D. Lauck................. 47 Director, Secretary / Treasurer and 1990 1999
Controller
Arthur F. Doust................ 74 Director 1952 1999
W. Burton Lloyd................ 59 Director 1986 1999
Robert H. Moyer................ 69 Director 1992 2000
Fred J. Roynon................. 65 Director 1993 1998
Richard J. Dudley.............. 67 Director 1993 2000
Asher B. Edelman............... 58 Director 1997 1998
James C. Herl.................. 51 General Manager -- Chemical Group -- --
</TABLE>

Robert W. Woolf joined the Company in 1972. He has served as Chairman of
the Board , President and CEO (1998 to date), President (1988 to date), Vice
President (1985 to 1988), Executive Administrator and Assistant Secretary (1977
to 1985) and as Assistant Controller (1972 to 1977) of the Company.

John P. Simcox joined the Company in 1972. He has served as Vice President
(1991 to date) and General Manager of the Tank Division (1990 to date), Director
of Sales for the Company (1987 to 1989), Sales Manager for Chemical Group and
Assistant Sales Manager for Tank Division (1977 to 1987), and as a salesman for
the Chemical Group and Tank Division in both Indiana and Ohio (1972 to 1977).

Kevin D. Lauck joined the Company in 1977. He has served as Secretary /
Treasurer and Controller (1997 to date), Secretary and Controller (1988 to
date), Assistant Secretary and Assistant Controller (1985 to 1987) and Assistant
Controller (1977 to 1985).

Arthur F. Doust joined the Company in 1952. He has served as Chairman of
the Board (1985 to 1998), Chief Executive Officer (1987 to 1998), President
(1969 to 1988) and as First Vice President and General Manager (1952 to 1969) of
the Company.

W. Burton Lloyd has been the President for more than the past five years of
Advanced Insulation Concepts, Inc. formerly American Isowall Corporation,
located in Florence, Kentucky, which manufactures various insulated panels for
use in the construction of cold storage units.

Robert H. Moyer is the President of The Mosser Group, located in Fremont,
Ohio, (1991 to date), a holding company of: Mosser Construction, Inc. of which
he is Chairman (1993 to date); Contractors Equipment, Inc.; WMOG Investment,
Inc. of which he is President (1994 to date); and Telamon Construction, Inc.
Mosser

27
<PAGE> 29

Construction, Inc., a commercial construction and contracting company, is
located in Fremont, Ohio. He is also a Director of Croghan Bancshares, Inc., the
publicly owned holding company of Croghan Colonial Bank (1973 to date).

Fred J. Roynon has been retired for more than the past 5 years. He is a
retired bank executive with twenty-four years experience in community bank
management, including Chairman, President and CEO of Society Bank Northwest Ohio
(1980-1985).

Richard J. Dudley has been retired for more than the past 5 years. He
retired as Chairman of the Board, President and CEO of S.E. Hyman Co., a
manufacturing company located in Fremont, Ohio, in 1987, and served as Assistant
to the President of Terra Technical College, Fremont, Ohio (1987-1990). Mr.
Dudley passed away on March 16, 1998.

Asher B. Edelman is President and Sole Director (1995 to date) of A.B.
Edelman Management Company, Inc., the sole general partner of Edelman Value
Partners, L.P.; General Partner (1984 to date), Asco Partners a general partner
of Edelman Securities Company; General Partner, Plaza Securities Company;
Chairman of the Board (1985 to date) and Chief Executive Officer (1993 to date)
of Datapoint Corporation; Investment Manager, (1996 to date) Edelman Value Fund,
Ltd.; Chairman of the Board, Canal Capital Corporation.

James C. Herl joined the Company in 1974. He has served as Engineer in the
Chemical Group, with primary responsibility in the Pavement Marking Division.
(1974-1994) and as General Manager of the Chemical Group (1995 to date).

Messrs. Doust, Woolf, and Dudley are members of the Executive Committee of
the Company. Messrs. Woolf, Doust and Lloyd are members of the Governance
Committee. Messrs. Doust, Moyer, Lloyd and Woolf are members of the Compensation
Committee and the Audit Committee is comprised of the following independent
directors, Messrs. Moyer, Roynon and Edelman.

The Company has no standing nominating committee or committee performing
similar tasks.

Directors of the Company are elected at the Company's annual meeting of
shareholders for a term of three years and until their successors are elected
and qualified. The executive officers of the Company are elected by and serve at
the pleasure of the Board of Directors of the Company.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE.

James R. LaBenne, Former General Manager at the Cal-Van Tools Division, was
delinquent in filing a Form 4 Statement of Changes in Beneficial Ownership, to
report the sale of 435 shares of stock in May of 1997, but timely filed Form 5
to rectify the delinquency. John P. Simcox inadvertently filed a 1997 Form 5
late to report the purchase of 50 shares of common stock in June of 1997. The
Company believes that all other Directors and Officers have timely filed all
reports required by Section 16(a) of the Act.

ITEM 11. EXECUTIVE COMPENSATION

SUMMARY INFORMATION

The following table summarizes the total compensation for each of the last
three years of (i) the Company's Chief Executive Officer and (ii) any of its
other four most highly compensated executive officers who received salary and
bonus in 1997 in excess of $100,000.

28
<PAGE> 30

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-----------------------------------
OTHER ALL OTHER
ANNUAL COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY $ BONUS $ COMPENSATION (b)
--------------------------- ---- -------- ------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Arthur F. Doust 1997 $ 58,448 $24,000 $ 3,000(a) $ 31,372
Chairman and CEO 1996 55,996 24,000 3,000(a) 2,480
1995 53,225 17,000 3,000(a) 2,177
Robert W. Woolf 1997 109,985 35,000 3,000(a) 102,714
President and COO 1996 106,814 20,000 3,000(a) 3,931
1995 102,086 18,125 3,000(a) 3,726
John P. Simcox 1997 83,126 18,200 3,000(a) 73,302
Vice President and General 1996 79,538 13,200 3,000(a) 2,875
Manager Tank Division 1995 76,209 13,200 3,000(a) 2,772
Kevin D. Lauck 1997 83,201 18,200 3,000(a) 71,175
Secretary / Treasurer 1996 79,571 13,200 3,000(a) 2,876
and Controller 1995 76,246 10,000 3,000(a) 2,674
</TABLE>

- ---------------

(a) Director Fees paid for service on Board of Directors.

(b) Includes Company's profit sharing plan account contributions and for 1997,
the dollar amount of the cash surrender value of life insurance policies
held in the Deferred Compensation Plan which vested for the four named
officers in the amount of $28,486, $97,644, $69,755 and $67,626,
respectively.

During the year ended December 31, 1997, each Director of the Company was
compensated for services as a Director by the total payment of $3000 for the
four regularly scheduled meetings. Outside or independent Directors are
compensated $400 for attending special meetings that are scheduled on days other
than the regular quarterly meetings.

DEFERRED COMPENSATION PLAN FOR KEY EMPLOYEES

In 1997, Chemi-Trol Chemical Co. (the "Company") adopted the Deferred
Compensation Plan for Key Employees (the "Plan"). Pursuant to the Plan, certain
key employees participating in the Plan (the "Participants") were granted vested
interests in life insurance policies the Company had previously purchased on
their lives. If a Participant terminates employment for any reason other than
death, the Participant is entitled to the cash value of the policy. If the
Participant dies while employed by the Company, the Participant is entitled to
one-half of the death benefit under the policy. The Company has entered into a
Trust Agreement pursuant to which the insurance policies have been contributed
to a grantor trust.

EXECUTIVE EMPLOYMENT AGREEMENTS

In August 1996, the Company entered into agreements to employ Mr. Robert W.
Woolf as the President and Chief Operating officer, Mr. John P. Simcox as Vice
President and General Manager of the Tank Division, and Mr. Kevin D. Lauck, as
Secretary and Controller for terms of three years. The employment agreements
provide for annual base compensation equal to an amount which is not less than
the officers annual base compensation on the date of the agreement and for an
annual bonus which is not less than the greater of 15% annual base compensation
or the bonus paid in the preceding fiscal year. In addition the employment
agreements provide that during the term of the agreement and for one year
thereafter, the officers shall not compete with any business carried on by the
Company (provided that no change of control shall have occurred). The agreements
further provide that if the officer's employment is terminated following a
change of control, other than for cause, disability or retirement, the officer
shall be entitled to receive, in lieu of any salary or bonuses payable under the
agreement, an amount equal to three times the present value of his annual base
compensation and bonus plus the cash surrender value of all life insurance
maintained by the Company on the officer's life.

29
<PAGE> 31

Compensation Committee Interlocks and Insider Participation

The Compensation Committee consists of Arthur F. Doust and Robert W. Woolf,
each of whom is an executive officer of the Company, and Robert H. Moyer and W.
Burton Lloyd, independent directors.

Compensation Committee Report on Executive Compensation

This report sets forth the compensation policies of the Compensation
Committee applicable to the Company's executive officers and the relationship of
corporate performance to executive compensation.

The Company's compensation package for its executive officers consists of
base salary, annual performance-based bonus and participation in the Company's
Profit Sharing Plan and the deferred compensation plan. These particular
elements are further explained herein.

Base salaries are determined primarily on the basis of salaries being paid
in the competitive marketplace, Company-wide performance and each executive
officer's responsibilities, individual performance, knowledge, ability, time in
position and prior experience. Salaries are adjusted annually as determined by
individual performance, the competitive marketplace, Company-wide performance
and changes in the cost of living, subject to minimum specified in employment
contracts with certain key employees of the Company. In general, base salaries
are set at levels believed by the Committee to be sufficient to attract and
retain qualified individuals when considered with the other components of the
Company's compensation structure.

Annual performance-based bonuses are determined at year end by the
Committee for each executive officer, with the amount for each depending upon
individual accomplishments and the overall performance of the Company, as
weighted and applied on an individual basis by the Compensation Committee.
Performance bonuses for executive officers have historically not exceeded
one-third of base compensation.

The Company's Profit Sharing Plan is qualified under Section 401(a) of the
Internal Revenue Code and is for the benefit of all employees who complete a
specified number of hours of service to the Company each Plan year and are
employees through year-end. The Board of Directors of the Company determines the
amount to be contributed from income to the Plan for each year based upon
Company performance, historical contribution levels and other factors deemed
appropriate by the Board. Company contributions to the Plan are allocated to the
accounts of eligible employees pro rata according to each employee's annual
compensation, without any variance of such formula for executive officers.
Retirement, disability or death benefits under the Plan commence on the earlier
of retirement, disability or death of an eligible employee, based upon the
employee's Plan account balance. Upon termination of employment for reasons
other than retirement, disability or death, rights of eligible employees depend
upon their number of years of service to the Company. All executive officers of
the Company are currently participating in the Profit Sharing Plan.

The foregoing report has been furnished by members of the compensation
committee of the Board of Directors.

Arthur F. Doust W. Burton Lloyd Robert H. Moyer Robert W. Woolf

30
<PAGE> 32

STOCK PERFORMANCE GRAPH

Set forth below is a line graph comparing the yearly percentage change in
the cumulative total shareholder return on the Company's Common Stock against
the cumulative total return of the S & P 500 Stock Index and the Diversified
Mfg. Group for the period commencing December 31, 1992, and ending December 31,
1997.

<TABLE>
<CAPTION>
Measurement Period Chemi-Trol S&P 500 Manufacturing
(Fiscal Year Covered) Chemical Co. Comp-LTD (Divers)-500
<S> <C> <C> <C>
Dec-92 100 100 100
Dec-93 114.27 110.062 121.50
Dec-94 118.14 111.52 125.89
Dec-95 140.30 153.39 177.27
Dec-96 130.00 188.59 244.35
Dec-97 273.90 251.49 290.99
</TABLE>

Assumes that the value of the investment in Chemi-Trol Chemical Common
Stock and each index was $100 on December 31, 1992, and that all dividends were
reinvested monthly.

Source: S&P Compustat Base Year = 100: 12/31/92

31
<PAGE> 33

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

(a) Security Ownership of Certain Beneficial Owners

Set forth below is certain information concerning persons who are known by
the Company to own beneficially more than 5% of any class of the Company's
voting shares on December 31, 1998.

<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT
TITLE OF CLASS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) OF CLASS
- -------------- ------------------------------------------------ ----------------------- --------
<S> <C> <C> <C>
Common Shares Arthur F. Doust 253,015(2) 12.62%
2690 CR 69
Gibsonburg, Ohio 43431
Common Shares Trilon Dominion Partners, L.L.C. 241,351(3) 12.03%
F/K/A Venture Capital,
Equities, L.L.C.
250 Park Avenue, Suite 2020
New York, New York 10022
Common Asher B. Edelman 125,200(4) 6.24%
Shares..... 717 Fifth Ave.
New York, New York 10022
</TABLE>

- ---------------

(1) All shares are held of record with sole voting and investment power unless
otherwise indicated.

(2) Includes (a) 157,014 shares held in trust by Arthur F. Doust and Anna K.
Doust, Co-Trustees, of which 78,507 shares are held for their own benefit;
(b) 45,265 shares owned by Anna K. Doust, wife of Arthur F. Doust; and (c)
12,743 shares owned by the children of Arthur F. Doust.

(3) Based upon most recent Schedule 13D filing dated September 27, 1996. VC
Holdings, Inc., the sole manager and the holder of 100% of the voting
interests of Trilon Dominion Partners, L.L.C. ("L.L.C."), is the indirect
beneficial owner of the 241,351 shares of common stock of the issuer owned
by L.L.C. Ronald W. Cantwell ("Mr. Cantwell") is the holder of 100% of the
capital stock of VC Holdings, Inc., which is the sole manager and the holder
of 100% of the voting interests of L.L.C. Consequently, Mr. Cantwell is the
indirect beneficial owner of the 241,351 shares of common stock of the
issuer owned by the L.L.C. Dominion Capital, Inc. holds a 50% non-voting
preferred interest in the L.L.C. Dominion Capital, Inc. has disclaimed
beneficial ownership of these securities.

(4) Based upon Form 4 filing dated December 9, 1997. Edelman Value Partners,
L.P. owns 43,700 Shares and Edelman Value Fund, Ltd. owns 81,500 shares.
Asher B. Edelman is the President and Sole Director of A.B. Edelman
Management Company, Inc., which is the Sole General Partner of Edelman Value
Partners, L.P. and also the Investment Manager of Edelman Value Fund, Ltd.
Therefore, Mr. Edelman may be deemed the beneficial owner of both of these
holdings.

32
<PAGE> 34

(b) Security Ownership Management

The following table sets forth information as to the beneficial ownership
of the Common Shares of the Company, as of December 31, 1997, by each Director
of the Company and by all directors and officers of the Company as a group:

<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNER TITLE OF CLASS BENEFICIAL OWNERSHIP(1) PERCENT
---------------- -------------- ----------------------- -------
<S> <C> <C> <C>
Arthur F. Doust................................. Common Shares 253,015(2) 12.62%
Robert W. Woolf................................. Common Shares 4225 .21%
John P. Simcox.................................. Common Shares 1550 .08%
Kevin D. Lauck.................................. Common Shares 2952 .15%
W. Burton Lloyd................................. Common Shares 61,463(3) 3.07%
Robert H. Moyer................................. Common Shares 2,452 .12%
Fred J. Roynon.................................. Common Shares 500 .02%
Richard J. Dudley............................... Common Shares 242 .01%
Asher B. Edelman................................ Common Shares 125,200(4) 6.24%
All directors and
officers as a group (10 persons).............. Common Shares 454,555 22.67%
</TABLE>

- ---------------

(1) All shares are held of record with sole voting and investment power unless
otherwise indicated.

(3) Includes (a) 58,269 shares owned by Roselyn Lloyd, wife of W. Burton Lloyd.

(4) Includes (a) 43,700 shares held by Edelman Value Partners, L.P., a Delaware
limited partnership of which A. B. Edelman Management Co., Inc., a New York
corporation is sole general partner. Mr. Edelman is President and sole
director of such corporation. (b) 81,500 shares held by Edelman Value Fund,
Ltd., a British Virgin Islands corporation for which Mr. Edelman serves as
Investment Manager.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

No disclosure required.

33
<PAGE> 35

PART IV

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

(a) 1. and 2. Financial Statements and Financial Statement Schedule

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Balance sheets at December 31, 1997 and 1996................ 13
Statements of income for each of the three years in the
period ended December 31, 1997............................ 14
Statements of shareholders' equity for each of the three
years in the period ended December 31, 1997............... 15
Statements of cash flows for each of the three years in the
period ended December 31, 1997............................ 16
Notes to financial statements............................... 17-24
Schedule for each of the three years in the period ended
December 31, 1997:
VIII -- Reserves.......................................... 35
</TABLE>

All other schedules are omitted since the required information is not
present or is not present in amounts sufficient to require submission of the
schedule, or because the information required is included in the financial
statements and notes thereto.

34
<PAGE> 36

(a) 3. EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------- -----------------------
<C> <S>
2.1 Agreement and Plan of Merger dated as of February 20, 1998
by and among Harsco Corporation, H-Chemi Acquisition Corp.
and Chemi-Trol Chemical Co. whereby the Registrant agrees to
be acquired for cash price of approximately $46.1 million or
$23.00 per share, as amended as of April 14, 1998.
3.1 Amended Articles of Incorporation of the Registrant
(Incorporated herein by reference to Exhibit 3.1 to Form
10-K annual report for year ended December 31, 1993).
3.2 Amended and Restated Code of Regulations of the Registrant.
(Incorporated herein by reference to Exhibit 3.2 to Form
10-K annual report for year ended December 31, 1993).
4.1 Articles IV and V of the Amended Articles of Incorporation
of the Registrant (Incorporated herein by reference to
Exhibit 3.1 to Form 10-K annual report for year ended
December 31, 1993).
4.2 Articles II, III, VIII and XIII of the Amended and Restated
Code of Regulations of the Registrant (Incorporated herein
by reference to Exhibit 3.2 to Form 10-K annual report for
year ended December 31, 1993).
4.3 Specimen Common Share Certificate (Incorporated herein by
reference to Exhibit 4(d) to Form S-1 Registration Statement
No. 2-59959 of the Registrant filed on September 27, 1977
(the "Registration Statement")).
4.4 Shareholder Rights Plan of the Registrant dated May 27, 1993
(Incorporated herein by reference to Exhibit 5(a) to Form
8-K Current Report of the Registrant dated May 27, 1993).
4.5 Amended and Restated Credit Agreement between the Registrant
and Fifth Third Bank dated May 2, 1996 authorizing borrowing
by the Registrant of up to $15,000,000 (Incorporated herein
by reference to Exhibit 4.5 to Form 10-K annual report for
year ended December 31, 1996).
4.6 Amendment to credit agreement between the Registrant and
Fifth Third Bank dated as of February 28, 1997 (see Exhibit
4.5 above) amending the terms of the credit agreement
(Incorporated herein by reference to Exhibit 4.6 to Form
10-K annual report for year ended December 31, 1996).
4.7 Second amendment to credit agreement between Registrant and
Fifth Third Bank dated as of May 2, 1997 (See Exhibit 4.5
above) amending the terms of the Credit Agreement.
4.8 Stock Option Agreement dated as of February 20, 1998 among
Harsco Corporation ("Parent") a Delaware Corporation,
H-Chemi Acquisition Corp., a Pennsylvania Corporation and a
direct, wholly-owned subsidiary of Parent and Chemi-Trol
Chemical Co., an Ohio Corporation.
No other instruments defining the rights of holders of
long-term debt of the Registrant have been included as an
exhibit because the total amount of indebtedness authorized
by any such instrument does not exceed 10% of the total
assets of the Registrant. The Registrant hereby agrees to
furnish supplementally a copy of any omitted long-term debt
instrument to the Commission upon request.
10.1 Agreement between the Registrant and Sumitomo Shoji America,
Inc. dated September 14, 1976 granting Sumitomo a right of
first refusal to supply steel plate to the Tank Division
(Incorporated herein by reference to Exhibit 13(b) (2) to
the Registration Statement).
10.2 Collective Bargaining Agreement between the Registrant and
the United Steelworkers of America, AFL-CIO-CLC, Local Union
No. 1915, dated May 1, 1996 (Incorporated herein by
reference to Exhibit 10.2 to 10-K annual report for year
ended December 31, 1996).
10.3 Form of Employment Agreements dated August 1, 1996 between
the Registrant and Robert A. Woolf, President, John P.
Simcox, Vice President and Kevin D. Lauck, Secretary
(Incorporated by reference to exhibit 10.4 to Form 10-K
annual report for year ended December 31, 1996).
10.4 Agreement between the Registrant and Laborers Inter-National
Union, Local No. 480, effective March 1, 1998.
</TABLE>

35
<PAGE> 37

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------- -----------------------
<C> <S>
10.5 Form of Deferred Compensation Plan for Key Employees
effective August 15, 1997.
10.6 Agreement of Purchase and Sale of Assets dated November 18,
1997 between the Registrant and Eagle Tools, Inc. for the
sale of certain assets of the Registrant's Cal-Van Tools
Division. (Incorporated herein by reference to Exhibit 2.1
to Form 8-K dated November 24, 1997).
10.7 Asset Purchase Agreement dated March 25, 1997 between the
Registrant and Terra International, Inc. for the sale of
Certain assets of its Cory Orchard & Turf Division.
22 Subsidiaries of the Registrant (No Exhibit is included
because the Registrant has no Subsidiaries.)
27 Financial Data Schedule
</TABLE>

(b) REPORTS ON FORM 8-K

On November 24, 1997 the Registrant filed a Form 8-K reporting under Item
2, acquisition or disposition of assets, completion of the sale of certain
assets of its Cal-Van Tools Division to Eagle Tools, Inc. "Eagle" an Ohio
Corporation having its principal office in Guilford County, North Carolina. The
8-K included an Unaudited ProForma Condensed Balance Sheet as of September 30,
1997 and Unaudited ProForma Condensed Statements of Income for: Fiscal year
ended December 31, 1997 and Nine Months ended September 30, 1997.

36
<PAGE> 38

CHEMI-TROL CHEMICAL CO.

SCHEDULE VIII -- RESERVES

YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995

<TABLE>
<CAPTION>
BALANCE AT ADDITIONS CHARGED
BEGINNING OF TO COSTS DEDUCTIONS FROM BALANCE AT END OF
DESCRIPTION PERIOD AND EXPENSES RESERVES PERIOD
----------- ------------ ----------------- --------------- -----------------
<S> <C> <C> <C> <C>
Year ended December 31, 1997
Allowance for doubtful
accounts...................... $210,000 $53,136 $ 8,136(a) $255,000
Year ended December 31, 1996
Allowance for doubtful
accounts...................... 150,000 97,511 37,511(a) 210,000
Year ended December 31, 1995
Allowance for doubtful
accounts...................... 141,000 18,095 9,095(a) 150,000
</TABLE>

- ---------------

(a) Doubtful accounts written off.

37
<PAGE> 39

SIGNATURE

PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.

CHEMI-TROL CHEMICAL CO.
Registrant

/s/ ROBERT W. WOOLF

--------------------------------------
By: Robert W. Woolf, Chairman,
President and Chief Executive
Officer

/s/ KEVIN D. LAUCK

--------------------------------------
By: Kevin D. Lauck, Secretary,
Treasurer and Controller (Principal
Accounting Officer and Principal
Financial Officer)

Gibsonburg, Ohio

May 13, 1998

38
<PAGE> 40

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED:

<TABLE>
<S> <C>
/s/ ARTHUR F. DOUST /s/ ROBERT W. WOOLF
- ----------------------------------------------------- -----------------------------------------------------
Arthur F. Doust, May 13, 1998 Robert W. Woolf, May 13, 1998
(Director) (Director, Chairman, President and
Chief Executive Officer)

/s/ ROBERT H. MOYER /s/ JOHN P. SIMCOX
- ----------------------------------------------------- -----------------------------------------------------
Robert H. Moyer, May 13, 1998 John P. Simcox, May 13, 1998
(Director) (Director and Vice President)

/s/ FRED J. ROYNON /s/ ASHER B. EDELMAN
- ----------------------------------------------------- -----------------------------------------------------
Fred J. Roynon, May 13, 1998 Asher B. Edelman, May 13, 1998
(Director) (Director)

/s/ KEVIN D. LAUCK /s/ W. BURTON LLOYD
- ----------------------------------------------------- -----------------------------------------------------
Kevin D. Lauck, May 13, 1998 W. Burton Lloyd, May 13, 1998
(Director and Secretary / Treasurer) (Director)
</TABLE>

SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO
SECTION 15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES
PURSUANT TO SECTION 12 OF THE ACT.

No Annual Report covering the Registrant's last fiscal year or proxy soliciting
material for any meeting of security holders since the 1997 Annual Meeting has
been sent to the Registrant's security holders. Such report and proxy material
for the Registrant's 1997 Annual Meeting will be furnished to security holders
subsequent to the filing of this Annual Report.

39
<PAGE> 41

FORM 10-K EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION OF DOCUMENT NUMBER
- ------- ----------------------- ------
<C> <S> <C>
2.1 Agreement and Plan of Merger dated as of February 20, 1998 40
by and among Harsco Corporation, H-Chemi Acquisition Corp.
and Chemi-Trol Chemical Co. whereby the Registrant agrees to
be acquired for cash price of approximately $46.1 million or
$23.00 per share, as amended as of April 14, 1998.
3.1 Amended Articles of Incorporation of the Registrant
(Incorporated herein by reference to Exhibit 3.1 to Form
10-K annual report for year ended December 31, 1993).
3.2 Amended and Restated Code of Regulations of the Registrant.
(Incorporated herein by reference to Exhibit 3.2 to Form
10-K annual report for year ended December 31, 1993).
4.1 Articles IV and V of the Amended Articles of Incorporation
of the Registrant (Incorporated herein by reference to
Exhibit 3.1 to Form 10-K annual report for year ended
December 31, 1993).
4.2 Articles II, III, VIII and XIII of the Amended and Restated
Code of Regulations of the Registrant (Incorporated herein
by reference to Exhibit 3.2 to Form 10-K annual report for
year ended December 31, 1993).
4.3 Specimen Common Share Certificate (Incorporated herein by
reference to Exhibit 4(d) to Form S-1 Registration Statement
No. 2-59959 of the Registrant filed on September 27, 1977
(the "Registration Statement")).
4.4 Shareholder Rights Plan of the Registrant dated May 27, 1993
(Incorporated herein by reference to Exhibit 5(a) to Form
8-K Current Report of the Registrant dated May 27, 1993).
4.5 Amended and Restated Credit Agreement between the Registrant
and Fifth Third Bank dated May 2, 1996 authorizing borrowing
by the Registrant of up to $15,000,000 (Incorporated herein
by reference to Exhibit 4.5 to Form 10-K annual report for
year ended December 31, 1996).
4.6 Amendment to credit agreement between the Registrant and
Fifth Third Bank dated as of February 28, 1997 (see Exhibit
4.5 above) amending the terms of the credit agreement
(Incorporated herein by reference to Exhibit 4.6 to Form
10-K annual report for year ended December 31, 1996).
4.7 Second amendment to credit agreement between Registrant and 74
Fifth Third Bank dated as of May 2, 1997 (See Exhibit 4.5
above) amending the terms of the Credit Agreement.
4.8 Stock Option Agreement dated as of February 20, 1998 among 76
Harsco Corporation ("Parent") a Delaware Corporation,
H-Chemi Acquisition Corp., a Pennsylvania Corporation and a
direct, wholly-owned subsidiary of Parent and Chemi-Trol
Chemical Co., an Ohio Corporation.
No other instruments defining the rights of holders of
long-term debt of the Registrant have been included as an
exhibit because the total amount of indebtedness authorized
by any such instrument does not exceed 10% of the total
assets of the Registrant. The Registrant hereby agrees to
furnish supplementally a copy of any omitted long-term debt
instrument to the Commission upon request.
10.1 Agreement between the Registrant and Sumitomo Shoji America,
Inc. dated September 14, 1976 granting Sumitomo a right of
first refusal to supply steel plate to the Tank Division
(Incorporated herein by reference to Exhibit 13(b) (2) to
the Registration Statement).
</TABLE>

40
<PAGE> 42
FORM 10-K EXHIBIT INDEX -- (CONTINUED)

<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION OF DOCUMENT NUMBER
- ------- ----------------------- ------
<C> <S> <C>
10.2 Collective Bargaining Agreement between the Registrant and
the United Steelworkers of America, AFL-CIO-CLC, Local Union
No. 1915, dated May 1, 1996 (Incorporated herein by
reference to Exhibit 10.2 to 10-K annual report for year
ended December 31, 1996).
10.3 Form of Employment Agreements dated August 1, 1996 between
the Registrant and Robert A. Woolf, President, John P.
Simcox, Vice President and Kevin D. Lauck, Secretary
(Incorporated by reference to exhibit 10.4 to Form 10-K
annual report for year ended December 31, 1996).
10.4 Agreement between the Registrant and Laborers Inter-National 84
Union, Local No. 480, effective March 1, 1998.
10.5 Form of Deferred Compensation Plan for Key Employees 88
effective August 15, 1997.
10.6 Agreement of Purchase and Sale of Assets dated November 18,
1997 between the Registrant and Eagle Tools, Inc. for the
sale of certain assets of the Registrant's Cal-Van Tools
Division. (Incorporated herein by reference to Exhibit 2.1
to Form 8-K dated November 24, 1997).
10.7 Asset Purchase Agreement dated March 25, 1997 between the 92
Registrant and Terra International, Inc. for the sale of
Certain assets of its Cory Orchard & Turf Division.
22 Subsidiaries of the Registrant (No Exhibit is included
because the Registrant has no Subsidiaries.)
27 Financial Data Schedule 101
</TABLE>