CPT HOLDINGS INC, 10-K, 1997-10-01

CPT HOLDINGS INC
10-K, 1997-10-01
FABRICATED STRUCTURAL METAL PRODUCTS

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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [Fee Required] For the fiscal year ended: June 30, 1997

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT
OF 1934 [No Fee Required]

Commission File Number 0-7462

CPT HOLDINGS, INC.
(Exact name of registrant as specified in its charter)

Minnesota 41-0972129
(State of Incorporation) (I.R.S. Employer identification No.)

1430 Broadway, 13th Floor
New York, New York 10018
(Address of principal executive offices) (Zip code)

Registrant's telephone number, including area code: (212) 382-1313

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

Securities registered pursuant to Section 12(g) of the Act:
NONE
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No ____

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K [X]

As of August 29, 1997, the aggregate market value of shares of Common Stock of
the registrant held by non-affiliates was approximately $989,185.

Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes X No ___

As of August 29, 1997, 1,510,084 shares of Common Stock were outstanding.

1
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PART I

ITEM 1. BUSINESS

General

CPT Holdings, Inc. ("CPT" or the "Company"), is a holding company which,
through its indirect operating subsidiary, J&L Structural, Inc., a Delaware
corporation ("J&L"), is a nationwide independent producer of high quality
lightweight structural steel shapes, with a leading market share in the
Northeast, Southeast and Mid-Atlantic regions. The Company's products are used
primarily in the manufactured housing, truck trailer, and highway safety systems
industries. The Company competes effectively on the basis of product quality,
customer service and price, in a number of niche markets characterized by few
competitors. The Company operates a uniquely designed mill on 33 acres in
Aliquippa, Pennsylvania which enables the Company to efficiently produce thin,
lightweight profile structural steel shapes (primarily I-Beams). The Company,
through the Brighton Electric Steel Casting Division of J&L ("Brighton"), also
has a dominant market share in the domestic small piercer point market.

CPT, a Minnesota corporation, was incorporated in 1971 as CPT Corporation.
Its principal offices are located at 1430 Broadway, 13th Floor, New York, New
York and its telephone number is (212) 382-1313. CPT adopted its current form as
a holding company in accordance with its Amended Plan of Reorganization (the
"Reorganization Plan") approved by the U.S. Bankruptcy Court for the District of
Minnesota. The Reorganization Plan became effective as of July 23, 1991.
References to the Company are intended to include CPT and its direct and
indirect subsidiaries, unless the context provides otherwise.

On February 8, 1993, Hupp Industries, Inc., now known as H. Industries,
Inc., ("Hupp") became a majority-owned subsidiary of CPT when CPT acquired 80.1%
of the capital stock of Hupp. Hupp was also a manufacturer of heating,
ventilating and air conditioning equipment used primarily in commercial as well
as military applications. Through its wholly owned division, DCM Corporation,
Hupp was also a manufacturer of fractional horsepower electrical motors. Hupp
experienced operating difficulties in both its air conditioning and electrical
motor manufacturing businesses and in February 1994 decided to discontinue the
manufacture of its air conditioning products. Hupp continued to experience
financial problems that caused certain defaults under its Credit and Security
Agreement with its bank. Despite efforts to bring the operations of Hupp to
profitability, Hupp was unable to eliminate its losses. As a consequence, on
October 27, 1994, Hupp's senior lender exercised its rights and conducted a
secured party sale of the assets of Hupp to an unrelated party. Hupp had no
assets and no employees subsequent to October 1994.

As part of the Acquisition, the assets of Brighton Electric Steel Casting
Company ("BESCC"), an existing subsidiary of CPT and the direct parent of J&L,
were contributed to J&L and BESCC changed its name to J&L Holdings Corp.
("JLH"). Prior to the closing of the Acquisition, BESCC redeemed its preferred
stock from the holder thereof in consideration for the issuance by CPT of a
Deferred Purchase Money Note in the approximate amount of $475,000, said amount
equal to the stated value of the preferred stock plus the accrued dividends
thereon, bearing interest at 11 percent and due December 15, 2002.

Also as part of the Acquisition, J&L distributed as a dividend to JLH the
right (which J&L acquired from JLS) to acquire a 38-acre parcel of undeveloped
land adjacent to the JLS rolling mill in Aliquippa, Pennsylvania. JLH, in turn,
contributed the right to acquire the 38-acre parcel to Continuous Caster
Corporation, a newly- incorporated Delaware corporation, ("CCC") in exchange for
all of the common stock of CCC. Shortly thereafter, CCC acquired title to the
38-acre parcel, using funds that JLS had placed in escrow prior to the
Acquisition.

Further information regarding the Acquisition is contained in Form 8-K
filed by the Company with the Securities and Exchange Commission on April 21,
1995, which is hereby incorporated by reference herein.

J&L Structural, Inc.

J&L is segmented into two distinct operating divisions, J&L Structural
division ("J&L Structural") and Brighton, as a result of significant differences
in both customers and products. J&L Structural is also segmented into two
separate divisions which includes the Ambridge division (formerly TCI). This
distinction is due mainly to separate labor contracts that exist among the
employees of J&L Structural. The Ambridge division provides finishing services
required for certain J&L Structural products. The following narrative on the
business will be segmented on this basis.

J&L Structural Division

Products

J&L Structural is a producer of high quality lightweight structural steel
shapes (primarily I-Beams) which are used primarily in the manufactured housing,
truck trailer, and highway safety systems industries.

J&L Structural's products are monitored, tested and inspected throughout
the manufacturing process to ensure that all aspects of quality meet applicable
industry or customer specifications. The products are also inspected to ensure
integrity of surface and dimensions.

J&L Structural's product lines are described below:

JUNIOR(R) Beams are hot rolled lightweight steel beam sections produced by
rolling heated steel billets through J&L Structural's fourteen stand rolling
mill. These sections have been accepted by designers and engineers for over half
a century as the lightest hot-rolled structurals in their size class. JUNIOR(R)
Beams are available in 3 to 12-inch depths, ranging in weight from 2.9 to 11.8
pounds per foot. A total of fourteen weights of JUNIOR(R) Beams are currently
available. JUNIOR(R) Beams are manufactured in a wide range of steel grades
including conventional and high strength steels. Strict quality control at J&L
Structural's mill assures a homogeneous product, uniform in mechanical and
chemical properties and possessing dimensions within close rolling tolerance
limits. JUNIOR(R) Beams have the strength, light weight and versatility to be
used by makers of manufactured housing and truck trailers, industrial and
commercial contractors and machinery builders. JUNIOR(R) Beams are primarily
used by the manufactured housing industry as undercarriage structural support.

Crossmembers are fabricated by the Ambridge division from JUNIOR(R) Beams.
Crossmembers are used by the truck trailer and truck body industry in the
production of trailer frames. These manufacturers space Crossmembers along the
entire length of the trailer to provide structural support to the body and
floor.

JUNIOR(R) Channels are available in four sizes and varying weights. They
generally weigh significantly less than the lightest standard structural steel
shape of equal depth, while exhibiting the characteristics of form and constancy
of dimension offered by a standard hot-rolled section. JUNIOR(R) Channels are
preferred over formed plate channels since they assure perfect fitting square
corners and true lines. These advantages permit flexibility of design with
minimum weight and lower cost without sacrificing structural strength. JUNIOR(R)
Channels offer excellent application flexibility in architecture and
construction, particularly in the construction of commercial and industrial
stairways. Additionally, truck trailer manufacturers are able to reduce weight
in their finished product through the use of JUNIOR(R) Channels as side rails.

Wide Flange Beams offer durability and economical installation to builders
of highway safety systems as well as for general construction applications. On a
pound-per-foot basis, J&L Structural's Wide Flange Beams are among the lightest
and lowest cost hot-rolled steel structurals available for highway guardrail
posts.

Standard I-Beams are produced by J&L Structural in sections of 3" x 5.7
and 7.5 pounds per foot and 4" x 7.7 and 9.5 pounds per foot in the same variety
of grades and lengths as available for its other products. The lighter weight
three-inch section is used as a highway guardrail post section.

Split Tees (often referred to as Split Beams) are JUNIOR(R) Beams that are
split longitudinally through the web section. This process produces two
identical T-sections that are used for ship hull reinforcement.

J&L Structural's philosophy from its inception has been to incrementally
expand its product offerings and capabilities while, at the same time, striving
to maintain high levels of profitability. The Company expects to continue to add
new products, new sizes and/or serve new markets on an "incremental" basis in
the future.

Suppliers

Steel billets, J&L Structural's primary raw materials, are purchased from
several domestic mini-mills and are delivered to J&L Structural's mill by barge,
rail or truck. J&L Structural issues a billet quality standard which must be met
by all suppliers. This standard includes specifications for billet chemistry,
dimension and surface quality. Currently, J&L Structural purchases semifinished
steel from two main suppliers and several alternate sources. The loss or
reduction in capability of either of these main billet suppliers would require
J&L Structural to rely more heavily on their other current sources of supply.
Management maintains good relationships with all its suppliers and would not
expect any significant impact on its financial statements or its ability to
source an adequate supply of billets assuming a need to change its supplier mix.

J&L is evaluating several options with regard to gaining more control over
its primary raw material supply. In addition to the possibility of constructing
a greenfield melt shop, J&L is considering long-term supply arrangements, joint
ventures and corporate acquisitions.

Marketing and Distribution

J&L Structural focuses its marketing efforts directly on end users of its
products. J&L Structural's primary marketing strategy is to position itself as a
high-quality niche manufacturer of a variety of lightweight structural steel
products. Customer service and product quality are pivotal elements of that
strategy, and as a result, J&L Structural maintains close ties with its
customers and their markets. Due to its unique mill design and flexible
operating schedule, J&L Structural is able to change its mill frequently at
minimal cost. This allows for quick response to customer requirements, while
maintaining reasonable inventory levels. As a result, J&L Structural has
established a record of superior customer service which differentiates it from
its competition.

J&L Structural maintains a sales force of five salaried employees, two of
whom are stationed in the field and three in Aliquippa. In addition, a
commissioned sales agent handles sales opportunities in Mexico and the rest of
Latin America.

Over 85 % of J&L Structural's shipments go directly to an end user rather
than a service center or steel distributor. J&L Structural ships to customers
from three strategic locations: Aliquippa, Pennsylvania; Ambridge, Pennsylvania;
and Iuka, Mississippi. The Mississippi location is a down-river public warehouse
that charges J&L Structural a fee for unloading barges and for warehousing beams
prior to shipping to customers in the Southeast. J&L Structural's location in
the Mid-Atlantic region on the inland waterway system provides good proximity to
its major markets. J&L Structural's barge facility provides low cost
transportation for the bulk movement of JUNIOR(R) Beams to be sold to the
manufactured housing industry in Alabama, Mississippi, Tennessee and other
Southeastern states. Moreover, Indiana, North Carolina and Pennsylvania are
leading states in the production of manufactured homes and all are within
one-day truck transportation. Additionally, Indiana leads the country in the
production of truck trailers.

Moreover, J&L Structural's location also enables it to utilize barge, rail
and truck lines to transport both its raw materials and finished goods, thereby
allowing it to be responsive to its customers. In addition, the Company is in
the process of seeking an additional distribution facility in the Southeast in
order to enhance its storage capacity. The additional storage capacity is also
expected to lower J&L Structural's freight costs, giving it the potential to
achieve higher margins in that region.

Competition

J&L Structural competes effectively in all of its major product areas on
the basis of product quality, customer service and price in a number of niche
markets characterized by few competitors. Its location on the Ohio River allows
it to ship products to customers and obtain raw materials on a very
cost-effective basis in comparison to its competitors and provides it with
expanded geographic coverage in an industry which is largely regional.

While J&L Structural has competition in all of its major product lines,
the thin, lightweight sections J&L Structural manufactures are difficult to
produce and therefore, the number of competitors producing these items is
limited. The unique design and relatively small size of J&L Structural's mill
enables it to efficiently produce thin, lightweight profiles. Under existing
industry configurations and considering the aggregate demand for its niche
products, the Company believes that replication of J&L Structural's unique mill
design by other companies wishing to compete in these markets would not be
economical. J&L Structural's small powerful mill is better suited to produce the
items in its product line than larger mills operated by competitors that produce
a broader range of products.

Recently, three large steel minimills announced plans for the greenfield
construction of melt shops and structural rolling mills that would have the
ability to produce bantam beams similar to J&L Structural's products. The
earliest of these announced plants is scheduled to start up in the Spring of
1999. Due to the intensive level of customer service necessary to satisfy this
limited niche market, it is difficult to determine the impact, if any, that
these new production facilities will have on J&L's primary markets.

J&L Structural's commitment to providing a focused product line that is
keyed off customer needs differentiates it from its competitors. In particular,
J&L Structural: (i) provides superior service and consistently high quality
products to its customers, many of which purchase all or substantially all of
their requirements for lightweight steel shapes from J&L Structural, (ii)
maintains adequate inventories and a flexible operating schedule which makes it
more responsive to customer needs and market conditions, (iii) focuses its
marketing directly on end users, (iv) relative to its competitors, produces a
narrow, more focused range of products, and (v) provides value-added finishing
services to meet specific customer needs.

Foreign manufacturers do not play a significant role in the domestic
structural markets which J&L Structural serves.

Employees

As of August 31, 1997, J&L Structural employed a total of 273 employees.
The United Steelworkers of America represents approximately 185 employees at J&L
Structural (excluding the Ambridge division) under a labor agreement that
expires in September 2000. The Ambridge division of J&L Structural and its 47
unionized employees are also represented by the United Steelworkers of America
on a five-year labor agreement, expiring in October 1999. The Company believes
that it has excellent relationships with both union locals. J&L Structural has
never experienced a work stoppage, has experienced few employee grievances and
has very little employee turnover.

Backlog

The backlog of unfilled orders for J&L Structural typically averages less
than 60 days. This remains the case even in strong markets due to frequent
product rollings and adequate finished inventory levels that allow J&L
Structural's customers to work within short lead times. As of August 31, 1997,
J&L Structural had open orders totaling $ 10,200,000. This compares with a
backlog of $7,040,000 at the same date in 1996. The increase in backlog in
comparison to the previous year is due mainly to continued strength in the
manufactured housing and general construction markets and renewed strength in
the truck/trailer manufacturing market.

The winter months are generally slower activity months for J&L Structural
due to the seasonality of the manufactured housing market and significant
seasonal reductions in highway construction and repair programs.

Environmental Compliance

U.S. steel producers, including J&L Structural, are subject to stringent
Federal, state and local environmental laws and regulations concerning, among
other things, air emissions, waste water discharge, and solid and hazardous
waste disposal. Company spending, in the future, for compliance with these
environmental laws and regulations is not anticipated to be significant.

No significant environmental problems have arisen concerning the use or
operation of J&L Structural's facilities or the conduct of its business.

3
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Brighton Electric Steel Casting Division

Products
The principal product manufactured by Brighton is piercer points, which
are disposable tooling used by the steel industry in the production of seamless
steel tubes. Piercer points are bullet-shaped castings which are driven into the
core of heated steel billets and, therefore, are central in the manufacturing
process of seamless steel tubing products. Generally, seamless tubes are
required in applications where welded seamed tubes lack rigidity and structural
strength. Seamless tubing has a multitude of applications ranging from oil
production to bearings used in the automotive industry.

The Company believes that Brighton is the largest producer of small
piercer points (1 to 250 pounds) in the United States. Brighton also produces
piercer points up to 400 pounds. In addition to piercer points, Brighton
supplies high alloy grate bars used by the steel industry, as well as hi-mill
castings and equalizer plates used in the suspension systems of railway cars.
Brighton's manufacturing capabilities provide it with the opportunity to develop
new markets for its molded alloy steel castings.

The manufacturing process at Brighton begins with the production of a
pattern. Brighton relies to a great extent on an outside pattern shop. Once a
pattern is produced a mold is manufactured at Brighton's facilities. Molten
metal is then poured into the mold, allowed to cool and then "shaken" free of
the mold to complete the finished product. From this step Brighton may heat the
molded metal product in one of its annealing ovens after which it is machined to
final tolerances.

The piercer points are usable by customers for only a limited amount of
production before they become too worn for the process. In some processes, two
piercer points are used for larger seamless tubes. Depending on the process and
materials used to manufacture seamless tubing, a piercer point generally has a
useful life of between two to 750 manufacturing runs before it must be replaced.
Used piercer points are then returned to Brighton for remolding into other
piercer points.

Suppliers

Brighton purchases a variety of raw materials, including alloys (such as
chrome, nickel, molybdenum and tungsten), foundry sand and grinding materials.
Brighton currently has strong and established relationships with all of its
major suppliers of raw materials. Brighton has not experienced any problems in
obtaining an adequate supply of raw materials at reasonable prices and it
expects the availability of future supplies to be sufficient. Nevertheless,
limited supplies of these raw materials and/or extraordinary high prices for
such materials could, among other things, cause Brighton to lose business by
failing to meet demand, squeeze its profit margins and/or encourage the use of
substitute products.

Marketing and Distribution

Brighton has a dominant market share of the small piercer points business
in the United States and excels in providing quality service and products.
However, Brighton's customer base is limited. Essentially, the customer base
consists of several major accounts that account for approximately 90% of
Brighton's revenues. A major loss of one or more of its accounts or a
significant reduction in demand by the steel industry would have a significant
adverse impact on Brighton's profitability.

Brighton sells to and services its customers directly with its own
personnel. In its effort to expand beyond its piercer-point business, Brighton
has in recent years engaged two manufacturing representative firms. The
diversification effort has increased its new non-piercer point sales from 15% of
total sales in fiscal year 1989 to approximately 25% of total sales for the
division in fiscal year 1997. In addition, the enhanced sales and marketing
effort has created an increased market awareness of Brighton's capabilities in
producing specialty high alloy steel castings.

Competition

Brighton has limited competition in the small piercer point (1 to 250
pounds) market. Its main competition is Columbiana Foundry ("Columbiana") based
in Columbiana, Ohio which produces a wide variety of castings, including piercer
points. In the past, Columbiana has focused its efforts on producing larger
piercer points.

Employees

As of August 31, 1997, Brighton employed a total of 21 employees. Most of
Brighton's personnel are represented by the United Steelworkers of America under
a contract that expires in December 1997. The Company considers its employee
relations at Brighton to be good.

Backlog

Brighton typically ships products within 30 days of receipt of an order.
Therefore, Brighton does not maintain a significant backlog of unshipped orders.
As of August 31, 1997, Brighton had firm open orders totaling $450,000. This
compares to a backlog of $435,000 at the same date in 1996. Brighton does not
consider its business to be seasonal.

Environmental Compliance

Brighton operates with several environmental permits issued by the
Pennsylvania Department of Environmental Protection. No significant
environmental problems have arisen concerning the use or operation of Brighton's
facilities or the conduct of its business. However, a change in the law or
regulations at either the federal, state or local level could adversely impact
the operations of Brighton.

4
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Financial Information Regarding Industry Segments
and Foreign and Domestic Operations

Financial information about the Company's various industry segments and
its foreign and domestic operations and export sales is contained in Note 13 of
the Notes to the Consolidated Financial Statements of the Company contained in
item 14 of this Form 10-K. The Company's continuing operations do not currently
have significant export sales or any foreign operations.

ITEM 2. PROPERTIES
CPT's principal executive offices were formerly located at 1140
Connecticut Avenue, N.W., Suite 1201, Washington, D.C. in approximately 2,000
square feet of office space, for which a lease existed with a term expiring in
May 1998. On November 1, 1994 the Company moved its executive offices to 1430
Broadway, 13th Floor, New York, New York. The New York offices are occupied
under a subleasing arrangement on a month-to-month lease. In December 1995, a
settlement was reached with the landlord of CPT's former offices that released
the Company from any future obligations under the lease.

The Company's facilities include: (i) J&L Structural - a reheat furnace, a
unique close-tolerance fourteen stand continuous rolling mill, a hot bed,
straighteners, and sawing, stacking and bundling facilities located on
approximately 33 acres on the Ohio River in Aliquippa, Pennsylvania, with over
265,000 square feet under roof and an adjacent barge loading facility; (ii) J&L
Structural's Ambridge division - a fabricating facility located in a leased
facility in Ambridge, Pennsylvania, approximately five miles from the main
facilities; and (iii) Brighton's headquarters and manufacturing plant, a 25,000
square foot facility, located in Beaver Falls, Pennsylvania, approximately 10
miles from J&L Structural. J&L Structural's Aliquippa facility is secured by
mortgages to its senior and subordinated lenders.

CCC holds title to 38 acres of undeveloped land adjacent to J&L Structural
in Aliquippa, Pennsylvania. The property was acquired subject to an agreed order
between CCC and the Pennsylvania Department of Environmental Protection. Under
the agreement by which this parcel was acquired, the Beaver County Corporation
for Economic Development has a right of first refusal to repurchase the parcel
for an amount approximating the purchase price plus all environmental testing
and remediation costs incurred by CCC and its affiliates if CCC or its
affiliates attempt to sell or transfer the property to a third party whose
intent is other than to ultimately construct a melt shop and continuous caster
on the property.

ITEM 3. LEGAL PROCEEDINGS
The Industrial and Allied Employees Union Local No. 73 Pension Plan (the
"Plan") issued a claim for payment of withdrawal liability totaling
approximately $870,000 under Section 4219 of ERISA against Hupp, CPT and all
"controlled group members", as a result of Hupp's cessation of contributions to
the Plan following the discontinuance of Hupp's business in October 1994. On
July 10, 1996, the arbitrator sustained the Plan's claim of withdrawal liability
against CPT. Pursuant to ERISA, CPT subsequently appealed the arbitration
decision to the U.S. District Court for the Northern District of Ohio ("District
Court"). As of August 31, 1997, CPT has made payments aggregating approximately
$741,000 to the Plan and as of June 30, 1996, had fully accrued the amount of
the outstanding claim less payments made through that date. On September 17,
1997, in response to CPT's appeal, the District Court vacated in part, and
confirmed in part the arbitrator's award. In its final and appealable judgement,
the District Court ruled in favor of the Plan in the amount of $62,696. As the
decision is appealable, CPT has not recorded any gain contingency as of June 30,
1997.

On March 25, 1997, J&L's furnace builder filed a statement of mechanics'
lien in the Court of Common Pleas of Beaver County, Pennsylvania (the "Court")
against the real property situated in Aliquippa and owned by J&L for payment of
$1,420,000 claimed due it. The mechanics' lien asserts that work was completed
on the furnace in December 1996, and that under the contract the final holdback
payment would be payable following completion of work. J&L has not delivered
final payment due to variances noted under performance testing results which did
not meet contract specifications. However, the furnace builder has refused to
recognize these test results due to its disagreement with J&L's procedural
methods utilized in carrying out the testing. Subsequent to filing of the
mechanics' lien, on April 18, 1997, J&L filed a demand for arbitration under the
contract. J&L sought declaratory judgment and performance on the following: (i)
contract interpretation of performance criteria to be applied under the
contract, (ii) contract interpretation with regard to procedures to be utilized
in conducting performance testing and (iii) dismissal of the mechanics' lien
claim against J&L's real property on the basis that it is premature and
improper. On June 18, 1997, the Court dismissed the mechanics' lien. Following
this decision, J&L Structural and the furnace builder have initiated formal
arbitration procedures and are in the process of selecting an arbitrator. J&L
had fully accrued $1,420,000 in accounts payable as of June 30, 1997.

The Company is not a party to any additional lawsuits.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
NONE

5
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PART II

ITEM 5. MARKET FOR REGISTRANTS' COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS

Between September 1992 and August 1994, CPT's Common Stock was included in
the NASDAQ Small Cap Market, also known as the NASDAQ System. In August of 1994,
the Common Stock of CPT was delisted from the Small Cap Market for failure to
meet the minimum bid price of $1.00. Since August of 1994, the Company's Common
Stock has traded over-the-counter with quotations for the stock available in the
"pink sheets" or through the over-the-counter Bulletin Board of the National
Association of Securities Dealers, Inc.

The following table sets forth for each of the periods indicated, the
range of the high and low bid prices for CPT's common stock, rounded to the
nearest 1/64 of a dollar, based on quotations obtained from the NASDAQ Small Cap
Market and through the over-the-counter bulletin board.

Fiscal 1997
High Low

First Quarter (7/1-9/30/96) $ 3.75 $2.12
Second Quarter (10/1-12/31/96) 3.00 0.75
Third Quarter (1/1-3/31/97) 1.70 0.62
Fourth Quarter( 4/1-6/30/97) 1.25 0.94

Fiscal 1996
High Low

First Quarter (7/1-9/30/95) $4.75 $1.87
Second Quarter (10/1-12/31/95) 5.25 3.12
Third Quarter (1/1-3/31/96) 4.75 2.12
Fourth Quarter( 4/1-6/30/96) 4.37 2.62

The quoted bid prices reflect inter-dealer prices without retail mark-ups,
mark-downs, or commissions and may not necessarily reflect actual transactions.
As of August 29, 1997, there were approximately 1,752 common stockholders.

Dividend Policy

CPT has not paid any cash dividends on its common stock within the last
two fiscal years and has no plan to pay any dividends in the foreseeable future.

6
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ITEM 6. SELECTED FINANCIAL DATA

Selected Income Statement Data as of and for the Years Ended June 30: (1)(2)

(in thousands except per share data)
<TABLE>
<S> <C> <C> <C> <C> <C>

- --------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
- --------------------------------------------------------------------------------------------

Total net revenue $98,199 $101,011 $31,208 $5,785 $3,739
(Loss) income from
continuing operations (2,654) (1,909) 410 232 (199)
after income taxes
(Loss) income from
operations of - - (553) (2,201) (2,009)
discontinued subsidiaries
Net gain (loss) on disposal
of discontinued - 2,220 2,129 (6,371) 1,600
subsidiaries
(Loss) income before income
taxes and extraordinary (2,654) 311 1,986 (8,340) (608)
items
Gain on extraordinary item - - 3,527 - -
Net income (loss) (2,654) 311 5,513 (8,340) (608)

Earnings (loss) per share
assuming full dilution:
From continuing operations $ (1.76) $ (.58) $ .23 $.15 $ (.13)
From discontinued operations - .69 .81 (5.67) (.28)
----- --- --- ----- ----
Extraordinary items
Net earnings (loss) per share $ (1.76) $ .11 $ 2.86 $ (5.52) $ (.41)
======== ======== ====== ======== =======
Fully-diluted common and
common equivalent shares
outstanding (000) 1,510 3,208 1,935 1,510 1,510

Selected Balance Sheet Data
(2):

Total current assets $19,756 $19,623 $19,951 $5,045 $6,957
Total assets 67,170 68,584 61,203 8,431 14,311
Current liabilities 18,686 15,709 16,041 11,857 9,280
Long-term obligations, net
of current portion 57,255 59,288 52,339 2,500 2,448
Redeemable preferred stock - - - 350 350
Common shareholders
equity(deficit) (11,638) (8,984) (9,671) (6,472) 1,868
- --------------------------------------------------------------------------------------------
</TABLE>

(1) As a result of the final discontinuance of operations for Hupp as of
October 27, 1994, the consolidated statements of operations for fiscal years
ended June 30, 1996, 1995, 1994 and 1993 have reflected the results of
operations of Hupp as discontinued operations. In addition, certain secured and
unsecured liabilities associated with the operations of Hupp have been treated
as forgiven in the years ended June 30, 1996 and 1995 based on the outcome of
certain bankruptcy proceedings and a secured party asset sale. See Note 1 to the
Consolidated Financial Statements.

(2) On April 6, 1995, J&L, an indirect, majority-owned subsidiary of the
Company, acquired the business and substantially all of the assets of JLS and
TCI as discussed in Note 1 to the Consolidated Financial Statements. The
Acquisition was accounted for as a purchase and the results of operations for
the acquired assets from the date of acquisition (April 6, 1995) through June
30, 1995, were included in the Company's consolidated statement of operations
for the fiscal year ended June 30, 1995.

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

Significant Events

The Company evaluates potential prospects for growth of its business from
time to time, including through acquisitions of existing businesses. In April
1997, the Company announced a proposal to negotiate the acquisition of Steel of
West Virginia, Inc., ("SWVA") for $9.00 per share in cash, but was rebuffed by
SWVA management. The Company then solicited proxies to oppose certain
anti-takeover proposals made by SWVA management and in favor of the Company's
non-binding resolution urging SWVA to enter into negotiations with any qualified
bidder, including the Company, to sell SWVA. The Company was successful in
stimulating opposition to the anti-takeover proposals made by SWVA, but was
unsuccessful in winning approval to enter into negotiations for the purchase of
SWVA with management. To date, this situation remains unchanged. Although the
Company will continue to evaluate other options with regard to SWVA, management
has made a decision to consider other viable options which would result
primarily in providing J&L Structural with a lower cost source of billets.

On April 6, 1995, J&L, an indirect majority-owned subsidiary of the
Company, acquired the business and substantially all of the assets of JLS and
TCI (the "Acquisition") as discussed in Note 1 to the Consolidated Financial
Statements. JLS and TCI were specialty manufacturers of high quality,
lightweight structural steel shapes used primarily in the manufactured housing,
truck trailer and highway safety systems industries. The results of operations
for the acquired assets from the date of acquisition (April 6, 1995) through
June 30, 1995, were included in the consolidated statement of operations for the
fiscal year ended June 30, 1995. The assets of BESCC were also contributed to
J&L on the acquisition date, and therefore, the results of operations for BESCC
subsequent to April 6, 1995 are reported as a division (Brighton) within the
newly formed subsidiary, J&L.

On October 27, 1994, due to continuing operating losses, Hupp's senior
lender proceeded with a secured party sale of the assets of Hupp to an unrelated
party. As a result, all operations of Hupp and its wholly-owned division DCM
were discontinued shortly thereafter. The loss from the final discontinuation of
operations has been reflected in the year-end financial statements and results
for the previous fiscal years ended June 30, 1994 and 1993 have been restated to
show the discontinuation. In addition, on July 24, 1995, a final decree was
issued by the Bankruptcy Court for the Northern District of Ohio closing the
Chapter 11 case filed by Hupp prior to the Company's acquisition of Hupp. As a
result, certain notes payable, unsecured creditor obligations and administrative
claims relating to the Chapter 11 filing and totaling approximately $3,527,000
were forgiven. Certain other unsecured liabilities of Hupp which remained
outstanding subsequent to the secured party sale of assets discussed above which
totaled approximately $2,220,000, were written off during the year ended June
30, 1996. The $2,220,000 and $3,527,000 have been recorded in the Company's
consolidated statement of operations as a gain from discontinued operations and
an extraordinary item for the fiscal years ended June 30, 1996 and 1995,
respectively.

Results of Operations

Net Sales

The Company recorded net sales of $98,199,000 for the fiscal year 1997
which compares to net sales of $101,011,000 and $31,208,000 recorded for the
years ended June 30, 1996 and 1995, respectively. Comparability to the period
ended 1995 is impacted by the Acquisition that took place on April 5, 1995. For
fiscal year 1997, $92,144,000 of net revenues was attributable to the J&L
Structural operations while $6,055,000 was attributable to the Brighton
operation. This compares to $94,609,000 for J&L and $6,402,000 for Brighton in
fiscal year 1996. The decrease in net sales at J&L compared to the prior fiscal
year was primarily due to a decline in orders from domestic truck trailer
manufacturers in the most recent fiscal year. Volume has declined approximately
22% as that market segment has seen a general reduction in inventories and a
consolidation of accounts. Offsetting this reduction have been increased orders
from highway safety customers as well as continuing growth in the manufactured
housing segment of J&L Structural's business. Brighton's fiscal 1997 net sales
decreased approximately 5.4% from fiscal 1996 levels while fiscal 1996 net sales
had increased 5.6% compared to fiscal 1995. Brighton's 1997 net sales reflect an
overall lower product volume of higher priced, higher margin items.

The Company recorded net sales of $27,264,000 and $25,205,000 for the
three month periods ended June 30, 1997 and 1996, respectively. The three month
net sales for June 30, 1997 and 1996, are comprised of $25,830,000, $1,434,000,
$23,457,000, and $1,748,000 for J&L Structural and Brighton, respectively.
Volume increases of over 10% accounted for the increased net sales noted for the
1997 quarter. These increases were primarily in the shipment of JUNIOR (R) beams
to manufactured housing customers and wide flange beams to highway safety system
customers. Shipment of crossmembers to the truck trailer industry have remained
flat between periods.

Gross Margins

Gross margins as a percentage of net sales were 12.2%, 12.9%, and 16.9%,
respectively for fiscal years 1997, 1996, and 1995. Gross margins for J&L
Structural for the fiscal 1997, were 11.2% while margins at Brighton during that
period were 27.7%. These percentages compare to 11.4% and 24.2% for fiscal 1996,
respectively.

In July, 1996, J&L Structural activated a new 120-ton walking beam
furnace. During the initial start up of the furnace, and for several months
thereafter, numerous technical and operating issues were encountered. As a
result, productivity and yield performance during fiscal 1997 did not meet
anticipated levels and, therefore, many of the benefits anticipated for fiscal
1997 from this equipment upgrade did not materialize. Future performance is
expected to improve as these issues have been largely resolved. Additionally, a
charge totaling approximately $767,000 was taken during the fourth quarter of
fiscal 1997 representing engineering and feasibility studies relating to the
intended construction of a caster and melt shop, which would produce billets to
be processed by J&L Structural. The Company has put the project on hold while it
evaluates other potentially more favorable billet supply options. While a final
decision whether to continue the project or not has yet to be made, management
has taken the position that these costs represent a non-productive asset. The
negative impact from lower productivity and yield coupled with the charge off of
the caster/melt shop costs was partially offset by favorable billet costs due to
lower scrap prices and favorable supply arrangements.

Brighton margins improved significantly between fiscal 1997 and 1996, as
this business segments' margins reflect the sale of higher priced, higher margin
items. Margin comparisons to the 1995 period are impacted by the Acquisition and
the short period reflected in the Consolidated Statement of Operations for that
period.

Gross margins as a percentage of net sales for the three month periods
ending June 30, 1997 and 1996 were 10.3%, 30.2%, 14.5% and 32.9% for J&L
Structural and Brighton, respectively. Quarterly comparison for J&L Structural
reflects increased volume and improved billet costs in the 1997 period, offset
by lower sales prices, the charge off of the caster/melt shop costs and higher
profit sharing expense. Slightly lower margins at Brighton were the result of
lower volumes.

Selling, General and Administrative Expenses

Selling, general and administrative expenses totaled $6,576,000,
$7,075,000 and $3,169,000 for the fiscal years 1997, 1996, and 1995,
respectively. As a percentage of revenues, the amounts represented 6.7%, 7.0%,
and 10.2% of net revenues, respectively. Expenses for fiscal 1997 included over
$230,000 of research and development costs relating to new product development.
During fiscal 1996, approximately $600,000 was related to additional expense
related to litigation with a Hupp pension plan sponsor. Fiscal 1995 expenses
included expenditures of approximately $500,000 related to a one time charge to
J&L Structural relating to Acquisition costs and approximately $300,000 of
expense necessary at CPT to support the Hupp pension plan litigation referred to
above.

Interest Expense

Interest expense totaled $7,517,000, $7,193,000 and $2,070,000 for fiscal 1997,
1996 and 1995, respectively. The increase in interest expense during fiscal 1997
when compared to the prior year was primarily due to approximately $132,000 of
incremental interest expense being capitalized during the construction phase of
the new reheat furnace, in addition to a slight increse in the prime lending
rate. Interest expense for fiscal 1995 was impacted by the Acquisition and the
resulting short period of the related Acquisition debt outstanding for that
period.

Other Income/Expense

Other income/expense for the fiscal year 1997 reflects expenditures
(substantially incurred during the fourth quarter) which resulted from
professional costs relating to a potential acquisition of a steel company (see
"Significant Events" above). Other income/expense for fiscal year 1996 reflects
an $828,000 charge relating to the signing of a 58-month labor agreement with
J&L Structural's United Steel Workers of America local union on December 3,
1995.

Liquidity and Capital Resources

The Company's cash flows from operating activities totaled $4,646,000,
$1,866,000, and $3,056,000 for the fiscal years ended June 30, 1997, 1996, and
1995 respectively. The increase in cash flows from operations during fiscal 1997
compared to fiscal 1996 resulted from improved working capital management offset
partially by professional costs incurred in an attempt to acquire a steel
company. The decrease in cash flows from operations during fiscal 1996 compared
to fiscal 1995 resulted mainly from a buildup of inventories from less than
optimum levels existing during fiscal 1995.

The Company's cash flow from investing activities totaled ($3,219,000),
($9,973,000) and ($823,000) for fiscal 1997, 1996 and 1995 respectively. Fiscal
1995 is shown net of proceeds used for the acquisition in April of 1995, and net
of proceeds from the sale of Hupp. J&L completed the installation of a new
reheat furnace in July 1996. The total cost of the project was $8,500,000 of
which $7,100,000 has been expended to date, $400,000 of which was expended
during fiscal 1997. This project was financed through borrowings from the senior
lender capital expenditure facility, borrowings from state and county sources
and from the excess availability that existed under the revolving credit
facility. The remaining $1,420,000 owed to the contractor under the terms of the
contract represents a retention amount. Numerous technical and operating issues
on the construction and operation of the new furnace still remain, and
resolution of these issues will take place in binding arbitration. The timing
for resolution and final determination of the portion of the $1,420,000, if any,
which will be owed to the contractor is unknown at this time. The balance of
funds utilized for investing activities is primarily directed toward maintenance
and refurbishment spend.

The Company's cash flows from financing activities totaled ($1,540,000),
$7,309,000 and $51,170,000 for fiscal 1997, 1996 and 1995, respectively. During
fiscal 1997 and 1996, borrowings under the senior credit facility, the revolving
credit facility and state and county loans totaling approximately $2,000,000 and
$9,500,000, respectively, were offset by repayments against these credit
facilities.

Cash and cash equivalents totaled $61,000, $174,000, and $972,000 as of
June 30, 1997, 1996, and 1995, respectively. Although the Company's total equity
represents a deficit of approximately $11,600,000, this position is due largely
to the basis adjustment for the leveraged Acquisition during fiscal 1995 (refer
to the Statement of Changes in Shareholder's Equity (Deficiency) in the
Consolidated Financial Statements). Management believes that cash flow from
operations will continue to satisfy the Company's requirements to fund operating
expenses, debt service and maintenance and refurbishment capital expenditures in
the future.

Readers should be aware that the foregoing paragraphs contained forward
looking statements regarding management's expectations for the reheat furnace
and cash flows, which forward looking statements may not be realized. Several
important factors could cause the Company's actual results of operations to
differ materially from those expressed in the foregoing forward looking
statements, including: a significant downturn in manufactured housing
construction and sales may occur or billet costs may increase and J&L may not
have the ability to pass such costs to customers.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA

INCLUDED IN ITEM 14

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

On May 6, 1996, the Board of Directors of CPT approved Deloitte & Touche
LLP as its independent accountant for the year ending June 30, 1996, and,
simultaneously, management of CPT informed the former accountant, Grant Thornton

LLP, that it had been dismissed. CPT did not have any disagreements with Grant
Thornton regarding any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure. Refer to Form 8-K dated May
6, 1996, as filed by the registrant with the Securities Exchange Commission on
May 10, 1996 and Exhibit 1 thereto, incorporated herein by reference.

7
<PAGE>

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The names, ages and positions of the directors and executive officers of
CPT as of August 29, 1997 are as follows:

Name Age Positions

Richard L. Kramer 48 Chairman of the Board, Director
and Secretary of CPT
William L. Remley 46 President, Treasurer and Director of CPT
Richard C. Hoffman 49 Director of CPT

Mr. Kramer has served as Chairman of the Board, a Director, and Secretary
of the Company since January 3, 1992. For more than the past six years, Mr.
Kramer has served as Chairman of the Board, a Director, and as a director of
Republic Properties Corporation, a private real estate development firm. Since
1988, Mr. Kramer served as Chairman of the Board of Sunderland Industrial
Holdings Corporation, a private holding company in various industrial
manufacturing businesses. Mr. Kramer is also Chairman of the Board of Weldotron
Corporation, Chairman of the Board of Texfi Industries, Inc., and Chairman of
the Board, a Director and Secretary for Mentmore Holdings Corporation
("Mentmore"). Mr. Kramer is also Chairman of the Board, a Director, Vice
President and Secretary for Trinity Investment Corp. ("Trinity"), Ascott Wing,
Inc. ("Ascott Wing") and Halton House Limited.

Mr. Remley has served as a Director, President and Treasurer of CPT since
January 3, 1992. Since 1988, Mr. Remley has served as Vice Chairman of
Sunderland Industrial Holdings Corporation, a private holding company in various
industrial manufacturing businesses. Mr. Remley is also Vice Chairman and Chief
Executive Officer of Weldotron Corporation; Vice Chairman, Chief Executive
Officer and President and a Director of Texfi Industries, Inc.; a Director,
President and Treasurer of Trinity; a Director, President and Treasurer of
Ascott Wing; a Trustee for The A.J. 1989 Trust and a Director, President and
Treasurer of Mentmore.

Mr. Hoffman is a licensed attorney who has served as General Counsel of the
Company since January, 1995 and Assistant Secretary since July, 1995. He
currently practices law as Richard C. Hoffman P.C. in Greenwich, Connecticut.

ITEM 11. EXECUTIVE COMPENSATION

The following table sets forth the compensation paid to Mr. William L.
Remley for the fiscal years 1997, 1996 and 1995, as the only paid executive
officer of the Company.

Annual Compensation

Name and Salary Bonus Other Annual
Principal Position Year ($) ($) Compensation
(a) (b) (c) (d) (e)
1997 -0- -0- $12,000
William L. Remley 1996 -0- -0- $12,000
President 1995 $25,000(1) -0- -0-

In fiscal 1995, no director received fees for the attendance at Company
Board meetings. However, beginning July 1995, all directors of the Company
received director's fees totaling of $12,000 annually.

(1)Reflects the period from July 1, 1994 through December 31, 1994. Mr.
Remley ceased receiving compensation thereafter.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Norwest Bank Minnesota, N.A. ("Norwest") serves as escrow agent of certain
shares of the Company's Common Stock for the benefit of holders of "Allowed
Claims" and for the benefit of stockholders of CPT Corporation, pursuant to the
Reorganization Plan. As escrow agent, Norwest held approximately 378,600 shares
of Common Stock for the benefit of such persons as of August 29, 1997.

The following table sets forth certain information, as of August 29, 1997,
with respect to the beneficial ownership of Common Stock by each person who is
known by the Company to own beneficially more than 5% of outstanding shares of
CPT's Common Stock, by each director of CPT, and by all officers and directors
as a group:
Number of Shares Percent of
Beneficially Common
Name Owned (1) Stock
- ---- --------- ----------
Richard L. Kramer -0- -0-
William L. Remley -0- -0-
Ascott Wing, Inc. (2) 604,586 15.87%
Trinity Investment Corp. (3)(4) 2,372,500 62.27%
Halton House Limited (2)(4)(5) 2,977,086 78.14%
The Halton Declaration of Trust (2)(4)(5) 2,977,086 78.14%
Bahamas Protectors Ltd., a Bahamian
corporation (2)(4)(5) 2,977,086 78.14%
All Directors and Officers as a group 2,977,086 78.14%
(3 persons including those named above) (4)(5)(6)

(1) The Persons named in the table have sole voting and investment power with
respect to all shares of Common Stock shown as beneficially owned by each of
them, subject to community property laws, where applicable, and the information
contained in other footnotes to the table.

(2) The principal offices of Ascott Wing, are at 1430 Broadway, 13th Floor, New
York, New York 10018. Halton House Limited, owns all of the outstanding stock of
Ascott. Halton House Limited's principal offices are located at c/o Coutts and
Company (Bahamas) LTD., P.O. Box N7788, West Bay Street, Nassau, Bahamas.
William L. Remley and Richard L. Kramer are directors and executive officers of
Halton House Limited. The Halton Declaration of Trust ("Halton Trust") whose
principal address is c/o Coutts and Company (Bahamas) LTD, P.O. Box N7788, West
Bay Street, Nassau, Bahamas, is the majority owner of Halton House Limited. All
powers with respect to investment voting securities beneficially owned by Halton
Trust are exercisable by Bahamas Protectors Ltd., a Bahamian corporation,
protector under the constituent documents of Halton Trust. Bahamas Protectors
Ltd.'s business address is c/o Private Trust Corp., Charlotte House, Charlotte
Street, Nassau, Bahamas.

(3) The principal offices of Trinity are at 1430 Broadway, 13th Floor, New York,
New York 10018. Halton House Limited owns all of the outstanding stock of
Trinity (see Note 2 above). William L. Remley and Richard L. Kramer are
directors and executive officers of Trinity.

(4) Includes 2,300,000 shares that could be acquired upon exercise of two
separate Warrants an ;one warrant representing a right to purchase 2,000,000
shares at an exercise price of $1.00 per share and one warrant representing a
right to purchase 300,000 shares at an exercise price of $4.00 per share. (see
Item 13).

(5) Includes shares owned by Ascott and shares subject to a Warrant
owned by Trinity (see Note 4 above).

(6) Includes shares over which Mr. Remley and Mr. Kramer may be deemed to
share voting and investment power (see Notes 2 and 3 above).

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

On February 1, 1996, Trinity and CPT entered into an unsecured line of
credit agreement totaling $1 million and bearing interest at 13% payable with
interest only semi-annually beginning April 1, 1996, until due in December,
2002. This line of credit was established to satisfy debt service at the holding
company level. In conjunction with the execution of the line of credit, 300,000
warrants for CPT stock have been issued to Trinity for a period of ten years
with an exercise price of $4.00 per warrant.

On April 1, 1995, CPT entered into a Credit Agreement and Security
Agreement with Trinity wherein Trinity agreed to loan CPT the principal amount
of $6,730,000 for the purpose of making a required $5,000,000 equity capital
infusion to JLH in order to consummate the Acquisition of the assets of JLS and
TCI, to retire the existing Variable Rate Debenture of CPT to Trinity in the
amount of $900,000 dated February 5, 1993 and to satisfy and retire certain
other short-term obligations of CPT plus accrued interest.
Included within the Credit Agreement was the following:

1. A fixed rate Debenture of CPT dated April 1, 1995 under which CPT
promises to pay Trinity, or any subsequent holder of the Debenture, the
principal sum of $6,730,000, plus accrued and unpaid interest at the fixed rate
of 13% per annum and costs provided therein, on or before December 15, 2002.

2. A Warrant Purchase Agreement dated April 1, 1995 by and between CPT and
Trinity, in which (i) CPT granted to Trinity Warrants to purchase up to
2,000,000 shares of the common stock of CPT at an exercise price of $ 1.00 per
share, (ii) CPT made certain representations to Trinity regarding its
capitalization, the shares of Common Stock outstanding, the authorization of the
Warrant and the continued truth and accuracy of representations of CPT in the
Credit Agreement and Security Agreement, (iii) Trinity made certain
representations to CPT, including representations regarding the status of the
Warrant (and the underlying shares of Common Stock, if issued) as "restricted
securities" due to the anticipated issuance of such securities pursuant to
exemptions from registration under the Securities Act of 1933, as amended, and
(iv) CPT granted Trinity certain rights to receive financial information and
reports of the Company and to inspect the assets, properties, books and records
of the Company and its subsidiaries.

3. Security Agreement dated April 1, 1995, between CPT and Trinity in
which CPT pledged all of its shares of JLH to Trinity as collateral for the
performance of its obligations under the new Credit Agreement.

Trinity has its principal business and executive offices at 1430 Broadway,
13th Floor, New York, New York 10018. Trinity is engaged in the investment
business. Richard L. Kramer is Chairman of the Board, a Director, Vice President
and Secretary of Trinity, and William L. Remley is a Director, President and
Treasurer of Trinity.

Halton House Limited, a Bahamian Corporation, owns all of the outstanding
capital stock of Trinity and Ascott Wing. Halton House Limited is a holding
company with interests in investment and industrial/ manufacturing/technology
companies. Richard L. Kramer is Chairman of the Board, a Director, Vice
President and Secretary of Halton House Limited, and William L. Remley is a
Director, President and Treasurer of Halton House Limited. Halton House Limited
is owned beneficially by The Halton Declaration of Trust which is a trust
created under the laws of the Bahamas. As of August 29, 1997, all powers with
respect to investment or voting securities beneficially owned by The Halton
Declaration of Trust are currently exercisable by Bahamas Protectors Ltd., a
Bahamian corporation, protector under the constituent documents of The Halton
Declaration of Trust.

Ascott Wing has its principal business and executive offices at 1430
Broadway, 13th Floor, New York, New York 10018. Ascott Wing is engaged in the
investment business. Richard L. Kramer is Chairman of the Board, a Director,
Vice President and Secretary of Ascott Wing, and William L. Remley is a
Director, President and Treasurer of Ascott Wing. The preferred stock redemption
obligation to Ascott Wing including accrued dividends through March 15, 1995,
totaling $475,204 was converted to a deferred purchase money note bearing
interest at a rate of 11% and payable interest only annually beginning March 15,
1996 and due December, 2002.

A management agreement exists between CPT and J&L whereby CPT or its
designated affiliate provides executive management advisory services to J&L. The
contract term of the agreement is for a period of six years through March, 2001
and is subject to being automatically renewed annually thereafter, unless
terminated by either party to the agreement. Annual compensation to CPT under
this agreement totals $600,000, which includes out-of-pocket expenses incurred
by CPT of up to $150,000 annually. CPT exercised its right under the agreement
to designate Mentmore as the management advisory service provider and as a
result has assigned all fees to which CPT is entitled under this agreement to
Mentmore. Management fee expense paid to Mentmore for the years ended June 30,
1997, 1996 and 1995 under this agreement totaled $600,000, $600,000 and
$150,000, respectively. Richard L. Kramer is Chairman of the Board, a Director
and Secretary of Mentmore, and William L. Remley is a Director, President and
Treasurer of Mentmore.

8
<PAGE>

PART IV

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

A. Documents to be filed as part of this Report.

1. The following financial statements of the Company and the report of
its independent auditors are filed herewith:
Page of this Report

Independent Auditors' Report of Deloitte & Touche LLP.................23
Independent Auditors' Report of Grant Thornton LLP....................24
Financial Statements:
Consolidated Balance Sheets as of June 30, 1997 and 1996..............25
Consolidated Statements of Operations for the Years Ended
June 30, 1997, 1996, 1995 ......................................26
Consolidated Statements of Changes in Shareholders' Deficit
for the Years Ended June 30, 1997, 1996, 1995...................27
Consolidated Statements of Cash Flows for the Years Ended
June 30, 1997, 1996, 1995.......................................28
Notes to Consolidated Financial Statements............................30

2. The following financial statement schedules of the Company and the
related reports of independent auditors are filed herewith:

Page of this Report

Independent Auditors' Report of Grant Thornton LLP on Schedules.......43
Financial Statement Schedules
I - Condensed Financial Information of Registrant.............44
II - Valuation and Qualifying Accounts.........................45

Exhibit 11 - Computation of Earnings Per Share..................46
Exhibit 27 - Financial Data Schedule............................47

Schedules other than those listed above are omitted because of the absence
of the conditions under which they are required or because the information
required is included in the financial statements or the notes thereto.

B. Reports on Form 8-K
None

9
<PAGE>

SIGNATURES

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.

Dated: October 1, 1997 CPT HOLDINGS. INC.
By: /s/William L. Remley
William L. Remley, President

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.

Signature Title Date

/s/ Richard L. Kramer Chairman of the Board,
Richard L. Kramer Secretary and Director October 1, 1997

/s/ William L. Remley President, Treasurer and October 1, 1997
William L. Remley Director (Principal
Executive, Accounting and
Financial Officer)

/s/ Richard C. Hoffman Director October 1, 1997
Richard C. Hoffman

10
<PAGE>

INDEPENDENT AUDITORS' REPORT

Board of Directors
CPT Holdings, Inc. and Subsidiaries

We have audited the consolidated balance sheets of CPT Holdings, Inc. and
Subsidiaries as of June 30, 1997 and 1996, and the accompanying related
consolidated statements of operations, changes in shareholders' deficit and cash
flows for the years then ended. Our audits also included the financial statement
schedules listed in the Index at Item 14. These financial statements and the
financial statement schedules are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and financial statement schedules based on our audits.

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

In our opinion, such consolidated financial statements referred to above present
fairly, in all material respects, the financial position of CPT Holdings, Inc.
and Subsidiaries as of June 30, 1997 and 1996 and the results of their
operations and their cash flows for the years then ended in conformity with
generally accepted accounting principles. Also, in our opinion, such financial
statement schedules, when considered in relation to the basic consolidated
financial statements taken as a whole, present fairly in all material respects
the information set forth therein.

DELOITTE & TOUCHE LLP

Pittsburgh, Pennsylvania
September 5, 1997
(September 26, 1997 as to Note 7)

11
<PAGE>

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors
CPT Holdings, Inc. and Subsidiaries

We have audited the accompanying consolidated statements of operations, changes
in stockholders' equity (deficit) and cash flows for the years ended June 30,
1995 of CPT Holdings, Inc. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

We conducted our audit 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 audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated results of operations and
cash flows of CPT Holdings, Inc. and subsidiaries for the year ended June 30,
1995, in conformity with generally accepted accounting principles.

GRANT THORNTON LLP

Pittsburgh, Pennsylvania
September 26, 1995, (except for Note 7, to which the date is October 12, 1995.)

12
<PAGE>

CPT Holdings, Inc. and Subsidiaries

CONSOLIDATED BALANCE SHEETS

June 30,

ASSETS

<TABLE>
<S> <C> <C>
1997 1996
Current assets
Cash and cash equivalents $ 61 $174
Receivables, net 9,471 8,506
Inventories 9,876 10,813
Deferred tax asset 202 -
Other current assets 146 130
--- ---

Total current assets 19,756 19,623

Property, plant and equipment, net 43,749 44,500
Goodwill, net of accumulated amortization of $519 and $424,
Respectively 1,365 1,460
Deferred financing costs, net of accumulated
amortization of $960 and $538, respectively 1,952 2,374
Other assets 348 627
--- ---

Total assets $ 67,170 $ 68,584
======== ========

LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities
Current portion of long-term obligations $ 3,378 $ 2,776
Accounts payable 9,562 8,881
Accrued liabilities 5,581 4,052
Payable to affiliate 165 -
--- -----

Total current liabilities 18,686 15,709

Long-term obligations, net of current portion 56,955 58,888
Other long-term obligations 300 400
Deferred tax liability 540 -

Minority interest in consolidated subsidiaries 2,327 2,571

Common shareholders' deficit
Common stock authorized 30,000,000 shares of $0.05
par value each; 1,510,084 shares issued and outstanding 76 76
Additional paid-in capital 5,737 5,737
Accumulated deficit (17,451) (14,797)
------- -------

Total common shareholders' deficit (11,638) (8,984)
------- ------

Total liabilities and common shareholders' Deficit $ 67,170 $ 68,584

The accompanying notes are an integral part of these statements.
</TABLE>

13
<PAGE>

CPT Holdings, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS
Years ended June 30,

(in thousands of dollars, except share amounts)
1997 1996 1995

Net Sales ................................. $ 98,199 $ 101,011 $ 31,208
Costs of sales ............................ 86,247 88,016 25,929
------ ------ ------
Gross profit .................... 11,952 12,995 5,279

Selling, general and administrative ....... 6,576 7,075 3,169

Operating income .......................... 5,376 5,920 2,110
Other (income) expense:
Interest expense - net .................... 7,517 7,193 2,070
Minority interest ......................... (244) 77 26
Other (income) expense, net ............... 420 659 (7)
--- --- --

Income (loss) from continuing
operations before income taxes ............ (2,317) (2,009) 21
Income tax benefit (charge) ............... (337) 100 389
---- --- ---

Income (loss) from continuing operations .. (2,654) (1,909) 410
Discontinued operations:

Loss from operations of discontinued ...... -- -- (553)
subsidiaries
Net gain (loss) on disposal of discontinued
subsidiaries .............................. -- 2,220 2,129
----- ----- -----
Income (loss) before extraordinary item ... (2,654) 311 1,986
Extraordinary item:
Gain from extinguishment of debt of
discontinued operation .................... -- -- 3,527
----- ----- -----
Net income (loss) ......................... $(2,654) 311 $ 5,513

Primary earnings (loss) per share:
From continuing operations ............... $ (1.76) $ (.58) $ .27
From discontinued operations ............. -- .69 1.04
From extraordinary item .................. -- -- 2.34
----- ----- -----
Total .................................... $ (1.76) $ .11 $ 3.65

Weighted average common shares outstanding 1,510,084 3,208,067 1,510,084

Fully-diluted earnings (loss) per share:
From continuing operations ................ $ (1.76) $ (.58) $ .23
From discontinued operations .............. -- .69 .81
From extraordinary item ................... -- -- 1.82
----- ----- -----
Total ........................... $ (1.76) $ .11 $ 2.86
Fully-diluted common and common equivalent
shares ............................... 1,510,084 3,208,067 1,934,580
</TABLE>

The accompanying notes are an integral part of these statements.

14
<PAGE>

CPT Holdings, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' DEFICIT

Years ended June 30, 1997, 1996, 1995

(in thousands of dollars, except share amounts)

Common Stock Additional Accumulated
Paid-In Deficit
Shares Amount Capital

Balance at June 30, 1994 . 1,510,084 $ 76 $ 4,368 $ (10,916)

Basis Adjustment for ..... -- -- -- (9,705)
Leveraged Acquisition (See
Note 1)

Fair value of warrants ... -- -- 840 --
issued with Amended Credit
Agreement

Fair value of warrants ... -- -- 153 --
issued with Subordinated
Term Note

Net income ............... 5,513
--------- ---------- ---------- ----------
Balance at June 30, 1995 . 1,510,084 76 5,361 (15,108)

Fair value of warrants ... -- -- 376 --
issued with unsecured line
of credit agreement

Net income ............... -- -- -- 311
---------- ---------- ---------- ----------
Balance at June 30, 1996 . 1,510,084 76 5,737 (14,797)

Net loss ................. -- -- -- (2,654)
---------- ---------- ---------- ----------
Balance at June 30, 1997 . 1,510,084 $ 76 $ 5,737 $ (17,451)
========== ========== ========== ==========

The accompanying notes are an integral part of these statements.

15
<PAGE>

CPT Holdings, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years ended June 30,

(in thousands of dollars)
<TABLE>
<S> <C> <C> <C>
1997 1996 1995
---- ---- ----
Cash flows from operating activities:
Net income (loss)
From continuing operations ......................... $ (2,654) $ (1,909) $ 410
From discontinued operations ....................... -- 2,220 1,576
From extraordinary item ............................ -- -- 3,527
-------- -------- --------
(2,654) 311 5,513

Adjustments to reconcile net income (loss)
to net cash from operating activities:
Minority interest in (loss) earnings of subsidiaries (244) 77 26
Loss (gain) on discontinued operations ............. -- (2,220) (2,129)
Gain on extinguishment of debt ..................... -- -. (3,527)
Depreciation and amortization ...................... 4,108 3,333 900
Deferred caster and melt shop charge ............... 767 -- --
Deferred taxes ..................................... 337 -- (710)
Changes in assets and liabilities,
net of divestiture effects of Hupp and effects
from purchase and contribution of the assets
of J&L and Brighton:
Decrease (increase) in accounts receivable .... (965) 2,264 540
Decrease (increase) in inventory .............. 937 (2,804) 1,935
Decrease (increase) in other current assets ... (16) 70 (128)
Increase (decrease) in accounts payable
and accrued liabilities ................... 2,211 881 4,237
Increase (decrease) in accrued loss
on sale of assets ......................... -- -- (3,049)
Increase (decrease) in other current
liabilities ............................... 165 (46) (552)
-------- -------- --------
Net cash provided by operating
activities ............................ 4,646 1,866 3,056
-------- -------- --------
Cash flows from investing activities:
Proceeds used to purchase the
assets of J&L Structural, Inc. .......... -- -- (54,659)
Proceeds from the sale of assets of Hupp ...... -- -- 1,934
Decrease (increase) in other non-current assets 279 -- (72)
Capital expenditures .......................... (3,498) (9,973) (751)
-------- -------- --------

Net cash used in investing activities ... (3,219) (9,973) (53,548)
</TABLE>

(CONTINUED)

16
<PAGE>

CPT Holdings, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

Years ended June 30,
(in thousands of dollars)
<TABLE>
<S> <C> <C> <C>
1997 1996 1995
---- ---- ----

Cash flows from financing activities:

Proceeds from issuance of long-term debt ....... 1,000 $ 2,000 50,000
Deferred financing costs ....................... -- -- (2,277)
Sale of common stock of subsidiary .............. -- -- 2,469
Net borrowings under Revolving Credit Facility (621) 6,659 3,656
Borrowings under state/local loans .............. 1,000 -- --
Repayments of state/local loans ................. (78) -- --
Borrowings under unsecured line of credit ....... 34 966 --
Repayments of long-term debt .................... (2,775) (2,116) (2,678)
Other ........................................... (100) (200) --
---- ---- ----
Net cash provided (used)
by financing activities ...................... (1,540) 7,309 51,170
Net increase (decrease) in cash
and cash equivalents ......................... (113) (798) 678

Cash and cash equivalents:
Beginning of year ............................ 174 972 294
--- --- ---

End of year .................................. $ 61 $ 174 $ 972
======== ======== ========

Supplemental Data - Cash paid
during the year for:
Interest, net of capitalized amounts ......... $ 6,268 $ 7,565 $ 650
======== ======== ========
Income taxes ................................. $ -- $ 169 $ 21
======== ======== ========
</TABLE>

Information regarding non-cash investing and financing activities:

Reduction in equity and property, plant & equipment totaling $9,705,000 due to
the basis adjustment for the leveraged Acquisition during fiscal 1995.

The accompanying notes are an integral part of these statements

17
<PAGE>

NOTE 1 - BASIS OF PRESENTATION

Consolidated Accounts

The accompanying consolidated financial statements include the accounts of CPT
Holdings, Inc., a Minnesota corporation and its direct and indirect
majority-owned subsidiaries (the "Company"), J&L Structural, Inc. ("J&L"), a
Delaware Corporation, J&L Holdings Corp. ("JLH"), a Delaware Corporation,
Continuous Caster Corporation ("CCC"), a Delaware Corporation and H. Industries,
Inc. ("Hupp.") All material intercompany transactions have been eliminated in
consolidation.

Acquisitions

The Company evaluates potential prospects for growth of its business from time
to time, including through acquisitions of existing businesses. In April 1997,
the Company announced a proposal to negotiate the acquisition of Steel of West
Virginia, Inc., ("SWVA") for $9.00 per share in cash, but was rebuffed by SWVA
management. The Company then solicited proxies to oppose certain anti-takeover
proposals made by SWVA management and in favor of the Company's non-binding
resolution urging SWVA to enter into negotiations with any qualified bidder,
including the Company, to sell SWVA. The Company was successful in stimulating
opposition to the anti-takeover proposals made by SWVA, but was unsuccessful in
winning approval to enter into negotiations for the purchase of SWVA with
management. To date, this situation remains unchanged. Although the Company will
continue to evaluate other options with regard to SWVA, management has made a
decision to consider other viable options which would result primarily in
providing J&L Structural with a lower cost source of billets. Professional costs
approximating $500,000, which related to the situation, were recorded as other
expense during the fourth quarter of fiscal 1997.

On April 6, 1995, J&L, a newly incorporated, indirect, majority-owned subsidiary
of the Company, acquired substantially all of the assets of J&L Structural, Inc.
("JLS") and Trailer Components, Inc. ("TCI"), Pennsylvania corporations based in
Aliquippa, Pennsylvania, for $50 million plus the assumption of certain
liabilities (the "Acquisition"). The Acquisition was accounted for as a purchase
effective April 6, 1995, and accordingly, at such date the Company recorded the
assets and liabilities assumed at their estimated fair values, adjusted for the
impact of the continuing residual interest of predecessor owners. Consequently,
the accompanying financial statements for fiscal 1995 reflect the results of
operations and cash flows of J&L from the period from the Acquisition (April 6,
1995) to June 30, 1995. Because the Acquisition qualified as a highly leveraged
transaction and a portion of the predecessor ownership will remain as indirect
stockholders of J&L, application of the guidance in Emerging Issues Task Force
(EITF) Issue No. 88-16 - "Basis in Leveraged Buyout Transactions" resulted in a
reduction of property, plant and equipment and common stockholders' equity in
the amount of $9,705,000.

As part of the Acquisition, the assets of Brighton Electric Steel Casting
Company ("BESCC"), an existing subsidiary of CPT and the direct parent of J&L,
were contributed to J&L and as of the date of the Acquisition operate as a
distinct division of J&L ("Brighton"). BESCC simultaneously changed its name to
J&L Holdings Corp. ("JLH"). Prior to the closing of the Acquisition, BESCC
redeemed its preferred stock from the holder thereof in consideration for the
issuance by the Company of a Deferred Purchase Money Note in the approximate
amount of $475,000, said amount equal to the stated value for the preferred
stock plus the accrued dividends thereon, bearing interest at 11% and due
December 15, 2002.

The purchase price and related expenses were funded as follows: (1) a $25
million 6-year Senior Term Loan bearing interest at prime plus 2% and secured by
a first lien on the assets of J&L; (2) $23 million of Subordinated Term Notes,
each bearing interest at 13%, secured by a junior lien on the assets of J&L and
including a grant of warrants equal in the aggregate to 15.3% of the common
stock ownership of J&L (on a fully-diluted basis), exercisable at $.01 per share
and subject to certain exercise restrictions; (3) a $15 million Revolving Line
of Credit bearing interest at prime plus 1.5% having an initial term of 5 years
followed by a 1 year right of renewal at the lender's discretion; (4) a capital
contribution of approximately $2.5 million by the shareholders of JLS and TCI in
return for the issuance of common stock representing 19.8% of JLH, which was in
turn contributed to J&L; and (5) a $5 million capital contribution from the
Company to JLH which was, in turn, contributed by JLH to J&L. Note 1 - BASIS OF
PRESENTATION - (CONTINUED)

Also as part of the Acquisition, J&L distributed as a dividend to JLH the right
(which J&L acquired from JLS) to acquire a 38-acre parcel of undeveloped land
adjacent to the JLS rolling mill in Aliquippa, Pennsylvania. JLH, in turn,
contributed the right to acquire the 38-acre parcel to CCC in exchange for all
of the common stock of CCC. Shortly thereafter, CCC acquired title to the
38-acre parcel, using funds which JLS had placed in escrow prior to the
Acquisition.

Discontinued Operations and Extraordinary Item

On October 27, 1994, Hupp, its senior lender and the Company entered into a
secured party asset sale agreement under which the senior lender and the Company
sold to a third party, for approximately $1,780,000, their interests in
substantially all of Hupp's assets. Pursuant to a sharing arrangement, the
Company received $75,000 from the senior lender from these proceeds.
Additionally, the bank and the Company agreed separately upon a sharing
arrangement in all payments received on Hupp's $213,000 note receivable in which
both held perfected security interests. Under the arrangement, the Company
received a maximum of $75,000 and all remaining amounts were retained by the
senior lender. Subsequent to the secured party sale, Hupp's historical
operations ended, and Hupp was left with virtually no assets from which to pay
its remaining unsecured obligations, including approximately $1,275,000 to the
senior lender. This transaction was estimated to result in a loss totaling
$3,049,000 which was recorded as an accrued loss on sale of assets at June 30,
1994. The actual loss incurred as a result of the asset sale totaled
approximately $920,000. The difference between the actual and estimated loss was
due to changes in estimates with regard to certain contingencies and changes in
financial position with regard to certain working capital items. As a result of
the submission of a final decree on July 24, 1995, which closed Hupp's Chapter
11 case filed prior to the Company's acquisition of Hupp stock in February 1993,
certain outstanding notes payable, unsecured creditor obligations and
administrative claims of Hupp totaling approximately $3,527,000 have been
recognized as an extraordinary gain on extinguishment of debt for the fiscal
year ended June 30, 1995. Additionally, during fiscal 1996, the remaining
liabilities of Hupp were written off, resulting in $2,220,000 of income from
discontinued operations in the year ended June 30, 1996. There are no remaining
assets or liabilities of Hupp existing on its balance sheet as of June 30, 1996.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. The Business

The Company's operations include two distinct business segments within its
single indirect operating subsidiary, J&L: J&L Structural and Brighton.
J&L Structural manufactures and fabricates lightweight structural steel
shapes which are distributed principally to the manufactured housing,
tractor trailer construction and ship building industries. Brighton
designs, manufactures and sells steel piercer points which represent
disposable tooling used in the production of seamless steel tubes used in
the petrochemical industry. CCC is a majority-owned, indirect subsidiary
which holds title to 38 acres of undeveloped land adjacent to J&L in
Aliquippa, Pennsylvania.

b. Inventories

The Company's inventories are valued at the lower of cost (first-in
first-out basis) or market value.

c. Cash Equivalents

For purposes of cash flows reporting, all investments purchased with
maturities of 90 days or less are treated as cash equivalents.

18
<PAGE>

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

d. Property and Depreciation

Property and equipment are stated at cost. Expenditures for additions,
renewals and improvements of property and equipment are capitalized, and
expenditures for repairs and maintenance and gains or losses on disposals
are included in results of operations. Depreciation was computed using
primarily the straight-line method over the following estimated lives:

Building 30 years
Machinery and equipment 7- 20 years
Furniture and fixtures 5 - 7 years
Office equipment 5 years
Roll inventory 3 years

e. Goodwill

The goodwill associated with acquisitions is amortized on a straight-line
basis over a period of 20 years.

f. Deferred Financing Costs

Amortization of deferred financing costs is charged to interest expense on
a periodic basis using a straight-line method over the average term of the
Company's senior and subordinated loan facilities with independent
lenders.

g. Impairment

On an ongoing basis, management reviews the valuation of property, plant
and equipment and intangible assets. As part of the review, the Company
estimates the value and future benefits of the cash flow generated by the
related subsidiaries to determine that no impairment has occurred.

h. Revenue Recognition

Revenue is recognized when product is shipped to dealers, distributors and
direct customers.

i. Research and Development

All product development costs are expensed as incurred. For the years
ended June 30, 1997, 1996 and 1995, these amounts were approximately
$230,000, $54,000 and $7,700, respectively.

j. Insurance

J&L provides health insurance and workers' compensation coverages to its
employees under separate self-insurance programs that include certain
stop-loss coverages. Insurance expense is recognized based on estimated
losses incurred under the program. Components of insurance expense include
paid claims, incurred but not paid claims and estimated incurred but not
reported claims.

k. Income Taxes

The Company accounts for income taxes utilizing the asset and liability
method as prescribed by Statement of Financial Accounting Standards No.
109 - Accounting for Income Taxes. Deferred income taxes are recognized
for the tax consequences of temporary differences between the financial
statement carrying amounts and the tax basis of existing assets and
liabilities by applying enacted statutory tax rates applicable to future
years. Deferred tax assets are reduced by a valuation allowance if it is
more likely than not that such benefits will not be realized, based upon
available evidence.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

l. Earnings Per Share

The computation of primary earnings per share does not included certain
outstanding stock warrants as common stock equivalents in the circumstance
that the average stock price for the period is below the warrant exercise
price making the warrants antidilutive.

The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standard ("SFAS") No. 128 - Earnings Per Share. SFAS No. 128
establishes new standards for computing and presenting earnings per share,
and is effective for financial statements issued for periods ending after
December 15, 1997. The Company believes adoption of this Standard will have
an immaterial impact on its earnings per share computation.

m. Management Estimates

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

NOTE 3 - ACCOUNTS RECEIVABLE

Accounts receivable consisted of the following at June 30:

(in thousands of dollars)

1997 1996

Trade receivables $ 9,428 $ 8,467
Other 261 346
---------- ----------
9,689 8,813
Less allowance for doubtful accounts 151 206
Less allowance for discounts and returns 67 101
------------ -------------

Accounts receivable, net $ 9,471 $ 8,506
========== ==========
For the years ended June 30, 1997, 1996 and 1995, no customer accounted for more
than 10% of the Company's net sales.

NOTE 4 - INVENTORIES

Inventories consisted of the following at June 30:

(in thousands of dollars)

1997 1996

Raw Materials $ 1,954 $ 1,971
Finished goods 7,922 8,842
------------ -----------

Total $ 9,876 $ 10,813
============ =============

19
<PAGE>

NOTE 5 - PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consisted of the following at June 30:

(in thousands of dollars)

1997 1996
---- ----

Land and land improvements $ 320 $
291
Building 1,972 1,082
Machinery and equipment 46,285 36,599
Furniture and fixtures 358 350
Office equipment 343 302
Roll inventory 1,320 802
Construction-in-process 62 8,503
------------ -----------

50,660 47,929
Less accumulated depreciation 6,911 3,429
------------ -----------

Total $ 43,749 $ 44,500
============ ============

Included within construction-in-process as of June 30, 1996 was approximately
$694,000 of costs incurred by J&L related to the possible construction of a
caster and melt shop, which would produce billets to be processed by J&L. During
1997, an additional $73,000 was incurred on this project. At June 30, 1997, as
part of its regular quarterly analysis, management reviewed the costs expended
on this project and while a final decision whether or not to construct a caster
and melt shop has not been made, the Company has put the project on hold while
it evaluates other potentially more favorable billet supply options. As a result
of this decision management presently views this asset as being non-productive
and has taken a charge of approximately $767,000 during the fourth quarter of
fiscal 1997.

NOTE 6 - ACCRUED LIABILITIES

Accrued liabilities consisted of the following at June 30:
(in thousands of dollars)
1997 1996
---- ----
Salaries, commissions and benefits payable $1,825 $1,741
Interest 1,595 536
Hupp pension contingency 179 424
Other liabilities 1,982 1,351
----------------- ----- -----

Total $5,581 $4,052
====== ======

20
<PAGE>

NOTE 7 - LONG-TERM OBLIGATIONS

Long-term obligations consisted of the following at June 30:
<TABLE>
<S> <C> <C>
1997 1996
(in thousands of dollars)

Senior Term Loan, $25,000,000 principal amount, interest at prime plus 2.0%,
payable in monthly installments, beginning August 1, 1995, with final payment
due April 1, 2001, senior position
collateralized by all the assets, contracts,
real property and common stock of J&L. $20,108 $21,884

Revolving Loan Facility, $15,000,000 principal amount,interest at prime plus
1.5%, payable April 1, 2000, with a oneyear renewal option, senior position
collateralized by all the assets,contracts, and real property and common
stock of J&L. Borrowingsare based on accounts
receivable trade amounts and inventory values. 9,251 9,880

Subordinated Term Notes, $23,000,000 principal amount, interest at the fixed
rate of 13%, payable interest only quarterly beginning June 30, 1995 through
March 31, 2002 and then quarterly principal payments of $1,500,000 plus interest
until due in June, 2005,subordinated position to the senior debt with respect to
collateralization by all the assets, contracts, real property and common stock
of J&L. The Notes have been discounted $153,000 at the date
of issuance for financial statement reporting
purposes as a result of the fair value attributed
to their related warrants (see Note 1). 23,000 23,000

Machinery and Equipment Loan Fund (MELF) loan, $500,000 principal amount,
interest a fixed rate of 3%, payable monthly beginning December 1, 1996, with
final payment due November 1, 2001, subordinated position to senior and
subordinated debt with respect to collateralization by all
assets, contracts and real property of J&L. 438 -

Beaver County Enterprise Zone and Development Fund loans, $250,000 principal
amount each, interest at 3% and 4.125% respectively, payable monthly beginning
June 1, 1997, with final payment due May 1, 2001, subordinated position to the
senior and subordinated debt with respect to collateralization
by all assets, contracts and real property of J&L. 485 -

Fixed rate 13% debenture agreement with a related investment company, $6,730,000
principal amount, payable semi-annually interest only beginning October 1, 1995
and due December 2002, secured by the Company's stock held in JLH. The debenture
has been discounted $840,000 at the date of issuance for financial statement
reporting purposes as a result of the fair value
attributed to the related warrants (see below). 6,730 6,730

Deferred purchase money note payable to a related holding company, interest
fixed at 11%, payable annually interest only beginning March
15, 1996 and due December 2002. 475 475

Unsecured line of credit to $1,000,000 with a related investment company,
bearing interest at 13% and payable with interest only semi-annually beginning
April 1, 1996 until due in March, 2002. The line of credit has been discounted
$376,000 at the date ofissuance for financial statement reporting purposes as a
result of the fair value attributed to the related warrants (see below). 1,000 966
----- ---

61,487 62,935
Total 3,378 2,776
Less-current maturities 1,154 1,271
Less-discounts on long term obligations ------- -----
$ 56,955 $ 58,888
Long-term obligations, net ========== ===========

</TABLE>

At June 30, 1997, the following table sets forth the scheduled maturities of the
long-term debt of the Company (in thousands of dollars):

June 30,
--------
1998 $ 3,378
1999 4,321
2000 13,940
2001 8,517
2002 1,625
Thereafter 29,706
----------
$ 61,487
===========

J&L capitalized interest on capital projects during their construction period in
fiscal 1997 and 1996 totaling approximately $130,000 and $262,000, respectively.

Included within the $25,000,000 Senior Term Loan, above, the lender provided a
Capital Expenditure Line of Credit in the principal amount of $3,000,000, which
bears interest at the same rate as the Senior Term Loan. At June 30, 1997,
$3,000,000 had been borrowed against this facility and was outstanding. Any
borrowings made under this Line of Credit are payable in equal monthly
installments beginning May 1, 1998 with the final payment to be made April 1,
2001.

Under the terms of the Revolving Loan, the Company used $875,000 of its credit
availability to issue a Letter of Credit. This Letter has been issued to an
insurance company collateralizing the costs of certain insurance programs (see
Note 12).

The Senior Term Loan, Revolving Loan Facility and the Subordinated Term Notes
include certain provisions which, among other things, provide that J&L will
maintain certain financial ratios, limit the amount of annual capital
expenditures, maintain a minimum tangible net worth and limit the amount of
shareholder distributions. As of June 30, 1997, J&L was not in compliance with
the provisions of the loan agreements dealing with the determination of the
financial ratios of operating cash flow to contractual total debt service with
the senior and subordinated lenders and operating cash flow to contractual
senior debt service with the senior lender only. Through September 26, 1997,
these violations as of June 30, 1997 have been waived by both the senior and
subordinated lenders. Additionally on September 26,1997, J&L negotiated a fourth
amendment to the credit agreement with its senior lender which adjusted the
measurement level of these financial covenants for the next two fiscal quarters.

As of March 31, 1997 and December 31, 1996, J&L was not in compliance with
certain of its operating cash flow to debt service ratio covenants. J&L received
waivers for covenant violations applicable to each of those periods. On January
9, 1997, J&L negotiated a third amendment to the credit agreement with its
senior lender which adjusted the level of aggregate outstanding letters of
credit available, reserved against availability under the Revolving Loan
Facility.

As of June 30, 1995, J&L was not in compliance with the minimum net worth
requirement of the Senior Term Loan and Subordinated Term Notes due mainly to
the application of EITF No. 88-16, the effects of which on the Company's
financial statements had not been determined at the time of the closing of the
Acquisition. The provisions of EITF No. 88-16 require that certain continuing
shareholder interests be valued at their predecessor basis rather than at fair
value to the extent of the lesser of their predecessor interest in the purchased
company or continuing interest in the acquiring company. Application of EITF No.
88-16 had the effect of reducing property, plant and equipment and shareholder's
equity; however, it had no cash impact to the financial statements. As a result,
on October 12, 1995, J&L's lenders amended the Senior Term Loan and Subordinated
Term Notes to ignore the effects of EITF No. 88-16 in computing minimum tangible
net worth effective as of June 30, 1995.

The fair market value of J&L's fixed rate long-term debt on June 30, 1997,
including current maturities, approximates its book value. The fair market value
estimate was based on cash flow yield to maturity and comparing that amount to
market quotations where possible. Management is not aware of any significant
factors that would alter this estimate after that date.

On February 1, 1996, the Company entered into an unsecured line of credit
agreement with Trinity Investment Corp. ("Trinity") for $1,000,000. As part of
this agreement, a stock warrant purchase agreement was executed whereby Trinity
was issued 300,000 warrants to purchase the same number of common stock shares
of the Company at an exercise price of $4.00 per warrant for a period of ten
years. These warrants have been valued at $376,000 as of the date of issuance
utilizing the Black Scholes option pricing model as a basis for the measurement.
The value of the warrants has been recorded as an increase in additional paid-in
capital of the Company. As of June 30, 1997, the Company was in default under
the line of credit agreement with Trinity for failure to make interest payments
aggregating approximately $60,500. Trinity has waived payment under this
violation through July 1, 1998.

On April 1, 1995, the Company entered into a Credit Agreement with Trinity,
which agreed to lend an aggregate of $6,730,000 in order to repay and satisfy
the following, as well as to fund a $5,000,000 capital contribution to JLH:

a) variable rate debenture in the original principal amount of $900,000
together with accrued interest thereon totaling approximately $185,000;

b) certain intercompany advances plus accrued interest totaling approximately
$270,000;

c) promissory note payable to The A.J. 1989 Trust which originated in February
1994 in the original principal amount of $200,000 together with accrued
interest thereon totaling approximately $22,000; and

d) certain non-interest bearing intercompany advances from The A.J. 1989 Trust
totaling approximately $150,000.

Additionally, as part of the Credit Agreement, a stock warrant purchase
agreement was executed whereby Trinity was issued 2,000,000 warrants to purchase
the same number of common stock shares of the Company at an exercise price of $1
per warrant for a period of ten years. These warrants have been valued at
$840,000 as of the date of issuance utilizing the Black Scholes option pricing
model. The value of the warrants has been recorded as an increase in additional
paid-in capital of the Company. As of June 30, 1997, the Company was in default
under the Credit Agreement for failure to make interest payments aggregating
approximately $903,000. Trinity has waived payment under this violation through
July 1, 1998.

On March 15, 1995, BESCC redeemed its preferred stock from Ascott Wing, Inc., a
related party, in consideration for the issuance by the Company of a Deferred
Purchase Money Note in the approximate amount of $475,000, said amount equal to
the stated value for the preferred stock plus the accrued dividends thereon. As
of June 30, 1997, the Company was in default under the Deferred Purchase Money
Note for failure to make interest payments aggregating approximately $52,000.
Ascott Wing, Inc. has waived payment under this violation through July 1, 1998.

NOTE 8 - INCOME TAXES

For the years ended June 30, 1997, 1996, and 1995 the provision (benefit) for
income taxes consisted of the following:

1997 1996 1995
---- ---- ----

Federal income tax provision (benefit) $ -- $(100,230) $ 135,000
State income tax provision ............. -- -- 236,600
Deferred tax provision (benefit) ....... 337,200 -- (760,000)
- ---------------------------------------- ------- -- ---------

Total .................... $ 337,200 $(100,230) $(388,400)
========= ========= =========

The effective income tax rate on income from continuing operations differs from
the statutory federal income tax rate for the fiscal years ended June 30, 1997,
1996, and 1995, as follows:

(in thousands)

1997 1996 1995

Income tax (benefit) at U.S. Federal
statutory rate of 34% .......... $(788) $(683) $ 7
Acquisition expenses ............... -- -- 199
State income taxes ................. 337 -- 165
Utilization of net operating loss
carryforwards, increase in
valuation allowance and other 788 583 (760)
--- --- ----

Income tax charge (benefit) ......... $ 337 (100) $(389)
===== ==== =====

Management has calculated its net operating loss carryforward at June 30, 1997
to be approximately $97,000,000. Such losses can be carried forward and expire
in the tax years ending June 30, 2003 through 2012.

Temporary differences between financial statement carrying amounts and tax bases
of assets and liabilities at June 30, 1997 and 1996 were as follows:

Current deferred taxes:
1997 1996
Assets
Accrued expenses ............. $ 1,189,900 $ 315,200
Bad debt allowance .......... 61,900 82,400
State net operating losses ... 30,000 --
Valuation allowance .......... (1,079,334) (397,600)
---------- --------

Net current deferred tax asset $ 202,466 --
=========== ==========

Non-current deferred taxes:
Property, plant and equipment
and intangibles .......... $ (4,097,600) $ 236,900
Net operating losses ........... 34,207,700 25,394,000
Valuation allowance ............ (30,649,749) (25,630,900)
----------- -----------

Total non-current deferred tax liability $ (539,649) $ --
============ ============

Management has recorded a valuation allowance against the deferred tax assets
due to their belief that recovery of these future deductions against future
taxable income is less than likely.

NOTE 9 - CAPITAL STOCK

Preferred Stock

The preferred stock redemption obligation including accrued dividends through
March 15, 1995 totaling $475,204 was converted to a deferred purchase money note
payable to a related holding company (see Note 7).

Warrants

Warrants for 300,000 shares of Company common stock were issued to Trinity in
conjunction with the unsecured line of credit agreement executed on February 1,
1996. The warrants are exercisable for a period of ten years at $4.00 per
warrant (see Note 7).

Warrants for 2,000,000 shares of Company common stock were issued to Trinity in
conjunction with the Amended Credit Agreement executed on April 1, 1995. These
warrants are exercisable for a period of ten years at $1.00 per warrant (see
Note 7).

NOTE 10 - BENEFIT PLANS

J&L maintains a defined contribution (money purchase) plan for substantially all
employees whereby J&L makes contributions, at designated rates, based on hours
worked. All contributions required under the plan have been funded as of June
30, 1997 and 1996. Pension expense for the years ended June 30, 1997 and 1996
and for the period from the date of the Acquisition (April 6, 1995) to June 30,
1995 was approximately $582,000, 486,000 and $90,000, respectively.

J&L participates in the National Industrial Group Pension Plan (NIGPP) which is
a multi-employer defined benefit pension plan covering all employees of
Brighton's collective bargaining unit. All contributions required under the plan
have been funded as of June 30, 1997 and 1996. A withdrawal from the plan would
trigger an obligation to the plan for a portion of the unfunded benefit
obligation. Pension expense for the years ended June 30, 1997 and 1996 and for
the period from the date of the Acquisition (April 6, 1995) to June 30, 1995 was
approximately $40,000, $40,000 and $11,000, respectively.

J&L provides a profit sharing plan for substantially all employees. The amount
available for profit sharing is based on a return on sales formula using defined
levels of pretax income. For those employees compensated under terms of
collective bargaining agreements, distributions are calculated and paid
quarterly. For other eligible employees, calculations and distributions are made
at J&L's fiscal year end. Such amounts have been reflected as current
liabilities in the accompanying consolidated balance sheets. Profit sharing
expense for the years ended June 30, 1997 and 1996 and for the period from the
date of the Acquisition (April 6, 1995) to June 30, 1995 was approximately
$764,000, $1,238,000 and $189,000, respectively.

J&L also maintains separate 401(k) or salary deferral plans for substantially
all of its employees. Participation in these plans is based on hours of service.
Both plans provide for employee contributions up to 20% of wages subject to
certain adjustments. The plan associated with the collective bargaining
agreement provides for discretionary company contributions. For the years ended
June 30, 1997 and 1996 and for the period from the date of the Acquisition
(April 6, 1995) to June 30, 1995, no employer contributions had been made.

In connection with its collective bargaining agreement with the Industrial and
Allied Employees Union Local No. 73 (the "Union"), Hupp participated in a
multi-employer defined benefit pension plan. The plan covered all of Hupp's
employees who were members of the Union. Pension expense approximated $99,000
for the fiscal year ended June 30, 1995. As a result of the secured party asset
sale on October 27, 1994, described in Note 1, Hupp was deemed to have withdrawn
from the plan. This withdrawal triggered a demand for payment of withdrawal
liability by the Union (see Note 11).

NOTE 11 - LITIGATION, COMMITMENTS AND CONTINGENCIES

The Industrial and Allied Employees Union Local No. 73 Pension Plan (the "Plan")
issued a claim for payment of withdrawal liability totaling approximately
$870,000 under Section 4219 of ERISA against Hupp, CPT and all "controlled group
members", as a result of Hupp's cessation of contributions to the Plan following
the discontinuance of Hupp's business in October 1994. On July 10, 1996, the
arbitrator sustained the Plan's claim of withdrawal liability against CPT.
Pursuant to ERISA, CPT subsequently appealed the arbitration decision to the
U.S. District Court for the Northern District of Ohio. As of August 31, 1997,
CPT has made payments aggregating approximately $741,000 to the Plan and as of
June 30, 1996, has fully accrued the amount of the outstanding claim less
payments made through that date. On September 17, 1997, in response to CPT's
appeal, the District Court vacated in part, and confirmed in part the
arbitrator's award. In its final and appealable judgement, the District Court
ruled in favor of the plan in the amount of $62,696. As the decision is
appealable, CPT has not recorded any gain contingency.

J&L's workers compensation insurance program provides for self insurance with
stop-loss protection. Under this arrangement, for the policy year November
1996-1997, J&L was required to issue a letter of credit in the name of the
insurance company. The letter of credit called for quarterly step-ups in the
amounts available for draw with the maximum aggregate amount of $1,000,000 being
available after August 29, 1997. At June 30, 1997, $875,000 was the maximum
amount available under the letter. J&L is financially responsible for the face
value of this letter of credit. The face value of this letter of credit reduces
the availability under the Revolving Line of Credit facility described in Note
7. For the policy year November, 1996-1997, J&L was required to maintain no
other forms of collateral relating to its workers' compensation program. For the
policy year November, 1995-1996, J&L maintained a letter of credit with the
insurance company in the amount of $500,000. Additionally, J&L elected to place
on deposit with the insurance company an amount equal to $340,000. On June 30,
1996, approximately $279,000 remained on deposit with the insurance company and
was reflected as an Other Asset in the accompanying consolidated balance sheets.

In 1995, J&L signed a contract for turnkey development, fabrication and
installation of a new reheat furnace. Furnace startup took place in July 1996,
with the entire project having a total cost of approximately $8.5 million. Of
this amount, $7.1 million has been disbursed through June 30, 1997, and the
remaining amount of $1.4 million representing the retention on the original
project has not been paid and is shown in accounts payable on the Company's
Consolidated Balance Sheets at June 30, 1997. J&L is currently in the process of
arbitration with the furnace supplier regarding the final payment. A
determination of the likely outcome of the arbitration is unknown at this time.

The Company is not a party to any additional litigation, commitments or
contingent matters.

NOTE 12 - RELATED PARTY TRANSACTIONS

A management agreement exists between the Company and J&L whereby the Company or
its designated affiliate provides executive management advisory services to J&L.
The contract term of the agreement is for a period of six years through March
2001 and is subject to being automatically renewed annually thereafter, unless
terminated by any party to the agreement. Annual amounts due to the Company
under this agreement total $600,000, which includes out-of-pocket expenses
incurred by the Company of up to $150,000 annually. The Company exercised its
right under the agreement to designate Mentmore Holdings Corporation
("Mentmore") as the management advisory service provider and as a result has
assigned all fees the Company is entitled to under this agreement to Mentmore.
Management fee expense paid to Mentmore for the years ended June 30, 1997 and
1996 and for the period from the date of the Acquisition (April 6, 1995) to June
30, 1995 under this agreement totaled $600,000, $600,000 and $150,000,
respectively.

Mentmore engages in investment banking and corporate management services. An
investment banking fee totaling $500,000 was paid to Mentmore by J&L during
fiscal 1995 in conjunction with the Acquisition. Richard L. Kramer is Chairman
of the Board, a Director and Secretary of Mentmore. William L. Remley is a
director and President of Mentmore.

The Chairman of the Board of the Company is also the Chairman of the Board, a
Director, Vice President and Secretary of Trinity and Ascott Wing. The President
and Treasurer of the Company is also a Director, President and Treasurer of
Trinity and Ascott Wing, and a Trustee for The A.J. 1989 Trust. Various lending
and stock purchase warrant agreements have been executed by the Company with
Trinity (see Notes 7 and 9). Various loans to the Company had been made by The
A.J. 1989 Trust, and a Deferred Purchase Money Note exists in consideration for
BESCC preferred stock redeemed on March 15, 1995 (see Note 7).

Long-term employment contracts exist with three executives at J&L, formerly
owners of JLS. These employment contracts extend for five year periods each
through March, 2000.

NOTE 13 - SEGMENT INFORMATION

The Company's continuing operations include two distinct business segments
within its single operating subsidiary, J&L. J&L Structural manufactures and
fabricates lightweight structural steel shapes which are distributed principally
to the manufactured housing, truck trailer construction and highway safety
industries. Brighton designs, manufactures and sells steel piercer points which
represent disposable tooling used in the production of seemless steel tubes used
in the petrochemical industry. The remaining operations of Hupp were
discontinued on October 27, 1994, as a result of a secured party sale of all of
its assets (see Note 1). Results of operations for Hupp have been included in
discontinued operations for all fiscal years presented. Hupp manufactured
heating, ventilating and air conditioning equipment used primarily in commercial
applications and fractional horsepower electrical motors and mobile products
used primarily in the heavy duty and off-road truck markets. Financial
information for continuing operations by business segment for the fiscal years
ended June 30, is as follows:
(in thousands of dollars)
1997 1996 1995
---- ---- ----

Sales to unaffiliated customers:
BESCC/Brighton $ 6,055 $ 6,402 $ 6,060
J&L Structural 92,144 94,609 25,148
------ -------------------------
Total $ 98,199 $101,011 $ 31,208
======= ======= =======

Depreciation and amortization:
CPT Holdings, Inc. $ 110 $ 75 $ 14
BESCC/Brighton 162 140 134
J&L Structural 3,836 3,118 752
------ --------- ---------
Total $ 4,108 $ 3,333 $ 900
======= ======== ========
Operating income:
CPT Holdings, Inc. $ (302) $ (1,227) $ (972)
BESCC/Brighton 1,107 996 1,083
J&L Structural 4,764 6,151 1,999
Continuous Caster Corp. (193) - -
------ ------- -------
Total $ 5,376 $ 5,920 $ 2,110
======== ======= =========

Identifiable assets
CPT Holdings, Inc $ 21 $ 95 $ 436
BESCC/Brighton 3,847 4,025 3,299
J&L Structural 63,147 64,116 57,120
Continuous Caster Corp 155 348 348
------ --------- -------
Total $ 67,170 $ 68,584 $ 61,203
======= ======= ========
Capital expenditures:
CPT Holdings, Inc. $ - $ - $ -
BESCC/Brighton 85 786 36
J&L Structural 3,413 9,187 715
------ -------------------------
Total $ 3,498 $ 9,973 $ 751
======= ====== =======

BESCC/Brighton's revenue was generated by five customers that comprised
80%,77% and 73% of its total revenue in 1997, 1996 and 1995, respectively.

21
<PAGE>

Report of Independent Certified Public Accountants

Board of Directors
CPT Holdings, Inc. and Subsidiaries

In connection with our audit of the consolidated financial statements of CPT
Holdings, Inc. and Subsidiaries referred to in our report dated September 26,
1995, which is included in the 1995 Annual Report to Shareholders, we have also
audited Schedules I & II and Exhibit 11 as of and for the year ended June 30,
1995. In our opinion, these schedules present fairly, in all material respects,
the information required to be set forth therein.

GRANT THORNTON LLP

Pittsburgh, Pennsylvania
September 26, 1995

22
<PAGE>

CPT HOLDINGS, INC.
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
June 30,
($000's)
Balance Sheets
Assets 1997 1996 1995
---- ---- ----

Cash and cash equivalents $ 18 $ 91
Note receivable - -
Prepaid expenses and other 203 204
EITF 88-16 basis adjustment (9,705) (9,705)
Investment in subsidiary 7,506 8,795
--------- --------
Total assets $ (1,978) $ (615)
========== =========

Liabilities and Shareholders' Deficit

Accrued liabilities $ 2,079 1,125
Due to subsidiaries 200 200
Long-term obligations 7,188 7,044
Accounts payable - -

Common stock: authorized 30,000,000 shares
at $0.05 par value each; 1,510,084 shares
issued and outstanding 76 76
Capital in excess of par value 5,737 5,737
EITF 88-16 basis adjustment (9,705) (9,705)
Accumulated deficit (7,553) (5,092)
---------- ------

Total shareholders' deficit (11,445) (8,984)
---------- -------
Total liabilities and shareholders'
deficit $ (1,978) $ (615)
=========== ========

Statements of Cash Flows

Cash flows from operating activities $ (370) $ (1,610) $ 91
Cash flows from investing activities - 299 (4,672)
Cash flows from financing activities 297 966 5,000
--------- -------- ------

Increase (decrease) in cash and cash
equivalents (73) (345) 419

Cash and cash equivalents:
Beginning of year 91 436 17
--------- ------ --------

End of year $ 18 91 $ 436
======== ====== ======

Statements of Loss

Loss (earnings) in subsidiary $ 992 $ (311) $ (104)
Other income (48) (80) (7)
Interest expense (income), net 1,215 1,073 470
Operating expenses 302 1,227 631
--------- ----- --------

Net loss $ 2,461 $ 1,909 $ 990
======== ========== =======

23
<PAGE>

CPT HOLDINGS, INC. AND SUBSIDIARIES

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
For the years ended June 30, 1997, 1996 and 1995
($000's)
<TABLE>
<S> <C> <C> <C> <C> <C>

Column A Column B Column C Column D Column E Column F

Description Balance at Charges to Retirements (1) Other charges Balance
beginning of costs & add (deduct) at end of
period expenses period

1997

Allowance for Doubtful
Accounts in Accounts
Receivable $206 $60 $115 $ - $151
===== === ===== ====== ====

Allowance for Sales
Discounts and Claims $101 $266 $ 300 $ - $ 67
===== ==== ====== ====== =====

1996

Allowance for Doubtful
Accounts in Accounts
Receivable $244 $ 76 $114 $ - $206
===== ==== ==== ====== ====

Allowance for Sales
Discounts and Claims $ 84 $329 $312 $ - $101
====== ==== ==== ====== ====

1995

Allowance for Doubtful
Accounts in Accounts
Receivable $124 $ 67 $161 $214 $244
===== ===== === === ====

Allowance for Sales
Discounts and Claims$ - $ - $ 19 $103 $ 84
======== ======= ===== === =====
</TABLE>

(1) Represents write-offs of uncollectable accounts or realized sales discounts
and claims.

24
<PAGE>

EXHIBIT 11
CPT Holdings, Inc. and Subsidiaries
COMPUTATION OF EARNINGS PER SHARE

Years ended June 30,

(in thousands of dollars, except share amounts)
<TABLE>
<S> <C> <C> <C>
1997 1996 1995
---- ---- ----
Income (loss) before discontinued
operations items extraordinary items ..... $ (2,654) $ (1,909) $ 410
Earnings impact of subsidiary common
stock equivalents ........................ -- (47) (16)
Gain from discontinued operations ........... -- 2,220 1,576
Gain on extraordinary items ................. -- -- 3,527
----------- ----------- -----------
Net income (loss) ........................... $ (2,654) $ 264 $ 5,497
=========== =========== ===========
Primary Shares:
Weighted average number of shares
outstanding during period ................ 1,510,084 1,510,084 1,510,084
Shares issuable on exercise of all
dilutive stock warrants, less
shares assumed repurchased from
proceeds ................................. -- 1,697,983 --
----------- ----------- -----------

Total .................................... 1,510,084 3,208,067 1,510,084
=========== =========== ===========

Primary earnings (loss) per share before
discontinued operations and
extraordinary items ...................... $ (1.76) $ (.58) $ .27
Primary earnings per share on
discontinued operations .................. -- .69 1.04
Primary earnings per share on
extraordinary items ......................... -- -- 2.34
----------- ----------- -----------

Primary earnings (loss) per share ........... $ (1.76) $ .11 $ 3.65
=========== =========== ===========

Assuming Full Dilution:

Weighted average number of shares
outstanding during period ................ 1,510,084 1,510,084 1,510,084
Shares issuable on exercise of all dilutive
stock warrants, less shares assumed
repurchased from proceeds ................ -- 1,697,983 424,496
----------- ----------- -----------

Total fully-diluted common
and equivalent shares .................... 1,510,084 3,208,067 1,934,580
=========== =========== ===========

Earnings (loss) per share before discontinued
operations and extraordinary items
assuming full dilution ................... $ (1.76) $ (.58) $ .23
Earnings (loss) per share on discontinued
operations assuming full dilution ........ -- .69 .81
Earnings per share on extraordinary
items assuming full dilution ............. -- -- 1.82
----------- ----------- -----------
Net earnings (loss) per share assuming
full dilution ............................ $ (1.76) $ .11 $ 2.86
=========== =========== ===========
</TABLE>

25
<PAGE>

<ARTICLE> 5
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1996
<CASH> 61
<SECURITIES> 0
<RECEIVABLES> 9689
<ALLOWANCES> 218
<INVENTORY> 9876
<CURRENT-ASSETS> 19756
<PP&E> 50660
<DEPRECIATION> 6911
<TOTAL-ASSETS> 67170
<CURRENT-LIABILITIES> 18686
<BONDS> 0
<COMMON> 76
0
0
<OTHER-SE> (11714)
<TOTAL-LIABILITY-AND-EQUITY> 67170
<SALES> 98199
<TOTAL-REVENUES> 98199
<CGS> 86247
<TOTAL-COSTS> 86247
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 60
<INTEREST-EXPENSE> 7517
<INCOME-PRETAX> (2317)
<INCOME-TAX> 337
<INCOME-CONTINUING> (2654)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2654)
<EPS-PRIMARY> (1.76)
<EPS-DILUTED> (1.76)

</TABLE>