KUHLMAN CORP, S-3, 1997-05-29

KUHLMAN CORP
S-3, 1997-05-29
DRAWING & INSULATING OF NONFERROUS WIRE

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<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 29, 1997

REGISTRATION NO. 333-

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-3

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

KUHLMAN CORPORATION

(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C>
DELAWARE 58-2058047
(State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.)
</TABLE>

3 SKIDAWAY VILLAGE SQUARE
SAVANNAH, GEORGIA 31411
(912) 598-7809

(Address, including ZIP Code, and telephone number, including
area code, of registrant's principal executive offices)

RICHARD A. WALKER, ESQ.
EXECUTIVE VICE PRESIDENT, CHIEF ADMINISTRATIVE OFFICER,
GENERAL COUNSEL AND SECRETARY
3 SKIDAWAY VILLAGE SQUARE
SAVANNAH, GEORGIA 31411
(912) 598-7809

(Name, address, including ZIP Code, and telephone number,
including area code, of agent for service)

COPIES TO:

<TABLE>
<S> <C>
STEPHEN A. LANDSMAN, ESQ. ARTHUR JAY SCHWARTZ, ESQ.
RUDNICK & WOLFE SMITH, GAMBRELL & RUSSELL, LLP
203 NORTH LASALLE STREET, 3343 PEACHTREE ROAD, N.E.
SUITE 1800 SUITE 1800, EAST TOWER
CHICAGO, ILLINOIS 60601 ATLANTA, GEORGIA 30326
(312) 368-4000 (404) 264-2620
(312) 236-7516 (TELECOPIER) (404) 264-2652 (TELECOPIER)
</TABLE>

Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this registration statement. If the only
securities being registered on this form are being offered pursuant to
distribution or interest reinvestment plans, check the following box. [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with distribution or
interest reinvestment plans, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

CALCULATION OF REGISTRATION FEE

[CAPTION]
<TABLE>
<S> <C> <C> <C>
TITLE OF EACH CLASS PROPOSED MAXIMUM PROPOSED MAXIMUM
OF SECURITIES TO AMOUNT TO BE OFFERING PRICE AGGREGATE OFFER-
BE REGISTERED REGISTERED (1) PER UNIT (2) ING PRICE (2)
<S> <C> <C> <C>
Common Stock, par value $1.00
per share
Preferred Stock Purchase Rights
(3) 2,500,000 $27.50 $68,750,000

AMOUNT OF
REGISTRATION
FEE (2)
<C>
$20,834
</TABLE>

(1) Includes 150,000 shares which the Underwriters have the option to purchase
from the Registrant to cover over-allotments, if any.
(2) Computed pursuant to Rule 457(c) under the Securities Act of 1933 using the
average of the high and low prices per share of Common Stock reported on the
New York Stock Exchange Composite Tape on May 22, 1997.

(3) Preferred Stock Purchase Rights are evidenced by certificates for shares of
Common Stock of the Registrant and automatically trade with the Common Stock
of the Registrant. The value attributable to such Preferred Stock Purchase
Rights, if any, is reflected in the market price of the Common Stock of the
Registrant.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.

<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such state.

SUBJECT TO COMPLETION, DATED MAY 29, 1997
2,350,000 SHARES

KUHLMAN CORPORATION
COMMON STOCK

The 2,350,000 shares of common stock, par value $1.00 per share (the "Common
Stock") offered hereby are being sold by Kuhlman Corporation, a Delaware
corporation (the "Company"). The Common Stock is traded on the New York Stock
Exchange ("NYSE") under the symbol "KUH." On May 27, 1997, the last reported
sale price of Common Stock on the NYSE was $28.375 per share. See "Price Range
of Common Stock and Dividends."

SEE "RISK FACTORS" BEGINNING ON PAGE 7 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR BY ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

[CAPTION]
<TABLE>
<S> <C> <C> <C>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT (1) COMPANY (2)
<S> <C> <C> <C>
Per Share........................................... $ $ $
Total (3)........................................... $ $ $
</TABLE>

(1) See "Underwriting" for a description of the indemnification arrangements
with the Underwriters.
(2) Before deducting expenses of the offering payable by the Company estimated
to be $400,000.
(3) The Company has granted to the Underwriters a 30-day option to purchase up
to 150,000 additional shares of Common Stock solely to cover
over-allotments, if any. If the Underwriters exercise this option in full,
the total Price to Public, Underwriting Discount and Proceeds to Company
will be $ , $ and $ , respectively. See "Underwriting."

The Common Stock is offered severally by the Underwriters named herein,
subject to prior sale, when, as and if received and accepted by them, subject to
their right to reject orders, in whole or in part, and to certain other
conditions. It is expected that delivery of the certificates representing the
Common Stock will be made on or about , 1997.

THE ROBINSON-HUMPHREY
COMPANY, INC.

FURMAN SELZ

PAINEWEBBER INCORPORATED

, 1997

<PAGE>

(Chart appears below)

KUHLMAN AT A GLANCE KUHLMAN LOGO

ELECTRICAL PRODUCTS SEGMENT

<TABLE>
<CAPTION>
<S> <C>
MAJOR PRODUCTS MAJOR MARKETS
KUHLMAN ELECTRIC Primary electrical power transmission and distribution.
Distribution, power and instrument transformers. Secondary electrical power distribution, construction,
electronic signal transmission and control, and automotive.

COLEMAN CABLE
Portable wiring, extension cords, trouble lights,
booster cables, wire for data transmission,
telecommunications, HVAC, irrigation and sound
systems, security wire, battery cables and
ignition wire sets.

INDUSTRIAL PRODUCTS SEGMENT
MAJOR PRODUCTS MAJOR MARKETS

SCHWITZER Commercial, industrial, transportation, construction,
Turbochargers, fans, fan drives and crankshaft agricultural, mining, marine and power generation.
vibration dampers.

KYSOR
Polymer fans and fan clutches, engine monitoring
devices and marine instruments, truck fuel tanks,
HVAC systems for commercial and industrial vehicles,
and trailer supports.
</TABLE>

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING STABILIZING TRANSACTIONS, SYNDICATE SHARES COVERING TRANSACTIONS AND
PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."

<PAGE>

(Kuhlman logo appears here)

ELECTRICAL PRODUCTS SEGMENT
<TABLE>
<CAPTION>
<S> <C>
(Picture of various distribution transformers)
KUHLMAN ELECTRIC distribution transformers.

(Photo of various cord products)
COLEMAN CABLE assorted cord products.

(Picture of power transformer in background of trees)
KUHLMAN ELECTRIC power transformer.

(Photo of electrical power and control cables)
COLEMAN CABLE electrical power and control cables.
(Picture of electronic wire and cable products)
COLEMAN CABLE "Signal" brand electronic wire and cable products.

</TABLE>

<PAGE>

INDUSTRIAL PRODUCTS SEGMENT
<TABLE>
<CAPTION>
<S> <C> <C>
(Photo of Schwitzer turbocharger) (Picture of Schwitzer vibration damper) (Photo of turbocharger being tested on engine)
SCHWITZER turbocharger. SCHWITZER vibration damper. SCHWITZER turbocharger undergoing
dynamometer testing on a Caterpillar engine.

(Picture of single metal fan) (Picture of plastic fan) (Photo of marine instrumentation)
KYSOR metal fan. KYSOR plastic fan. KYSOR "MEDALLION" marine instrumentation.

</TABLE>

(Picture of truck products including fans, clutches, fuel tanks,
instrumentation, HVAC systems and trailer supports)
KYSOR transportation products--applications including fans, fan clutches, fuel
tanks, instrumentation, HVAC systems and trailer supports.

<PAGE>
PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND FINANCIAL STATEMENTS AND NOTES THERETO APPEARING ELSEWHERE IN
THIS PROSPECTUS. UNLESS THE CONTEXT OTHERWISE REQUIRES, REFERENCES HEREIN (I) TO
THE "COMPANY" INCLUDE THE COMPANY, ITS SUBSIDIARIES AND ITS PREDECESSORS; AND
(II) TO "COMMON STOCK" INCLUDE THE COMPANY'S COMMON STOCK, PAR VALUE $1.00 PER
SHARE, AND ITS PREFERRED STOCK PURCHASE RIGHTS. SEE "DESCRIPTION OF CAPITAL
STOCK." UNLESS OTHERWISE INDICATED, THE INFORMATION CONTAINED IN THIS PROSPECTUS
DOES NOT GIVE EFFECT TO THE EXERCISE OF THE UNDERWRITERS' OVER-ALLOTMENT OPTION.

THIS PROSPECTUS, INCLUDING DOCUMENTS INCORPORATED BY REFERENCE, CONTAINS
FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") AND SECTION 21E OF THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED (THE "EXCHANGE ACT"), WHICH CAN BE IDENTIFIED
BY THE USE OF FORWARD-LOOKING TERMINOLOGY SUCH AS "ANTICIPATE," "MAY," "WILL,"
"EXPECT," "CONTINUE," "REMAINS," "INTEND," "AIM," "TREND," "SEEK," "SHOULD," AND
"PROSPECTS," OR THE NEGATIVE THEREOF OR OTHER VARIATIONS THEREON OR COMPARABLE
TERMINOLOGY. FORWARD-LOOKING STATEMENTS ARE INHERENTLY SUBJECT TO RISKS AND
UNCERTAINTIES, MANY OF WHICH CANNOT BE PREDICTED WITH ACCURACY AND SOME OF WHICH
MIGHT NOT EVEN BE ANTICIPATED. FUTURE EVENTS AND ACTUAL RESULTS, FINANCIAL AND
OTHERWISE, MAY DIFFER MATERIALLY FROM THE RESULTS DISCUSSED IN THE
FORWARD-LOOKING STATEMENTS. FACTORS THAT MIGHT CAUSE SUCH DIFFERENCES INCLUDE,
BUT ARE NOT LIMITED TO, THOSE DISCUSSED UNDER THE CAPTIONS "RISK FACTORS" AND
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS" HEREIN.

THE COMPANY

Kuhlman Corporation is a growth-oriented, diversified industrial
manufacturing company focused on building shareholder value by delivering
superior financial performance. The Company intends to achieve its financial
goals through continued internal growth and a disciplined acquisition program.
The Company currently operates in two product segments based on the distinct
markets and customers served: Electrical and Industrial Products. The Electrical
Products Segment is comprised of Kuhlman Electric Corporation ("Kuhlman
Electric") and Coleman Cable Systems, Inc. ("Coleman Cable"). Kuhlman Electric
is a leading manufacturer of transformers and other products for electrical
utilities and industrial users. Coleman Cable is a nationally-recognized
manufacturer of electrical and electronic wire and cable products, such as cord
sets, battery booster cables, industrial power cords, security wire, and
electronic voice and data cable for use in consumer, commercial and industrial
applications. The Industrial Products Segment is comprised primarily of the
Schwitzer Group, a combination of Schwitzer, Inc. ("Schwitzer") and the
operations of the Transportation Products Group ("Kysor") of Kysor Industrial
Corporation, which was acquired by the Company in March 1997. The Schwitzer
Group is a leading worldwide manufacturer of proprietary engine components, fuel
tanks and other products used on light, medium and heavy-duty trucks, and for
construction, agricultural, mining, power generation and marine equipment. The
Schwitzer Group's products include, among others, turbochargers, fans and fan
drives that enhance engine performance, as well as fuel tanks, instrumentation,
and heating, ventilation and air conditioning ("HVAC") systems. In 1996, on a
pro forma basis after giving effect to the Kysor acquisition, the Electrical and
Industrial Products Segments contributed approximately 45% and 55%,
respectively, to the Company's net sales.

The Company believes that because of the diversified nature of the products
it sells and the markets it serves, it is less susceptible to cycles in a single
product, business or industry, thus enabling the Company to produce more
consistent and sustainable growth in earnings and cash flow. The Company's
products are sold to over 5,000 domestic and international customers operating
in 60 countries. The Company serves some of the largest enterprises in the
world, including: Caterpillar, Inc., Deere & Company, Ford Motor Company,
Mercedes-Benz, Wal-Mart Stores, Inc., General Electric Company, Pacific Gas and
Electric Company and Edison International. The Company serves its diverse
customer base from 27 manufacturing facilities operating in five countries with
approximately 3,800 employees.

The Company's predecessor was founded in 1894 and, until recently, was
primarily a manufacturer of transformers for the electrical utility industry. As
a consequence, the Company's financial performance was subject to the
potentially cyclical nature of a single industry. In 1993, the Company, led by a
new management team, implemented strategies to expand and diversify the
organization in order to create greater shareholder value by generating more
consistent growth in earnings and cash flow. Since 1993, the Company has
experienced significant growth in sales and net income through a focused
strategy of internal growth and a highly-disciplined acquisition program. During
that period, the Company has acquired and successfully integrated five
companies, including Schwitzer, which merged with the Company in 1995, and
Kysor, which was acquired in March 1997. In 1993, the Company's predecessor had
net sales of $118.1 million and had a net loss of $3.0

<PAGE>
million (before giving effect to the Schwitzer merger). Assuming the Kysor
acquisition had occurred on January 1, 1996, the Company's 1996 pro forma net
sales and net income would have been $592.6 million and $20.8 million,
respectively.

The Company has developed and implemented several growth strategies for
enhancing shareholder value, including:

INTERNAL GROWTH. The Company has enjoyed a successful track record of
internal growth. This growth has been achieved primarily by increasing sales to
existing customers, attracting new customers and introducing new products.
Management anticipates that future internal growth will occur through the
continuing implementation of its key operating strategies, including: (i)
improving the competitive position of its business units by expanding on their
core competencies; (ii) providing customers with value-added, differentiated
products and superior services at competitive prices; (iii) maximizing the
operating capabilities of each business by enhancing manufacturing and
distribution systems and deploying assets in areas with superior earnings
potential; (iv) continually striving to improve the Company's products,
processes and the capabilities of its employees; and (v) optimizing synergies
from strategic acquisitions.

There are also certain industry trends that are expected to benefit the
Company. The Company believes that the Electrical Products Segment will benefit
from further deregulation in the electrical utility industry, vendor
consolidation in wire and cable markets and worldwide growth in demand for voice
and data communication products, including those provided by Coleman Cable. The
Company also believes that the Industrial Products Segment will benefit from
worldwide trends, including deregulation in certain transportation markets,
increased demand for commercial transportation equipment due to the adoption of
"just-in-time" delivery requirements, rising fuel costs, stringent emission
standards for engines, demand for lighter, more efficient engines and the
growing needs of lesser developed countries for infrastructure and food,
creating demand for construction and agricultural equipment.

GROWTH THROUGH ACQUISITION. The Company seeks to make strategic
acquisitions at attractive prices that either expand or enhance current
operations, or create a platform to enter new markets. Since 1993, the Company
has acquired Coleman Cable, Schwitzer, Communication Cable, Inc. ("CCI"), Web
Wire Products, Inc. ("Web Wire") and Kysor. The following table summarizes
certain information with respect to these acquisitions:

<TABLE>
<CAPTION>
NET SALES FOR FISCAL
DATE OF YEAR PRIOR TO DATE
BUSINESS ACQUISITION OF ACQUISITION PRINCIPAL PRODUCTS
<S> <C> <C> <C>
(IN MILLIONS)
Coleman Cable........ December 1993 $111.0 Electrical wire and cable products for low voltage
applications
Schwitzer............ May 1995 153.3 Turbochargers, fans, fan drives and crankshaft vibration
dampers
CCI.................. February 1996 56.3 Electrical and electronic wire and cable products, including
products for voice and data communication
Web Wire............. October 1996 5.8 Battery cables, ignition wire sets and related products
Kysor................ March 1997 136.2 Fans and fan clutches, engine monitoring devices, marine
instruments, truck fuel tanks and HVAC systems for commercial
and industrial vehicles
</TABLE>

The Company's well-defined acquisition strategy for businesses which
represent new platforms requires the acquired businesses to have sustainable
competitive advantages and to participate in expanding, niche markets.
Acquisitions are expected to be immediately accretive to the Company's earnings.
The Company believes that its acquisition program has allowed, and will continue
to allow for, the diversification of shareholder risk, the expansion of core
competencies and management expertise, the addition of complementary products
and distribution channels, and the establishment of platforms for future
"add-on" opportunities. The acquisitions of Coleman Cable and Schwitzer are
examples of such platform targets, which allowed for subsequent complementary
"add-on" acquisitions of CCI and Web Wire for Coleman Cable, and Kysor for
Schwitzer.

MANAGEMENT STRUCTURE. The Company's business segments generally operate
autonomously, with decision-making capabilities pushed down to the operating
level, and in many cases to the factory level, to more efficiently meet the
needs of customers. Management has created a culture of continuous improvement
and implemented a set of Company-wide performance goals that measure both the
Company's success and each business unit's contribution to growth in earnings
and cash flow, return on capital investment and return on shareholders' equity.
Business segment managers, including key members of each functional area within
such business segments, are generally incentivized to achieve certain customer
satisfaction, growth and profitability targets. In order to further align
management's interests with those of shareholders, the Company recently
implemented a long-term incentive program for approximately 30 key employees,
which provides for compensation based on the Company's stock price performance.
See Note 5 of Notes to Consolidated Financial Statements. The Company believes
that its compensation plans have contributed to the significant growth of
shareholder value in recent years. As of May 1, 1997, the directors and
executive officers of the Company (11 persons) beneficially owned 9.8% of the
Company's Common Stock. See "Principal Shareholders."

<PAGE>
THE OFFERING

<TABLE>
<S> <C>
Common Stock offered.......................................... 2,350,000 shares

Common Stock to be outstanding after this offering............ 16,194,354 shares (1)

Use of proceeds............................................... To reduce the outstanding balance under the Company's
principal credit agreement and to redeem outstanding warrants.
See "Use of Proceeds."

New York Stock Exchange Symbol................................ KUH
</TABLE>

(1) Excludes (i) 2,406,977 shares reserved for issuance as of May 1, 1997 under
the Company's stock incentive plans; and (ii) 480,750 shares reserved for
issuance under the warrants to be redeemed by the Company immediately
subsequent to the consummation of this offering.

RISK FACTORS

For a discussion of certain factors that should be considered in evaluating
an investment in the Common Stock, see "Risk Factors."
5

<PAGE>
SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA

(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, THREE MONTHS ENDED MARCH 31,
PRO FORMA PRO FORMA
1994 1995 1996(1) 1996(2) 1996 1997(3) 1997(2)
<S> <C> <C> <C> <C> <C> <C> <C>
(UNAUDITED) (UNAUDITED)
STATEMENT OF INCOME DATA:
Net sales.............................. $396,117 $425,384 $456,465 $ 592,619 $103,457 $ 134,148 $ 160,957
Gross profit........................... 75,885 84,107 100,935 132,354 21,464 29,742 36,111
Operating profit....................... 23,284 29,161 38,411 49,928 7,742 11,251 13,727
Operating net income (4)............... 9,970 13,783 17,336 20,771 3,418 5,282 6,107
Net income............................. 9,970 8,183 17,336 20,771 3,418 5,282 6,107
Weighted average shares outstanding
(fully diluted)...................... 13,647 13,178 14,384 14,384 13,656 14,574 14,574
PER SHARE DATA:
Operating net income (fully diluted)
(4)............................... $ 0.73 $ 1.05 $ 1.21 $ 1.44 $ 0.25 $ 0.36 $ 0.42
Net income (fully diluted) (5)....... 0.73 0.62 1.21 1.44 0.25 0.36 0.42
Dividends declared (6)............... 0.60 0.60 0.60 0.60 0.15 0.15 0.15
OTHER DATA:
EBITDA (7)............................. $ 33,779 $ 40,974 $ 48,794 $ 66,383 $ 10,331 $ 14,924 $ 18,578
Capital expenditures................... 13,048 15,200 10,980 22,588 1,753 2,606 4,318
Depreciation and amortization.......... 11,207 11,320 12,470 18,555 3,026 3,988 5,181
Return on average equity (8)........... 14.5% 18.0% 21.3% 25.5% -- -- --
Gross profit margin.................... 19.2% 19.8% 22.1% 22.3% 20.7% 22.2% 22.4%
Operating profit margin................ 5.9% 6.9% 8.4% 8.4% 7.5% 8.4% 8.5%
</TABLE>

<TABLE>
<CAPTION>
AS OF MARCH 31, 1997
ACTUAL AS ADJUSTED(9)
<S> <C> <C> <C> <C> <C> <C> <C>
(UNAUDITED)
BALANCE SHEET DATA:
Working capital................................................................................. $ 54,141 $ 54,141
Total assets.................................................................................... 419,989 419,989
Total debt...................................................................................... 180,211 126,175
Total shareholders' equity...................................................................... 94,908 148,944
</TABLE>

(1) Includes the results of CCI from February 21, 1996 and Web Wire from October
8, 1996.

(2) Reflects the results of the Company as if the acquisition of Kysor had
occurred on January 1, 1996.

(3) Includes the results of Kysor from March 10, 1997.

(4) Operating net income is net income before the net of tax impact of merger
expenses.

(5) On a supplementary basis, assuming this offering had been completed as of
January 1, 1996 and the estimated net proceeds had been used as described
under the caption "Use of Proceeds" herein, net income per share would have
been approximately $1.22 and $0.35 per share for the year ended December 31,
1996 and the three months ended March 31, 1997, respectively. The pro forma
earnings per share on a supplementary basis, as if Kysor had been acquired
on January 1, 1996, would have been $1.43 and $0.40 per share, respectively
for such periods.

(6) Dividends per share in 1994 and 1995 have not been restated to reflect
shares issued in the Schwitzer merger.

(7) EBITDA represents operating profit plus other, net plus depreciation and
amortization. EBITDA does not represent and should not be considered as an
alternative to net income or cash flow from operations as determined in
accordance with generally accepted accounting principles ("GAAP"), and the
Company's calculation thereof may not be comparable to that reported by
other companies.

(8) Return on average equity is calculated as operating net income for the year
divided by average equity. Equity is adjusted for the effect of merger
expenses. The Company's calculation may not be comparable to that reported
by other companies.

(9) Adjusted to reflect the sale of 2,350,000 shares of Common Stock offered
hereby at an assumed public offering price of $28.375 per share and the use
of the estimated net proceeds therefrom as described under "Use of
Proceeds."

<PAGE>
RISK FACTORS

PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS,
IN ADDITION TO THE OTHER INFORMATION CONTAINED IN THIS PROSPECTUS, IN EVALUATING
THE COMMON STOCK OFFERED HEREBY.

SENSITIVITY TO ECONOMIC AND OTHER CONDITIONS

The industries in which the Company competes can be capital intensive and
cyclical in nature and can be affected significantly by general economic and
other conditions that may have a material effect on the Company's operating
performance or earnings. These conditions include recession, reduced demand for
the Company's products due to competition or overcapacity, the cyclicality of
other industries in which end-users of the Company's products operate, changes
in regulatory climate and environmental and legal matters, and other factors. In
addition, since the interest rates on a majority of the Company's borrowings are
variable, a substantial and sustained increase in interest rates could have a
material adverse effect on the Company.

GROWTH THROUGH ACQUISITION

As part of its operating history and growth strategy, the Company has
consummated and seeks to consummate the acquisition of other businesses. The
Company continually seeks acquisition candidates in selected markets and from
time to time engages in exploratory discussions with suitable candidates. There
can be no assurance, however, that the Company will be able to identify and
acquire targeted businesses or obtain financing for such acquisitions on
satisfactory terms. The process of integrating acquired businesses into the
Company's operations may result in unforeseen difficulties and may require a
disproportionate amount of resources and management attention. Future
acquisitions may be financed through the issuance of Common Stock, which may
dilute the ownership of the Company's shareholders, or through the incurrence of
additional indebtedness. Furthermore, there can be no assurance that competition
for acquisition candidates will not escalate, thereby increasing the costs of
making acquisitions or making suitable acquisitions unattainable. See
"Business."

POSSIBLE FLUCTUATIONS IN THE COST OF RAW MATERIALS; DEPENDENCE ON SUPPLIERS

The Company purchases a number of raw materials, including copper, steel,
aluminum, nickel, cast iron, various insulating materials and polymers. The
price and availability of these raw materials are subject to market conditions
and can fluctuate. In addition, it is possible that due to the Company's
increasing focus on "lean manufacturing," which incorporates "just-in-time"
supplier-customer delivery methods with fewer suppliers, the risk of
difficulties in obtaining raw materials may increase. Although the Company may
engage in hedging activities under certain circumstances in order to mitigate
the impact of fluctuating commodity prices, the Company's financial condition or
results of operations may be materially and adversely affected by increases in
raw material costs to the extent the Company is unable to pass on such higher
costs to customers. The Company is dependent upon unaffiliated companies for the
supply of its raw materials. The Company's arrangements with its suppliers are
subject to various risks, such as work stoppages and other factors that could
have an adverse effect on the business of the Company. The Company believes that
the loss of certain of the Company's suppliers could, in the short term, have a
material adverse impact on the Company's business until alternative supply
arrangements were secured. See "Business -- Raw Materials and Supplies."

COMPETITION

The industries in which the Company operates are highly competitive. There
can be no assurance that the Company's products will continue to compete
successfully with the products of other companies. Many of the Company's
competitors are significantly larger and have greater financial and other
resources than the Company. In addition, the Company is under continuous
pressure from its major customers to reduce product costs. The Company believes
that its experience in engineering and implementing cost reduction programs and
its ability to develop new products and to control manufacturing and development
costs should allow the Company's product prices to remain competitive. There can
be no assurance, however, that the Company's growth and profitability will not
be materially adversely affected by competition.

INTERNATIONAL SALES AND OPERATIONS

During 1996, net sales from international operations represented
approximately 13% of the Company's net sales, as compared to approximately 15%
of net sales during 1995. The Company's profitability and financial condition
therefore may be impacted by the success of these international operations.
Though a substantial portion of the Company's international activities are in
stable operating environments, international sales and operations are generally
subject to a higher degree of

<PAGE>
risk than those in the United States. These risks may include difficulties and
delays in obtaining reimbursement, unexpected changes in regulatory
requirements, tariffs and other barriers, political instability, difficulties in
staffing and managing foreign operations, longer payment cycles, greater
difficulty in accounts receivable collection and adverse tax consequences.
Currency translation gains and losses on the conversion of foreign currencies
into United States dollars for international operations could also contribute to
fluctuations in the Company's results of operations. If for any reason exchange
or price controls or other restrictions on the conversion or repatriation of
foreign currencies were imposed, the Company's operating results could be
materially adversely affected. There can be no assurance that these factors will
not have a material adverse impact on the Company's future international sales
and operations and, consequently, on the Company's operating results.

RELIANCE ON KEY PERSONNEL

The Company's long-term success and its growth strategy depend on its
management team. As a result, the Company is highly reliant on this team and
believes that its continued success will be driven by, to a significant extent,
the efforts and abilities of its key executives, including executives of its
subsidiaries. The loss of the services of this team of key executives or any of
its members could have a significant adverse effect upon the Company. The
Company does not maintain key man life insurance policies on the lives of any of
its key executives, nor, with the exception of one executive of Schwitzer, has
the Company entered into employment agreements with any of its executive
officers.

VOLATILITY OF STOCK PRICE

There may be significant volatility in the market price for the Common
Stock from time to time. Changes in general conditions in the economy, the
financial markets or industries in which the Company competes, natural disasters
or other developments affecting the Company or its competitors, including
quarterly results of the Company or companies in related industries, could cause
the market price of the Common Stock to fluctuate substantially. In addition, in
recent years the stock market has experienced significant price and volume
fluctuations, which have had a significant effect on the market prices of
securities issued by many companies for reasons unrelated to the operating
performance of these companies.

ANTI-TAKEOVER PROVISIONS

Certain provisions of the Delaware General Corporation Law, and the
Company's Certificate of Incorporation, Bylaws, and Rights Agreement relating to
the Preferred Stock Purchase Rights including, without limitation, a staggered
Board of Directors and certain procedural requirements in connection with
shareholder proposals or director nominations, may discourage other persons from
attempting to acquire control of the Company. In addition, the Company has
available for issuance 2,000,000 shares of Preferred Stock, $1.00 par value per
share, which the Board of Directors of the Company is authorized to issue, in
one or more series, without any further action on the part of the shareholders.
Each of these provisions could render more difficult or discourage an attempt by
a third party to obtain control of the Company. In the event the Company issues
a series of Preferred Stock in the future that has preference over the Common
Stock with respect to the payment of dividends and upon the Company's
liquidation, dissolution or winding up, the rights of holders of the Common
Stock offered hereby could be adversely affected. See "Description of Capital
Stock."

<PAGE>
USE OF PROCEEDS

The net proceeds to the Company from the sale of the 2,350,000 shares of
Common Stock offered hereby (after deducting the underwriting discount and
estimated expenses of this offering) are estimated to be $62.9 million ($67.0
million if the Underwriters' over-allotment option is exercised in full),
assuming a public offering price of $28.375 per share.

The Company intends to use $54.0 million of the net proceeds to repay
borrowings from the revolving portion of its principal credit agreement (the
"Credit Agreement"), thereby increasing the Company's availability under that
portion of the Credit Agreement. Such debt had a weighted average interest rate
of approximately 6.6% per annum as of March 31, 1997. After application of the
net proceeds of this offering, $137.2 million would have been available for
borrowing under all of the Company's credit facilities, including $94.0 million
under the revolving portion of the Credit Agreement as of May 28, 1997. The
excess availability under the revolving portion of the Credit Agreement may be
immediately reborrowed at any time prior to July 1, 2001, the maturity date of
the Credit Agreement, and can be used for general corporate purposes, including,
funding future growth opportunities and acquisitions. The Company is not
currently a party to any agreement, arrangement or understanding in connection
with potential acquisitions, but the Company will continue to evaluate suitable
acquisitions as they are identified. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations -- Capitalization."

In addition, the Company intends to use $8.9 million of the net proceeds to
redeem warrants to purchase 480,750 shares of Common Stock (the "Warrants") held
by Massachusetts Mutual Life Insurance Company, a former lender of Schwitzer,
and two of its affiliates (collectively, the "Warrantholders"). The Warrants,
which were issued by Schwitzer to the Warrantholders in 1992, are currently
exercisable at a price of $8.32 per share, subject to certain conditions. The
Warrants also provide for certain "demand" and "piggy back" registration rights
with respect to the shares of Common Stock issuable upon exercise of the
Warrants, which rights will be terminated upon the redemption of the Warrants.
The Company intends to redeem the Warrants immediately subsequent to the
consummation of this offering. The Warrantholders' obligation to sell the
Warrants to the Company is subject to certain conditions. In the event the
Warrants are not redeemed by the Company, the number of shares of Common Stock
to be offered hereby will be reduced by 450,000 shares, with all of the net
proceeds being used to repay borrowings under the Credit Agreement.

PRICE RANGE OF COMMON STOCK AND DIVIDENDS

The Common Stock of the Company is listed on the NYSE under the symbol
"KUH." The following table sets forth, for the calendar periods indicated, the
high and low sale prices per share for the Common Stock reported on the NYSE
Composite Tape, as well as the dividends declared per share.

<TABLE>
<CAPTION>
CASH
DIVIDENDS
PER
HIGH LOW SHARE
<S> <C> <C> <C>
1995:
First Quarter..................................................... $ 13 1/2 $ 10 3/4 $0.15
Second Quarter.................................................... 12 3/8 10 3/8 0.15
Third Quarter..................................................... 13 10 7/8 0.15
Fourth Quarter.................................................... 13 3/8 10 7/8 0.15
1996:
First Quarter..................................................... $ 15 5/8 $ 11 7/8 $0.15
Second Quarter.................................................... 18 1/2 15 1/8 0.15
Third Quarter..................................................... 17 1/2 13 3/4 0.15
Fourth Quarter.................................................... 19 3/8 14 1/8 0.15
1997:
First Quarter..................................................... $ 24 1/8 $ 17 1/8 $0.15
Second Quarter (through May 27, 1997)............................. 28 3/4 23 1/8 0.15
</TABLE>

The last reported sale price of the Common Stock on the NYSE Composite Tape
on May 27, 1997 was $28.375 per share. At May 27, 1997, the Company had
approximately 5,000 shareholders of record.

The ability of the Company to pay dividends will be subject to (i)
earnings; (ii) capital requirements; (iii) contractual provisions of debt
agreements; (iv) funds legally available for such dividends; (v) general
business conditions; and (vi) other relevant factors. The Company's borrowing
agreements allow the payment of dividends on Common Stock as long as such
payment will not cause a default under such agreements. Such agreements include
various restrictive covenants as to, among others, maintenance of minimum net
worth. Under the most restrictive of these covenants, approximately $17.7
million was available for the payment of dividends on the Common Stock at March
31, 1997.

<PAGE>
CAPITALIZATION

The following table sets forth the capitalization of the Company as of
March 31, 1997 and as adjusted to reflect the sale by the Company of 2,350,000
shares of Common Stock offered hereby at an assumed public offering price of
$28.375 per share, and the application of the estimated net proceeds therefrom.
See "Use of Proceeds." This table should be read in conjunction with "Management
Discussion and Analysis of Financial Condition and Results of Operations" and
the Company's Consolidated Financial Statements and Notes thereto included
elsewhere in this Prospectus.

<TABLE>
<CAPTION>
MARCH 31, 1997
AS
ACTUAL ADJUSTED
<S> <C> <C>
(UNAUDITED)
(IN THOUSANDS)
Current portion of long-term debt................................................................... $12,528 $12,528
Long-term debt:
Bank debt......................................................................................... $163,184 $109,148
Other long-term debt.............................................................................. 4,499 4,499
Total long-term debt........................................................................... 167,683 113,647
Shareholders' equity:
Preferred stock, par value, $1.00, 2,000,000 shares authorized, none issued; Junior participating
preferred stock, Series A, no par value, 200,000 shares authorized, none issued................... -- --
Common stock, par value $1.00, 20,000,000 shares authorized, 13,835,373 shares issued, 16,185,373
shares issued, as adjusted (1).................................................................... 13,835 16,185
Additional paid-in capital.......................................................................... 33,174 92,961
Retained earnings (2)............................................................................... 50,490 42,389
Other............................................................................................... (2,591) (2,591)
Total shareholders' equity..................................................................... 94,908 148,944

Total capitalization......................................................................... $262,591 $262,591
</TABLE>

(1) Excludes (i) 1,651,663 shares as of March 31, 1997, subject to options
granted under the Company's stock incentive plans; and (ii) 480,750 shares
reserved for issuance under the Warrants.

(2) The as adjusted amount is reduced by approximately $8.1 million,
representing the net amount paid to redeem the Warrants in excess of their
original assigned value.

<PAGE>
SELECTED HISTORICAL AND PRO FORMA
FINANCIAL DATA

The selected financial data set forth below for the years ended December
31, 1994, 1995 and 1996, and as of December 31, 1995 and 1996 have been derived
from the Company's Consolidated Financial Statements, which statements have been
audited by Arthur Andersen LLP, independent public accountants, as indicated in
their reports included and incorporated by reference herein. The selected
financial data set forth below as of and for the three months ended March 31,
1996 and 1997 have been derived from the unaudited financial statements of the
Company for such periods. In the opinion of management, the unaudited financial
statements from which these data have been derived include all adjustments
(consisting only of normal recurring adjustments) necessary for a fair
presentation of the information set forth therein. The selected consolidated
financial data below should be read in conjunction with the Company's
Consolidated Financial Statements and Notes thereto and with "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
PRO
FORMA
1992(1) 1993(2) 1994(3) 1995(4) 1996(5) 1996(6)
<S> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
STATEMENT OF INCOME DATA:
Net sales.......................................... $231,426 $242,221 $396,117 $425,384 $456,465 $592,619
Cost of goods sold................................. 184,624 198,923 320,232 341,277 355,530 460,265
Gross profit....................................... 46,802 43,298 75,885 84,107 100,935 132,354
Operating expenses................................. 32,801 31,869 52,601 54,946 62,524 82,426
Operating profit before restructuring charge....... 14,001 11,429 23,284 29,161 38,411 49,928
Restructuring charge............................... 1,650 8,650 -- -- -- --
Operating profit................................... 12,351 2,779 23,284 29,161 38,411 49,928

Interest expense, net.............................. (3,985) (4,523) (6,969) (7,066) (6,981) (12,998)
Merger expenses.................................... -- -- -- (4,510) -- --
Other, net......................................... 1,470 178 (712) 493 (2,087) (2,100)
Income (loss) before taxes, extraordinary item and
cumulative effect of change in accounting
principles....................................... 9,836 (1,566) 15,603 18,078 29,343 34,830
Taxes (benefit) on income (loss)................... 4,972 (1,876) 5,633 8,034 12,007 14,059
Income before extraordinary item and cumulative
effect of change in accounting principles........ 4,864 310 9,970 10,044 17,336 20,771
Extraordinary item, net of tax..................... -- -- -- (1,861) -- --
Cumulative effect of change in accounting
principles, net of tax........................... (10,111) -- -- -- -- --
Net income (loss).................................. $(5,247) $310 $9,970 $8,183 $17,336 $20,771
Weighted average shares outstanding (fully
diluted)......................................... 12,618 13,484 13,647 13,178 14,384 14,384
EARNINGS PER SHARE (FULLY DILUTED)(7)(8):
Income before extraordinary item and cumulative
effect of change in accounting principles..... $0.38 $0.02 $0.73 $0.76 $1.21 $1.44
Extraordinary item, net of tax................... -- -- -- (0.14) -- --
Cumulative effect of change in accounting
principles.................................... (0.80) -- -- -- -- --
Net income (loss)................................ $(0.42) $0.02 $0.73 $0.62 $1.21 $1.44
</TABLE>

<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
PRO
FORMA
1992(1) 1993(2) 1994(3) 1995(4) 1996(5) 1996(6)
<S> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
OTHER DATA:
EBITDA (9)........................................... $24,449 $20,209 $33,779 $40,974 $48,794 $66,383
Capital expenditures................................. 8,887 6,091 13,048 15,200 10,980 22,588
Depreciation and amortization........................ 8,978 8,602 11,207 11,320 12,470 18,555
Return on average equity (10)........................ 7.8% 8.4% 14.5% 18.0% 21.3% 25.5%
Gross profit margin.................................. 20.2% 17.9% 19.2% 19.8% 22.1% 22.3%
Operating profit margin.............................. 5.3% 1.1% 5.9% 6.9% 8.4% 8.4%

AS OF DECEMBER 31,
PRO
FORMA
1992 1993 1994 1995 1996 1996(6)
(IN THOUSANDS) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital...................................... $54,845 $63,397 $49,501 $39,182 $54,592 $50,333
Total assets......................................... 156,930 242,921 229,185 214,902 277,416 410,601
Total debt........................................... 41,814 106,130 84,773 74,175 94,597 182,164
Total shareholders' equity........................... 64,842 64,187 73,216 74,232 91,574 91,574
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
PRO
FORMA
1996 1997(11) 1997(6)
<S> <C> <C> <C>
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE
DATA)
STATEMENT OF INCOME DATA:
Net sales........................................................................... $103,457 $134,148 $160,957
Cost of goods sold.................................................................. 81,993 104,406 124,846
Gross profit........................................................................ 21,464 29,742 36,111
Operating expenses.................................................................. 13,722 18,491 22,384
Operating profit.................................................................... 7,742 11,251 13,727

Interest expense, net............................................................... (1,563) (1,938) (3,062)
Other, net.......................................................................... (437) (315) (330)

Income before taxes................................................................. 5,742 8,998 10,335
Taxes on income..................................................................... 2,324 3,716 4,228

Net income.......................................................................... $3,418 $5,282 $6,107
Weighted average shares outstanding (fully diluted)................................. 13,656 14,574 14,574
EARNINGS PER SHARE (FULLY DILUTED)(7)(8):
Net income........................................................................ $0.25 $0.36 $0.42
OTHER DATA:
EBITDA (9).......................................................................... $10,331 $14,924 $18,578
Capital expenditures................................................................ 1,753 2,606 4,318
Depreciation and amortization....................................................... 3,026 3,988 5,181
Gross profit margin................................................................. 20.7% 22.2% 22.4%
Operating profit margin............................................................. 7.5% 8.4% 8.5%

AS OF MARCH 31,
1996 1997
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Working capital..................................................................... $42,000 $54,141
Total assets........................................................................ 261,402 419,989
Total debt.......................................................................... 102,339 180,211
Total shareholders' equity.......................................................... 75,493 94,908
</TABLE>

<PAGE>
(1) Includes a $1.7 million restructuring charge ($1.0 million net of tax, or
$0.08 per share) and a $10.1 million charge ($0.80 per share) related to
the adoption of Statement of Financial Accounting Standards ("SFAS") No.
106, "Employers Accounting for Postretirement Benefits Other Than Pensions"
and SFAS No. 109, "Accounting for Income Taxes."

(2) Includes an $8.7 million restructuring charge ($5.3 million net of tax, or
$0.39 per share).

(3) Includes the first full year of results for Coleman Cable, acquired on
December 15, 1993.

(4) Includes expenses associated with the Schwitzer merger, including the debt
extinguishment costs classified as an extraordinary item, totaling $5.6
million (net of tax), or $0.43 per share.

(5) Includes the results of CCI from February 21, 1996 and Web Wire from
October 8, 1996.

(6) The pro forma statement of income and related data reflects the results of
the Company as if the acquisition of Kysor had occurred on January 1, 1996.
The pro forma balance sheet and related information presents the financial
position of the Company as if the acquisition of Kysor had occurred on
December 31, 1996.

(7) In March 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS No.
128"). This standard modifies disclosure requirements for companies
required to report earnings per share ("EPS") to include presentations of
Basic EPS (which includes no dilution of common stock equivalents) and, if
applicable, Diluted EPS (which reflects the potential dilution of common
stock equivalents). The pro forma Basic and Diluted EPS for the years ended
December 31, 1992, 1993, 1994, 1995 and 1996 and for the three months ended
March 31, 1996 and 1997 are as follows:
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
1992 1993 1994 1995 1996 1996 1997
<S> <C> <C> <C> <C> <C> <C> <C>
(UNAUDITED)

<CAPTION>
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings per share:
Income before extraordinary item and cumulative
effect of change in accounting principle:
Basic..................................... $ 0.39 $ 0.02 $ 0.77 $ 0.76 $ 1.29 $ 0.26 $ 0.38
Diluted................................... 0.37 0.02 0.73 0.75 1.25 0.25 0.36

Weighted average shares outstanding:
Basic.......................................... 12,618 12,812 13,009 13,178 13,389 13,181 13,746
Diluted........................................ 13,286 13,464 13,647 13,475 13,858 13,559 14,479
</TABLE>

(8) On a supplementary basis, assuming this offering had been completed as of
January 1, 1996 and the estimated net proceeds had been used as described
under the caption "Use of Proceeds" herein, net income per share would have
been approximately $1.22 and $0.35 per share for the year ended December
31, 1996 and the three months ended March 31, 1997, respectively. The pro
forma earnings per share on a supplementary basis, as if Kysor had been
acquired on January 1, 1996, would have been $1.43 and $0.40 per share,
respectively for such periods.

(9) EBITDA represents operating profit before restructuring charge plus other,
net plus depreciation and amortization. EBITDA does not represent and
should not be considered as an alternative to net income or cash flow from
operations as determined in accordance with GAAP, and the Company's
calculation thereof may not be comparable to that reported by other
companies.

(10) Return is income for the year divided by average equity. Income is defined
as net income plus net of tax impact of restructuring costs, accounting
changes and merger expenses. Average equity is adjusted for the effect of
restructuring costs, accounting changes and merger expenses. The Company's
calculation may not be comparable to that reported by other companies.

(11) Results reflect the acquisition of Kysor from March 10, 1997.

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

OVERVIEW

The Company's predecessor was founded in 1894 and, until recently, was
primarily a manufacturer of transformers for the electrical utility industry. As
a consequence, the Company's financial performance was subject to the
potentially cyclical nature of a single industry. In 1993, the Company, led by a
new management team, implemented strategies to expand and diversify the
organization in order to create greater shareholder value by generating more
consistent growth in earnings and cash flow. Since 1993, the Company has
experienced significant growth in sales and net income through a focused
strategy of internal growth and a highly-disciplined acquisition program. During
that period, the Company acquired and successfully integrated five companies,
including Schwitzer, which merged with the Company in 1995, and Kysor, which was
acquired in March 1997. In 1993, the Company's predecessor had net sales of
$118.1 million and had a net loss of $3.0 million (before giving effect to the
Schwitzer merger). Assuming the Kysor acquisition had occurred on January 1,
1996, the Company's 1996 pro forma net sales and net income would have been
$592.6 million and $20.8 million, respectively.

The Company's current business units operate in two product segments based
on the distinct markets and customers served: Electrical and Industrial
Products. The Electrical Products Segment is comprised of Kuhlman Electric and
Coleman Cable. The Industrial Products Segment is comprised primarily of the
Schwitzer Group, a combination of Schwitzer and the operations of Kysor. The
Electrical Products Segment manufactures and sells transformers primarily for
electrical utilities and wire and cable products for consumer, commercial and
industrial uses, while the Industrial Products Segment manufactures and sells
proprietary products for use in commercial and industrial engines and other
applications.

On March 10, 1997, the Company purchased substantially all of the assets of
Kysor for $86.0 million in cash plus the assumption of certain liabilities which
totaled approximately $46.0 million. The purchase of Kysor was financed from
borrowings under the Company's Credit Agreement. The acquisition has been
recorded using the purchase method of accounting and accordingly, the net assets
and results of operations for Kysor are included in the Company's consolidated
financial statements as part of the Industrial Products Segment from the date of
acquisition.

The following table summarizes certain statement of income and segment data
for the periods indicated:

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
1994 1995 1996 1996 1997
<S> <C> <C> <C> <C> <C>
(IN THOUSANDS) (UNAUDITED)
NET SALES:
Electrical Products.......................................... $235,274 $243,761 $268,846 $ 57,449 $ 72,483
Industrial Products.......................................... 160,843 181,623 187,619 46,008 61,665
Total net sales............................................ $396,117 $425,384 $456,465 $103,457 $134,148
INCOME BEFORE TAXES AND EXTRAORDINARY ITEM:
Electrical Products.......................................... $ 8,611 $ 13,639 $ 20,103 $ 3,397 $ 4,170
Industrial Products.......................................... 17,096 19,541 22,386 5,104 8,843
Operating earnings (1)..................................... 25,707 33,180 42,489 8,501 13,013
Corporate.................................................... (3,855) (4,156) (6,165) (1,196) (2,077)
Interest expense, net........................................ (6,969) (7,066) (6,981) (1,563) (1,938)
Merger expenses.............................................. -- (4,510) -- -- --
Unallocated.................................................. 720 630 -- -- --
Total income before taxes and extraordinary item........... $ 15,603 $ 18,078 $ 29,343 $ 5,742 $ 8,998
</TABLE>

(1) Operating earnings is defined as operating profit plus other, net directly
attributable to each segment.

<PAGE>
RESULTS OF OPERATIONS

CONSOLIDATED RESULTS -- THREE MONTHS ENDED MARCH 31, 1997 AND 1996

GENERAL. The Company reported record quarterly results in the first quarter
of 1997 in several key financial areas, including net sales, operating profit
and net income, which increased 29.7%, 45.3% and 54.5%, respectively, in the
first quarter of 1997 when compared to the same period in 1996. The increases
were attributable to the positive operating performance reported in each of the
Company's two segments, Electrical and Industrial Products and the acquisition
of Kysor.

NET SALES. Net sales were a record $134.1 million in the first quarter of
1997 compared to $103.4 million reported in the same period in 1996, an increase
of $30.7 million, or 29.7%. Each of the Company's two segments contributed to
the increase in net sales as demand for most of the Company's key products
remained vibrant throughout the period. Net sales were benefitted by
approximately $9.3 million in the first quarter of 1997 due to the acquisition
of Kysor.

OPERATING PROFIT. Operating profit for the first quarter of 1997 was a
record $11.3 million compared to $7.7 million reported for the same period in
1996, an increase of $3.6 million, or 45.3%. Consolidated operating profit
margins in the first quarter of 1997 improved to 8.4% of net sales compared to
7.5% reported in the year-ago period. The increase in consolidated operating
profit and operating profit margins occurred primarily in the Industrial
Products Segment due to the record sales volume and improved gross profit
margins for certain products. Overall, operating expenses increased $4.8
million, or 34.8%, to $18.5 million, or 13.8% of net sales in the first quarter
of 1997 compared to $13.7 million or 13.3% of net sales reported in the first
quarter of 1996. The increase in operating expenses was due primarily to the
higher sales noted above, greater corporate expenses associated with its
acquisition activities and the addition of Kysor. The increase in operating
expenses as a percentage of net sales was due primarily to the impact of higher
corporate expenses.

OTHER INCOME (EXPENSE). Interest expense, net was $1.9 million in the first
quarter for 1997 compared to $1.6 million for the same period in 1996, an
increase of $375,000, or 24.0%. The increase was due to the higher levels of
debt outstanding throughout the 1997 period compared to the first quarter of
1996 due to the acquisitions of CCI and Kysor. Other, net was an expense of
$315,000 in the first quarter of 1997 compared to a $437,000 expense reported in
the same period in 1996, a decrease of $122,000, or 27.9%. The decrease was due
to lower miscellaneous, non-operating expenses, none of which were significant,
in the first quarter of 1997 compared to the year ago period.

NET INCOME. Net income for the first quarter of 1997 was a record $5.3
million compared to $3.4 million reported in the same period in 1996, an
increase of $1.9 million, or 54.5%. Earnings per share on a fully diluted basis
in the first quarter of 1997 were $0.36 compared to $0.25 for the first quarter
of 1996, an increase of 44.0%. The increase in earnings per share was due to the
higher net income noted above, partially offset by more shares outstanding
throughout the period. The increase in the number of shares outstanding for the
earnings per share calculation included additional common stock equivalents as a
result of an increase in the Company's stock price. The Company's effective tax
rate for the first quarter of 1997 and 1996 was 41.3% and 40.5%, respectively.
The difference in rates was due primarily to a change in the source of earnings
between various taxing countries.

BACKLOG. Bookings were strong throughout the first quarter of 1997,
resulting in an increase in the Company's backlog. The Company's consolidated
backlog increased $34.8 million, or 29.2% to $153.8 million at March 31, 1997
from the backlog at the end of 1996. The increase was attributable primarily to
the acquisition of Kysor and strong demand for certain industrial components.

ELECTRICAL PRODUCTS SEGMENT

NET SALES. In the Electrical Products Segment, net sales increased $15.0
million, or 26.2%, to $72.5 million in the first quarter of 1997 compared to the
same period in 1996. The increase was due primarily to greater shipments of
transformer products, particularly medium power transformers, and the inclusion
of CCI's results for the full quarter in 1997. CCI was acquired by the Company
on February 21, 1996.

OPERATING EARNINGS. Operating earnings in the Electrical Products Segment
increased $773,000, or 22.8%, to $4.2 million in the first quarter of 1997
compared to the same period in 1996. The increase was due primarily to greater
net sales and improved operating margins at Kuhlman Electric which reported its
highest operating earnings in the last sixteen quarters. Operating earnings at
Coleman Cable were essentially the same in the first quarter of 1997 and 1996,
as the impact of CCI's full quarter results in 1997 were offset by lower sales
and operating earnings for certain electronic wire and cable products due to
weak demand industry-wide. The drop in demand was caused primarily by a
reduction of excess inventory levels by end users of certain electronic wire.

<PAGE>
INDUSTRIAL PRODUCTS SEGMENT

NET SALES. Net sales for the Industrial Products Segment in the first
quarter of 1997 were $61.7 million compared to $46.0 million reported in the
same period in 1996, an increase of $15.7 million, or 34.0%. The increase was
due primarily to record sales of engine components in North America and Europe
and the addition of Kysor, which added approximately $9.3 million in net sales
from the date of its acquisition by the Company. The record sales were due to
continued robust demand for turbochargers and other engine components from
original equipment manufacturers ("OEMs").

OPERATING EARNINGS. Operating earnings in the Industrial Products Segment
improved $3.7 million, or 73.3%, to $8.8 million in the first quarter of 1997
when compared to the same period in 1996. The increase was due primarily to the
record shipments of engine component products, the positive impact of a change
in sales mix, improved operating efficiencies, and the addition of Kysor.
Operating earnings in the first quarter of 1997 were benefitted by approximately
$812,000 from the acquisition of Kysor on March 10, 1997.

CONSOLIDATED RESULTS -- YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

GENERAL. In 1996, the Company sold more products, earned more income and
generated more cash flow from operations than in any year in its 103-year
history. 1996 was the third consecutive year in which the Company achieved
record sales. The Company's improved financial results were due to the positive
operating performance results in each of the Company's two segments, Electrical
and Industrial Products.

NET SALES. Consolidated net sales were $456.5 million in 1996 compared with
$425.4 million and $396.1 million in 1995 and 1994, respectively. In 1996, the
Company's net sales increased 7.3% when compared to 1995. The strength of both
the Electrical and Industrial Products Segments contributed to the record sales
in 1996. Within the Electrical Products Segment, sales were benefitted by strong
shipments of medium power transformers to utilities and the addition of CCI,
which significantly broadened the Company's wire and cable operations. Sales
within the Industrial Products Segment benefitted from robust demand
domestically for various engine component products. The Company's 1995
consolidated net sales increased 7.4% over 1994. This increase was due primarily
to strong worldwide demand for turbochargers and other engine components and
certain wire and cable products, partially offset by lower shipments of
distribution transformers due to the downsizing of that product line.

OPERATING PROFIT. The Company posted record operating profit in 1996 due to
the strong earnings performance of each business segment. Consolidated operating
profit advanced 31.7% in 1996 to $38.4 million (8.4% of net sales) from $29.2
million (6.9% of net sales) reported in 1995. Operating profit in 1994 was $23.3
million (5.9% of net sales). The growth in operating profit in 1996 was due
primarily to the increased sales volume noted above and improved gross profit
margins in each segment. Consolidated gross profit margins increased to 22.1% of
net sales in 1996 from 19.8% and 19.2% in 1995 and 1994, respectively. Gross
profit margins improved in the Electrical Products Segment because of favorable
changes in sales mix, particularly for transformer products, the addition of CCI
with its higher margin product offering and the disposal of Nehring Electrical
Works Company ("Nehring"), a subsidiary of Coleman Cable whose products had
lower margins. Margin improvement in the Industrial Products Segment was driven
by strong domestic demand coupled with better manufacturing efficiencies.
Operating expenses for the Company in 1996 were $62.5 million or 13.7% of net
sales compared to $54.9 million or 12.9% of net sales in 1995 and $52.6 million
or 13.3% of net sales in 1994. Operating expenses increased in both 1996 and
1995 from the previous year due primarily to the higher net sales noted above,
partially offset by cost containment programs throughout the Company.

OTHER INCOME (EXPENSE). Other income (expense) for the Company consists
primarily of interest expense and other miscellaneous non-operating activity
including foreign currency translation adjustments. Interest expense, net was
$7.0 million, $7.1 million and $7.0 million in 1996, 1995 and 1994,
respectively. Interest expense, net was down slightly in 1996 compared to 1995
primarily because the Company's lower cost of borrowed funds offset the higher
debt levels attributable to the acquisitions of CCI and Web Wire. Interest
expense, net was up in 1995 over 1994 because much of the decrease in
outstanding debt in 1995 did not occur until late in the fourth quarter. In
1996, other, net was an expense of $2.1 million compared to income of $493,000
in 1995 and an expense of $712,000 in 1994. In 1995, other, net was benefitted
by $1.3 million (net of tax) or $0.10 per share primarily associated with a
covenant not to compete, which expired in June of 1995, and the favorable
settlement of certain liabilities. Foreign currency translation adjustments
related to the Company's Brazilian operations resulted in income of $193,000 in
1996, income of $75,000 in 1995 and expense of $847,000 in 1994. Fluctuations
associated with foreign currency translation adjustments due to the
hyperinflationary economy of Brazil may occur in the future.

<PAGE>
NET INCOME. For the year ended December 31, 1996, the Company reported net
income of $17.3 million compared to $13.8 million (before expenses associated
with the Schwitzer merger) and $10.0 million in 1995 and 1994, respectively.
Earnings per share (fully diluted) were $1.21 in 1996 compared to $1.05 (before
expenses associated with the Schwitzer merger) and $0.73 in 1995 and 1994,
respectively. Net income and earnings per share in 1995 were $8.2 million and
$0.62, respectively, after giving effect to the merger expenses. See Note 2 of
the Notes to Consolidated Financial Statements. The effective tax rate reported
by the Company was 40.9%, 44.4% and 36.1% in 1996, 1995 and 1994, respectively.
See Note 8 of the Notes to Consolidated Financial Statements.

ELECTRICAL PRODUCTS SEGMENT

In 1996, the Electrical Products Segment reported record net sales and
operating earnings for the second consecutive year. Net sales increased to
$268.8 million in 1996 from $243.8 million reported in 1995 and $235.3 million
in 1994. Operating earnings of the Electrical Products Segment were $20.1
million in 1996 compared to $13.6 million and $8.6 million in 1995 and 1994,
respectively. In 1996, net sales and operating earnings for the Electrical
Products Segment increased 10.3% and 47.4%, respectively, over 1995 primarily
due to the continued improvement in the operating performance at Kuhlman
Electric and the addition of CCI. In 1995, net sales improved only modestly over
the 1994 period primarily because of the downsizing of the distribution
transformer product line while operating earnings increased dramatically due to
the improved operating performance of Kuhlman Electric.

The improvement in the financial results reported by the Electrical
Products Segment in 1996 was due to the Company focusing on its objective of
providing its customer base with higher value-added products. The result of this
effort was to change the mix of sales to higher margin products and services.
This process had a dramatic impact on the results of Kuhlman Electric which
increased net sales and operating earnings approximately 18% and 94%,
respectively, over the 1995 period. Within Kuhlman Electric, the Company has
emphasized its medium power and instrument transformer lines which generally
carry higher margins compared to other product lines. For example, net sales of
medium power transformers have increased approximately 38% and 26% in 1996 and
1995, respectively, over the previous year. As a result of this shift in product
focus coupled with the Company's continued programs to improve manufacturing
efficiencies and productivity over the last three years, Kuhlman Electric has
posted solid annual gains in operating performance since 1993.

Net sales and operating earnings for wire and cable products within the
Electrical Products Segment reached record highs for the second consecutive year
in 1996. Net sales increased approximately 6% in 1996 compared to 1995 and
approximately 16% in 1995 over 1994. Net sales in 1996 included the results of
CCI from February 21, 1996, its date of acquisition, excluded the activity of
Nehring, which was disposed of on December 29, 1995, and was negatively impacted
by the decline in the price of copper. The average price of copper, a principal
raw material for wire and cable products, declined approximately 15.7% in 1996
from 1995. The impact of this drop led to lower selling prices for certain
products due to lower raw material costs and improved gross profit margins as a
percentage of net sales. In addition, operating margins were benefitted by the
addition of CCI which sells products that generally generate higher margins,
more than offsetting the loss in margin on products sold by Nehring.

INDUSTRIAL PRODUCTS SEGMENT

Net sales and operating earnings in the Industrial Products Segment reached
record highs for 1996. Net sales were $187.6 million in 1996 compared to $181.6
million and $160.8 million in 1995 and 1994, respectively. Operating earnings
for the Industrial Products Segment increased to $22.4 million in 1996 from
$19.5 million and $17.1 million in 1995 and 1994, respectively. Operating
earnings as a percentage of net sales advanced to 11.9% in 1996 from 10.8% and
10.6% in 1995 and 1994, respectively. Net sales to domestic customers as a
percentage of total Industrial Products Segment net sales were approximately
70%, 66% and 70% in 1996, 1995 and 1994, respectively.

Net sales and operating earnings increased 3.3% and 14.6%, respectively, in
1996 compared to 1995. The improvement was primarily the result of continued
robust demand for turbochargers and other engine components. The surge in demand
came primarily from OEMs in the United States as moderate interest rates
continued to support growth in many key end markets. Sales to domestic based
customers grew approximately 8% in 1996 from 1995 while international sales
remained flat in the same period. Operating earnings grew $2.9 million, or
14.6%, in 1996 over 1995, while operating earnings as a percentage of net sales
increased from 10.8% in 1995 to 11.9% in 1996. This improvement was due
primarily to greater operating efficiencies, the impact of higher sales volume
and lower operating expenses as a percentage of net sales.

In 1995, net sales and operating earnings for the Industrial Products
Segment grew 12.9% and 14.3%, respectively, over the results reported in 1994.
The growth in net sales volume was due primarily to greater demand from OEM
customers as

<PAGE>
market conditions in many parts of the world improved. Domestic net sales
increased approximately 7% in 1995 compared to 1994 primarily due to improved
market conditions for medium and heavy-duty trucks and agricultural and
construction equipment. International net sales increased approximately 27% in
1995 compared to 1994 as demand for the Company's products increased due to
strengthening worldwide economies, primarily in Europe and South America, and
greater market penetration by the Company's industrial products. Operating
earnings as a percentage of net sales increased from 10.6% in 1994 to 10.8% in
1995. This improvement was due primarily to higher sales volume resulting in
better utilization of production capacity.

EFFECTS OF INFLATION

The Company has not experienced any material adverse effects on operations
in recent years caused by inflation, though margins can be affected by
inflationary conditions. The Company uses numerous raw materials in its
products, including copper, aluminum, steel and plastics. Prices for many of
these materials started to rise in 1994, as worldwide economies began to
strengthen and continued to rise throughout much of 1995. Though the Company
attempted to pass along these increases in the form of higher prices to its
customers, competition made this increasingly difficult which resulted in
pressure on operating profit for certain products. In 1995 and 1994, the Company
was able to mitigate some of the impact of these higher costs by exercising
tight cost control measures and improving its operating efficiencies. In 1996,
pricing pressure for certain of these materials began to abate somewhat,
resulting in more stable margins.

LIQUIDITY AND CAPITAL RESOURCES

The Company's sources of funds have consisted primarily of operating cash
flow and debt financing from banks. The Company's uses of funds have consisted
primarily of acquisitions of new companies or businesses, debt reduction,
capital expenditures, increased operating working capital and dividends to
shareholders. Although no assurance can be given, the Company believes that its
cash, earnings, available borrowings and access to other sources of capital are
adequate to support its current operations and continued growth through both
internal expansion and potential acquisitions.

CASH FLOW

The Company generated record cash flow from operations of $37.7 million in
1996, compared to $28.1 million and $18.9 million in 1995 and 1994,
respectively. This represents an increase in cash flow from operations of 34%,
49% and 80% in 1996, 1995 and 1994, respectively, over the prior year. Improved
operating earnings in each segment and strong working capital management were
the primary contributors to the Company's continued growth in cash flow from
operations. In the first quarter of 1997, the Company generated $9.1 million in
cash flow from operations compared to $10.9 million for the same period in 1996,
a decrease of $1.8 million, or 16%. The decline was due primarily to the timing
of the impact of changes in working capital requirements, partially offset by
the record earnings reported in the first quarter of 1997.

Consolidated working capital (net of cash) was $47.4 million at March 31,
1997 compared to $52.4 million at December 31, 1996, a decrease of $5.0 million.
The decline in working capital was due primarily to the increase in term debt
associated with the acquisition of Kysor. Cash and cash equivalents increased to
$6.8 million at March 31, 1997 from $2.2 million at December 31, 1996 due to the
timing of cash receipts and the addition of Kysor. Accounts receivable, net was
$93.4 million at March 31, 1997 compared to $70.1 million at December 31, 1996,
an increase of $23.3 million, or 33.2%. The increase was due primarily to the
acquisition of Kysor and the Company's record sales volume in the first quarter
of 1997. Similarly, inventories increased $15.8 million, or 30.1% to $68.3
million at March 31, 1997 from December 31, 1996 primarily due to the inclusion
of Kysor and because of higher expected sales activity in the Electrical
Products Segment. Deferred taxes and prepaid expenses and other current assets
increased $3.5 million, or 30.9%, to $14.8 million at March 31, 1997 from the
end of 1996 primarily because of tax attributes associated with the acquisition
of Kysor. Accounts payable and accrued liabilities were $116.6 million at March
31, 1997 compared to $79.2 million at December 31, 1996, an increase of $37.4
million, or 47.2%. The increase was due primarily to the addition of Kysor and
higher accounts payable to vendors caused by the greater level of inventories.

CAPITALIZATION

Total debt at March 31, 1997 was $180.2 million, compared to $94.6 million
at December 31, 1996. The increase was due primarily to the acquisition of
Kysor, which was funded from borrowings under the Company's Credit Agreement.
The Credit Agreement consists of two credit line facilities. The first facility
(the "Revolving Facility"), which is due July 1, 2001, is a $125.0 million
revolving credit facility to be used for general corporate purposes, including
funding future growth opportunities and acquisitions. Borrowings under the
Revolving Facility at March 31, 1997 were $84.0 million. The second facility

<PAGE>
(the "Acquisition Facility") is a 364-day, $125.0 million facility to be used to
fund future acquisitions and general corporate purposes related thereto.
Borrowings under the Acquisition Facility at March 31, 1997 were $90.0 million.
Under the terms of the Acquisition Facility, outstanding borrowings at July 1,
1997 are to be repaid in 16 equal quarterly installments beginning on October 1,
1997. Interest rates on amounts borrowed under each facility are based
principally on the London Interbank Offered Rate (LIBOR) plus an applicable
margin factor. The Company also pays a commitment fee on the unused portion of
each facility. The margin factor and the commitment fee rate are determined
based on the Company's leverage ratio (as defined in the Credit Agreement). The
weighted average interest rate as of March 31, 1997 under the Credit Agreement
was 6.6%.

The Company borrowed $90.0 million under the Acquisition Facility to fund
the cash portion of the acquisition of Kysor, including $4.0 million for general
corporate purposes relating to Kysor. In addition, the Company assumed
approximately $721,000 of existing Kysor debt as part of the acquisition.

Total availability under the Company's revolving credit agreements was
$83.2 million at May 28, 1997. Under the most restrictive warranties and
covenants contained in the Company's credit agreement, the Company had
approximately $17.7 million of consolidated retained earnings at March 31, 1997
free of any restrictions as to the payment of dividends. The dividend declared
in the first quarter of 1997 was $2.1 million, or $0.15 per share.

CAPITAL EXPENDITURES

The Company believes that achieving the proper returns on its invested
capital is a key factor in driving shareholder value. Toward that objective, the
Company has focused its efforts on improving the returns earned on its invested
capital by redeploying underperforming, non-core assets and making additional
capital investments in areas where the Company can maximize its earnings
potential. This includes expenditures on plant and equipment for internal
expansion as well as on acquisitions of businesses. See " -- Overview." As part
of this effort, the Company spent $11.0 million in 1996 for new plant and
equipment. Over the last three years, the Company has invested a total of $39.2
million for new plant and equipment, primarily to improve productivity, product
quality and durability, to increase manufacturing capacity, and to enhance its
customer service capabilities in each segment. The Company believes these
investments, which have exceeded depreciation expense by 22% in the three year
period ended December 31, 1996, have played a key role in improving operating
profit margins and will enhance its operations and financial performance in 1997
and beyond.

Capital expenditures for the first three months of 1997 were $2.6 million
compared to $1.8 million reported in the same period last year. Expenditures in
the first quarter of 1997 were primarily for normal replacements and additions
to plant and equipment. The Company expects capital expenditures in 1997 to
total approximately $20 million for normal additions to plant and equipment,
including the 1997 requirements of Kysor since the date of its acquisition.

<PAGE>
BUSINESS

OVERVIEW

Kuhlman Corporation is a growth-oriented, diversified industrial
manufacturing company focused on building shareholder value by delivering
superior financial performance. The Company intends to achieve its financial
goals through continued internal growth and a disciplined acquisition program.
The Company currently operates in two product segments based on the distinct
markets and customers served: Electrical and Industrial Products. The Electrical
Products Segment is comprised of Kuhlman Electric and Coleman Cable. Kuhlman
Electric is a leading manufacturer of transformers and other products for
electrical utilities and industrial users. Coleman Cable is a
nationally-recognized manufacturer of electrical and electronic wire and cable
products, such as cord sets, battery booster cables, industrial power cords,
security wire, and electronic voice and data cable for use in consumer,
commercial and industrial applications. The Industrial Products Segment is
comprised primarily of the Schwitzer Group, a combination of Schwitzer and
Kysor. The Schwitzer Group is a leading worldwide manufacturer of proprietary
engine components, fuel tanks and other products used on light, medium and
heavy-duty trucks, and for construction, agricultural, mining, power generation
and marine equipment. The Schwitzer Group's products include, among others,
turbochargers, fans and fan drives that enhance engine performance, as well as
fuel tanks, instrumentation, and HVAC systems. In 1996, on a pro forma basis
after giving effect to the Kysor acquisition, the Electrical and Industrial
Products Segments contributed approximately 45% and 55%, respectively, to the
Company's net sales.

BUSINESS STRATEGY

GENERAL

The Company has developed several growth strategies for enhancing
shareholder value, including internal growth, growth through acquisition and an
incentivized management team.

INTERNAL GROWTH

The Company has enjoyed a successful track record of internal growth. This
growth has been achieved primarily by increasing sales to existing customers,
attracting new customers and introducing new products. Management anticipates
that future internal growth will occur through the continuing implementation of
its key operating strategies, including: (i) improving the competitive position
of its business units by expanding on their core competencies; (ii) providing
customers with value-added, differentiated products and superior services at
competitive prices; (iii) maximizing the operating capabilities of each business
by enhancing manufacturing and distribution systems and deploying assets in
areas with superior earnings potential; (iv) continually striving to improve the
Company's products, processes and the capabilities of its employees; and (v)
optimizing synergies from strategic acquisitions.

<PAGE>
GROWTH THROUGH ACQUISITION

The Company seeks to make strategic acquisitions at attractive prices that
either expand or enhance current operations, or create a platform to enter new
markets. Since 1993, the Company has acquired Coleman Cable, Schwitzer, CCI, Web
Wire and Kysor. The following table summarizes certain information with respect
to these acquisitions:

<TABLE>
<CAPTION>
NET SALES FOR FISCAL
DATE OF YEAR PRIOR TO DATE
BUSINESS ACQUISITION OF ACQUISITION PRINCIPAL PRODUCTS
<S> <C> <C> <C>
(IN MILLIONS)
Coleman Cable............................. December 1993 $111.0 Electrical wire and cable products for low
voltage applications
Schwitzer................................. May 1995 153.3 Turbochargers, fans, fan drives and
crankshaft vibration dampers
CCI....................................... February 1996 56.3 Electrical and electronic wire and cable
products, including products for voice and
data communication
Web Wire.................................. October 1996 5.8 Battery cables, ignition wire sets and
related products
Kysor..................................... March 1997 136.2 Fans and fan clutches, engine monitoring
devices, marine instruments, truck fuel
tanks and HVAC systems for commercial and
industrial vehicles
</TABLE>

MANAGEMENT STRUCTURE

The Company's business segments generally operate autonomously, with
decision-making capabilities pushed down to the operating level, and in many
cases to the factory level, to more efficiently meet the needs of customers.
Management has created a culture of continuous improvement and implemented a set
of Company-wide performance goals that measure both the Company's success and
each business unit's contribution to growth in earnings and cash flow, return on
capital investment and return on shareholders' equity. Business segment
managers, including key members of each functional area within such business
segments, are generally incentivized to achieve certain customer satisfaction,
growth and profitability targets. In order to further align management's
interests with those of shareholders, the Company recently implemented a
long-term incentive program for approximately 30 key employees, which provides
for compensation based on the Company's stock price performance. As of May 27,
1997, the Company's stock price performance resulted in the achievement of
certain awards under the program. See Note 5 of Notes to Consolidated Financial
Statements for additional information concerning the program, including its
estimated impact on the Company's results of operations. The Company believes
that its compensation plans have contributed to the significant growth of
shareholder value in recent years.

BUSINESS SEGMENTS

ELECTRICAL PRODUCTS SEGMENT

The Electrical Products Segment is comprised of Kuhlman Electric, which is
based in Versailles, Kentucky, and Coleman Cable, which is based in North
Chicago, Illinois. Demand and profitability in this segment are generally
affected by the level of domestic economic activity in the consumer, commercial
and industrial markets served. Housing starts, commercial and industrial
construction, maintenance and upgrading of established electrical systems and
electrical usage are key components of demand for the segment's various
electrical products.

KUHLMAN ELECTRIC

PRODUCTS. Established in 1894, Kuhlman Electric designs, manufactures and
markets a broad range of electric power transformers for electrical distribution
systems serving residential, commercial and industrial customers. These products

<PAGE>
include distribution transformers, medium-size power transformers and instrument
transformers. Distribution transformers reduce high voltages transmitted on
electrical transmission lines to usable levels (120 and 240 volts) for homes,
offices and factories. Distribution transformers may be mounted on a utility
pole, placed at ground level on a pad or in underground vaults. Power
transformers are designed for utility and industrial customers to be installed
in substations or commercial electric power centers for apartment complexes,
shopping centers, factories and other users of electrical power. Kuhlman
Electric's power transformer product line includes a variety of transformers in
electrical power ranges from 5 MVA (mega-volt amperes) to 50 MVA. Instrument
transformers are high-accuracy transformers that reduce high current and voltage
to lower levels within an electrical distribution network for revenue metering,
relaying and system protection applications. As electrical power generation,
transmission and distribution practices continue to change in a deregulated
environment, the Company expects instrument transformers to be in greater demand
as more electric power is transferred between sellers and buyers.

SALES AND MARKETING. The Company believes that Kuhlman Electric has
achieved a competitive advantage in the market with product quality, short
production lead times and enhanced on-time delivery. Kuhlman Electric also
benefits from its ability to provide its customers with on-site delivery and
installation of power transformers, an important service as customers seek to
outsource certain functions. A significant portion of the distribution, power
and instrument transformers manufactured by Kuhlman Electric in 1996 were
marketed directly through 10 employee sales professionals. The balance was sold
through 19 independent commissioned sales organizations, which employ
approximately 75 salespersons and sales engineers.

CUSTOMERS. The principal market for Kuhlman Electric's transformer products
is electric utility companies throughout the United States, including The
Detroit Edison Company, Northern States Power Company, Edison International,
Pacific Gas and Electric Company and Cinergy Corp. In addition, direct sales to
commercial and industrial users of electric power are increasing, as changes
occur in the electrical generation, transmission and distribution industry. OEMs
of electric power generation equipment, such as General Electric Company, are
also significant customers of Kuhlman Electric.

COLEMAN CABLE

PRODUCTS. Coleman Cable manufactures and distributes a wide range of
electrical and electronic wire and cable products for consumer, commercial and
industrial markets. These products include cord sets, battery booster cables and
other wire products for consumer uses and flexible cords, power cables, control
cables, robotics cables, diesel locomotive cables and specialty cables used in
the distribution of portable power for construction and industrial uses, as well
as in OEM applications. In 1996, with the acquisition of CCI, the Company
significantly enhanced its capability in the rapidly-growing data transmission
and telecommunications industries by virtue of CCI's broad array of low voltage
electronic wire and cable products, including coaxial and category cables. The
acquisition of Web Wire provided the Company with a broad line of battery
cables, ignition wire sets and related products to augment the Company's
well-known line of products for the automotive aftermarket.

Coleman Cable is also a leading provider of electronic wire and cable for
diversified consumer and commercial markets for low voltage requirements, some
of which are marketed under the "Signal" brand name, which the Company believes
is recognized as a leading brand throughout the security and systems contractor
industry. The "Signal" brand of cables is also used extensively by burglar
alarm, fire alarm, smoke detector and closed circuit television (CCTV)
installation and contracting companies. Coleman Cable also produces cables for
energy management systems and for irrigation and sprinkler systems, and it is
one of the largest producers of thermostat cable in the U.S. These products are
marketed under the "Baron" brand name. The Company believes that products with
the "Baron" brand name are recognized for their quality throughout the HVAC
industry. Products marketed under the "Baron" brand name are used in a variety
of applications by HVAC installers, energy management installers, golf course
sprinkler installers, irrigation system installers, OEMs, machine tool
manufacturers and electrical contractors.

SALES AND MARKETING. Coleman Cable's products are sold directly through 17
employee salespersons, and numerous manufacturers' representatives employing
over 700 salespersons, to commercial contractors, security distributors, mass
merchandisers, hardware wholesalers, automotive retailers, warehouse clubs, home
centers, hardware chains, contractor/industrial supply houses and electrical
distributors, specialty retailers, and various industrial and OEM users on a
nationwide basis. Coleman Cable's flexible power and control cable products are
marketed to electrical, industrial and construction customers under trade names
that the Company believes are widely recognized for their quality and
high-performance standards. "Signal" brand products are sold to security and
equipment distributors, wire and cable distributors, electronic parts
distributors, electrical distributors and OEMs through its employee sales force
and to a lesser extent independent sales representatives.

<PAGE>
CUSTOMERS. Coleman Cable's wire and cable products are sold to numerous
distributors operating in various industries, OEMs and government agencies.
Significant customers of Coleman Cable include Wal-Mart Stores, Inc., Ace
Hardware Corporation, Graybar Electric, Sprint Corporation, General Electric
Company, NYNEX Corporation, WESCO and Anixter International. Coleman Cable
believes that it is one of the leading providers of extension cords and battery
booster cables to the contractor supply market and nationally recognized
retailers, respectively.

INDUSTRIAL PRODUCTS SEGMENT

The Industrial Products Segment is comprised principally of the Schwitzer
Group, which consists of Schwitzer and Kysor. The Schwitzer Group is based in
Indianapolis, Indiana. Demand and profitability in this segment are affected by
economic conditions in industrialized and developing regions of the world.
Expenditures for light, medium and heavy-duty trucks, construction and
agricultural equipment, marine applications and other industrial transportation
equipment may affect demand for the segment's products.

PRODUCTS. The Schwitzer Group is a leading worldwide manufacturer of
proprietary engine components, fuel tanks and other products used on light,
medium and heavy-duty trucks, and for construction, agricultural, mining, power
generation and marine equipment. The Schwitzer Group designs, manufactures and
markets technically advanced components, including turbochargers, fan drives,
cooling fans and crankshaft vibration dampers, for enhancing the efficiency of
commercial and industrial diesel and gasoline engines. These components improve
engine performance by enhancing horsepower output, fuel efficiency, emissions
and durability, and are engineered to meet the specific engine applications of
each customer. Engines incorporating the Company's products are used in light,
medium and heavy-duty trucks, in agricultural and construction equipment, and in
other industrial and commercial applications. Turbochargers use the energy from
engine exhaust to provide pressurized air to the engine, thus increasing power
and reducing exhaust emissions, and are expected to play a significant role in
engine designs capable of complying with increasingly stringent exhaust emission
regulations worldwide. Turbochargers are fitted to engines for on-road vehicles
(such as delivery trucks and semi-tractors) and off-road vehicles (such as farm
and construction equipment).

Fans cool engines and protect them from overheating while reducing noise
and wear on other cooling system components. With the addition of Kysor, the
Company believes that the Schwitzer Group is one of the world's leading
designers and manufacturers of fans and fan drives, producing a complete line of
metal and polymer fans and viscous and friction fan drives. Fan drives, designed
to sense engine temperature, automatically engage and disengage engine cooling
fans. This increases power while reducing fuel consumption and engine noise. The
Schwitzer Group produces vibration dampers which reduce engine vibrations and
enhance engine performance and durability, while reducing noise.

In addition, the Schwitzer Group designs, manufactures and markets other
components for commercial and industrial transportation applications, including
various engine monitoring devices and marine instruments under the "Kysor
Medallion" brand name, truck fuel tanks under the "Kysor Michigan Fleet" brand
name, and HVAC systems for commercial and industrial vehicles and trailer
supports under the "Kysor Westran" brand name.

The Industrial Products Segment also includes Emtec Products Corporation
("Emtec") which designs, manufactures and markets a variety of spring and spring
assembly products and stampings for the transportation, appliance and
electronics markets. Emtec's sales in 1996 were approximately $8 million.

SALES AND MARKETING. The Schwitzer Group sells its products to OEMs, fleet
operators and aftermarket customers through its employee sales force and through
approximately 200 independent distributors to customers in more than 60
countries throughout the world. Many products offered by the Schwitzer Group,
including turbochargers sold to OEMs, must be custom-designed to specific engine
applications of each OEM. Accordingly, research and development personnel of the
Schwitzer Group work closely with OEMs during the design and development of an
engine. Dampers, fan drives and cooling fans also are custom-engineered by the
Schwitzer Group and are used on diesel and gasoline engines. These products are
incorporated on engines that are utilized in light, medium and heavy-duty trucks
and industrial equipment, as well as agricultural and construction equipment.

CUSTOMERS. The Company believes that it is one of the leading independent
suppliers of turbochargers to the non-passenger car market in the world.
Schwitzer's primary customers are the world's leading engine builders, located
primarily in North America, Western Europe, South America and Japan. These
customers include Caterpillar, Inc., Mack Trucks, Inc., Ford Motor Company,
General Motors Corporation, Mercedes-Benz, MAN Aktiengesellschaft, AB Volvo,
Deere & Company and Navistar International Corporation. The principal markets
for Kysor's products are OEMs and fleet operators of light, medium and
heavy-duty trucks, buses, off-highway equipment and the marine industry.

<PAGE>
COMPETITION

The Company experiences substantial competition in each of its business
segments. The Company has numerous competitors, some of which have substantially
greater financial and technical resources than the Company and include divisions
of some of the world's largest business enterprises. The Company generally
competes against divisions or subsidiaries of such large business enterprises,
as well as against numerous other smaller competitors in the various markets in
which it participates. The Company believes that both of its business segments
compete primarily on the basis of product quality, product innovation, service
and price.

CUSTOMERS

During 1996, 1995 and 1994, various purchasing units of Caterpillar, Inc.
accounted for approximately 9%, 10% and 11%, respectively, of the consolidated
net sales of the Company.

RAW MATERIALS AND SUPPLIES

The principal raw materials required by the Electrical Products Segment are
copper, steel, aluminum, various insulating materials and polymers. Copper,
which is the Electrical Products Segment's single largest raw material, is
generally purchased in either wire or rod form from a number of major domestic
producers. Pricing is typically based upon announced prices of the New York
Commodity Exchange, Inc. ("COMEX") for high grade copper, plus a negotiated
premium. The principal raw materials used in the Industrial Products Segment are
nickel, aluminum, cast iron and steel. Although castings used to manufacture
specialized components for turbochargers are available from only a few suppliers
worldwide, the Company has experienced no difficulties in obtaining adequate
supplies to meet its manufacturing needs. The Company may engage in hedging
activities under certain circumstances to mitigate the impact of price
fluctuations in certain commodity prices. However, the Company may experience
rapid increases in the price of its principal raw materials. The Company's
financial condition or results of operations may be materially and adversely
affected by such increases in raw material costs to the extent the Company is
unable to pass on such higher costs to customers.

Raw materials purchased by the Company are generally available from
numerous independent sources at competitive prices, and are principally obtained
from domestic suppliers. The Company does not expect significant difficulty in
filling its raw material requirements. However, it is possible that because of
the Company's continuing focus on "lean manufacturing," which incorporates
"just-in-time" supplier-customer delivery methods with fewer suppliers, the
Company may experience increased difficulties in obtaining raw materials.

BACKLOG

An order is included in the Company's backlog when a firm delivery date has
been received from the customer. The following table sets forth backlog, which
the Company believes to be firm as of the dates indicated:

<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF MARCH 31,
1996 1996 1997
<S> <C> <C> <C>
(IN THOUSANDS)
Electrical Products.................................... $ 51,266 44,661 $ 51,868
Industrial Products.................................... 67,715 58,346 101,914(1)
$118,981 $103,007 $153,782(1)
</TABLE>

(1) Includes Kysor's backlog of $31,701.

At March 31, 1997 substantially all of the Company's backlog of orders was
expected to be completed by December 31, 1997.

ENGINEERING AND PRODUCT DEVELOPMENT

The Company continually seeks to improve its existing products and to
develop new products. Engineering and product development activities are
conducted separately by each business unit. The Company's business units focus
on developing applications-engineered products designed to meet their customers'
needs. Teams representing different functional areas within a business unit work
closely with customers early in the product design process to ensure that the
product meets the customer's specifications and is designed for cost
effectiveness. Engineering expenses include activities associated with product
development, the application of products to specific customer needs, and ongoing
efforts to refine and enhance existing

<PAGE>
products. These costs are expensed as incurred and totaled $7.0 million in 1996.
With the addition of Kysor, the Company expects to spend approximately $12
million on engineering and product development in 1997.

LEGAL PROCEEDINGS

The Company, from time to time, is subject to legal claims and other
matters relating to the conduct of its business. In the opinion of management,
the ultimate disposition of such matters presently outstanding will not have a
materially adverse effect upon the Company's consolidated financial position or
results of operations.

ENVIRONMENTAL

The Company is subject to numerous environmental laws and regulations
concerning air emissions, discharges into waterways and the generation,
handling, storage, transportation, treatment and disposal of waste materials.
These laws and regulations are constantly changing and it is impossible to
predict with accuracy the effect they may have on the Company in the future.
Like many other industrial concerns, the Company's manufacturing operations
entail the risk of noncompliance, which may result in fines, penalties and
remediation costs, and there can be no assurance that such costs will be
insignificant. To the best of the Company's knowledge, it is in substantial
compliance with all federal, state and local environmental protection
provisions, and believes that any future fines, penalties and remediation costs
associated with environmental noncompliance should not have a material adverse
effect on capital expenditures, earnings or the Company's competitive position.
However, legal and regulatory requirements in those areas have been increasing,
and there can be no assurance that significant costs and liabilities will not be
incurred in the future due to regulatory noncompliance. See Note 5 to Notes to
Consolidated Financial Statements.

EMPLOYEES

As of May 1, 1997, the Company employed approximately 3,800 persons,
approximately 1,100 of whom are currently subject to collective bargaining
agreements. Three of the Company's collective bargaining agreements, covering an
aggregate of approximately 300 employees at three facilities,expire within the
next 12 months. The Company considers relations with its employees to be
satisfactory.

FACILITIES

The executive offices of the Company are located at 3 Skidaway Village
Square, Savannah, Georgia 31411. The telephone number at that address is (912)
598-7809. The executive offices of Kuhlman Electric, Coleman Cable and the
Schwitzer Group are located in Versailles, Kentucky, North Chicago, Illinois,
and Indianapolis, Indiana, respectively. In total, the Company owns or leases 27
manufacturing facilities, which are located throughout the United States, as
well as in England, Wales, Brazil and South Korea.

<PAGE>
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS

BOARD OF DIRECTORS

The following information is furnished with respect to each person who is
currently a director of the Company:

<TABLE>
<CAPTION>
NAME AGE DIRECTOR SINCE PRINCIPAL POSITION WITH THE COMPANY
<S> <C> <C> <C>
Curtis G. Anderson................... 55 1993 President, Chief Operating Officer
and Director
William E. Burch..................... 72 1993 Director (1)
Steve Cenko.......................... 71 1987 Director (2)
Gary G. Dillon....................... 63 1995 Chairman and Chief Executive
Officer of Schwitzer and Director
of the Company
Alexander W. Dreyfoos, Jr............ 65 1993 Director (1)
Robert S. Jepson, Jr................. 54 1993 Chairman of the Board, Chief
Executive Officer and Director
William M. Kearns, Jr................ 61 1993 Director (1)
George J. Michel, Jr................. 65 1985 Director (2)
General H. Norman Schwarzkopf........ 62 1994 Director (2)
</TABLE>

(1) Member of the Audit Committee.

(2) Member of the Compensation Committee.

The Company's Board of Directors is classified into three classes having
staggered terms of three years each. The current terms of Messrs. Anderson,
Burch, Dreyfoos and General Schwarzkopf expire in 1998; of Messrs. Cenko and
Jepson in 1999; and of Messrs. Dillon, Kearns and Michel in 2000.

EXECUTIVE OFFICERS

The following information is furnished with respect to each person who is
currently an executive officer of the Company:

<TABLE>
<CAPTION>
EXECUTIVE
OFFICER
NAME AGE SINCE PRINCIPAL POSITION WITH THE COMPANY
<S> <C> <C> <C>
Robert S. Jepson, Jr................. 54 1993 Chairman of the Board and Chief
Executive Officer
Curtis G. Anderson................... 55 1994 President and Chief Operating
Officer
Gary G. Dillon....................... 63 1995 Chairman and Chief Executive
Officer of Schwitzer
Vernon J. Nagel...................... 39 1993 Executive Vice President of
Finance, Chief Financial Officer
and Treasurer
Richard A. Walker.................... 45 1984 Executive Vice President, Chief
Administrative Officer, General
Counsel and Secretary
</TABLE>

CURTIS G. ANDERSON, who was elected President and Chief Operating Officer
of the Company on April 26, 1994, and a director on September 8, 1993, founded
and has been, since 1986, Chairman of Anderson Capital Corporation, a private
investment company. Prior thereto, he spent 19 years in corporate and investment
banking, including 14 years with Citibank and five years with The First National
Bank of Chicago where he served as Executive Vice President, Head of Financial
Products Department.

WILLIAM E. BURCH served as counsel to the law firm of Lukins & Annis in
Spokane, Washington from 1984 to 1993. From 1981 to 1984, he served as Vice
Chairman and from 1975 to 1981, as President and Chief Executive Officer of Fred
S. James & Co. (insurance brokers). He has been a consultant from 1982 to the
present. He also currently serves as a director of Guy F. Atkinson Company of
California.

<PAGE>
STEVE CENKO has been a consultant from 1985 to the present. From 1980 to
1985 he served as President of Lamb Systems Group (engineering, manufacturing,
and marketing of machine tools) and as a director and Executive Vice President
of Lamb Technicon Corporation (holding company).

GARY G. DILLON has served as Chairman of Schwitzer since June 1991 and
Chief Executive Officer of Schwitzer since April 1989. From April 1989 to March
1997, he also served as President of Schwitzer. Prior to April 1989 he served as
President and Chief Executive Officer of Household Manufacturing, Inc. Mr.
Dillon is also a director of Household International, Inc.

ALEXANDER W. DREYFOOS, JR. is currently serving, and has served
continuously since 1963, as Chairman of the Board of Photo Electronics
Corporation (investment management). He also serves as a director of FPL Group,
Inc.

ROBERT S. JEPSON, JR., who was elected President and Chief Executive
Officer of the Company on February 10, 1993, and Chairman of the Board on June
9, 1993, founded and was Chairman and Chief Executive Officer of The Jepson
Corporation from 1983 until its sale in 1989. The Jepson Corporation was a
diversified manufacturing company listed on the NYSE. Immediately preceding his
election as President and Chief Executive Officer of the Company, Mr. Jepson
was, and is currently, Chairman and Chief Executive Officer of Jepson
Associates, Inc., a private investment company, and serves as Chairman of the
Board of Jepson Vineyards, Ltd.

WILLIAM M. KEARNS, JR. is currently President of W.M. Kearns & Co., Inc.
(private investment company) and is a Senior Consultant for Furman Selz LLC, one
of the several Underwriters. He was associated with Lehman Brothers (investment
banking) and its predecessor firms for more than 33 years. From 1992 to 1994 he
was an Advisory Director of Lehman Brothers and from 1969 through 1992 he was a
Managing Director of that firm. He also serves as a director of Selective
Insurance Group, Inc., Malibu Entertainment Worldwide International, Inc. and as
a trustee of EQ Advisors Trust (Equitable Life Assurance Society of the United
States).

GEORGE J. MICHEL, JR. has been a private investor and consultant and
Chairman of Windstar International, Inc. (management consulting) from 1990 to
the present. Prior to 1990, he was Chairman of Stanadyne, Inc. (diversified
manufacturer of fabricated metal products) from 1985 to 1989, and Chief
Executive Officer of the same corporation from 1988 to 1989.

VERNON J. NAGEL, who joined the Company on April 5, 1993, became Executive
Vice President of Finance, Chief Financial Officer and Treasurer of the Company
in February 1994 and was Vice President of Finance, Chief Financial Officer and
Treasurer prior thereto. He was the Vice President of Finance, Chief Financial
Officer and Secretary of Stericycle, Inc. (medical waste management) from 1990
until 1993. Prior thereto, Mr. Nagel served in various financial executive
capacities with The Jepson Corporation from 1985 until 1990.

GENERAL H. NORMAN SCHWARZKOPF is currently active as an author, lecturer
and TV consultant. He retired in August 1991 as a Four-Star General in the U.S.
Army after having served as Commander in Chief, United States Central Command,
Department of Defense, and Commander of Operations Desert Shield and Desert
Storm. He currently serves as a director of Borg-Warner Security Corporation,
The Washington Water Power Company, Remington Arms Company, Inc., and Home
Shopping Network, Inc.

RICHARD A. WALKER has served as an Executive Vice President or similar
position with the Company, as well as General Counsel and Secretary, since 1991.
He has served as Chief Administrative Officer since 1994. From 1984 until 1991,
Mr. Walker served as Vice President, General Counsel and Secretary of the
Company. Prior thereto, Mr. Walker was a partner in the law firm of Harness,
Dickey & Pierce.

<PAGE>
PRINCIPAL SHAREHOLDERS

BOARD OF DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth, as of May 1, 1997, and as adjusted to
reflect the sale of the shares of Common Stock offered hereby, the number of
shares of Common Stock beneficially owned by each director and executive officer
of the Company, and the percent of class owned by such persons.

<TABLE>
<CAPTION>
PERCENT OF CLASS (4)
PRIOR TO AFTER
NUMBER OF SHARES (1)(2)(3) OFFERING OFFERING
<S> <C> <C> <C>
Curtis G. Anderson............................................................. 266,803 1.9% 1.6%
William E. Burch............................................................... 16,619(5) * *
Steve Cenko.................................................................... 21,626 * *
Gary G. Dillon................................................................. 256,497 1.8% 1.6%
Alexander W. Dreyfoos, Jr...................................................... 26,768 * *
Robert S. Jepson, Jr........................................................... 581,058(5) 4.1% 3.5%
William M. Kearns, Jr.......................................................... 20,941 * *
George J. Michel, Jr........................................................... 27,805(5) * *
Vernon J. Nagel................................................................ 93,815 * *
H. Norman Schwarzkopf.......................................................... 11,085 * *
Richard A. Walker.............................................................. 129,952 * *
All Directors and Executive Officers
as a Group (11 Persons)...................................................... 1,452,969 9.8% 8.5%
</TABLE>

* Less than one percent of outstanding shares.

(1) Includes shares in Kuhlman Electric's Employees' Stock Purchase Plan, the
Company's Dividend Reinvestment Plan, the Kuhlman Electric Savings Maximizer
Plan, and in the Schwitzer U.S. Inc. Tax Reduction Investment Plan for
Certain Salaried and Exempt Employees.

(2) Includes shares which the following persons have the right to acquire upon
the exercise of stock options as of May 1, 1997 or at any time within 60
days thereafter: Curtis G. Anderson -- 200,000 shares; Steve Cenko -- 12,359
shares; Gary G. Dillon -- 170,491 shares; Robert S. Jepson, Jr. -- 400,000
shares; George J. Michel, Jr. -- 12,359 shares; Vernon J. Nagel -- 90,000
shares; and Richard A. Walker -- 123,392 shares.

(3) Excludes the following grants and awards under the Company's Long-Term
Incentive Plan: stock options for 2,000 shares granted to each non-employee
director on each of August 9, 1996 and April 24, 1997; performance
units/shares awarded on August 8, 1996, but not fully vested as of May 1,
1997, of 9,900 shares to Curtis G. Anderson; 7,425 shares to Gary G. Dillon;
9,900 shares to Robert S. Jepson, Jr.; 3,960 shares to Vernon J. Nagel and
3,960 shares to Richard A. Walker; and stock options granted on February 17,
1997 for 60,000 shares to Curtis G. Anderson; 10,000 shares to Gary G.
Dillon; 100,000 shares to Robert S. Jepson, Jr.; 40,000 shares to Vernon J.
Nagel; and 40,000 shares to Richard A. Walker.

(4) Each respective individual's shares included in note (2) were deemed to be
outstanding as of May 1, 1997 for the purpose of computing the percentage
applicable to the person owning such shares but were not deemed to be
outstanding for the purpose of computing the percent of class owned by any
other person. The total number of shares included in note (2) were deemed to
be outstanding for the purpose of computing the percent of class for all
directors and executive officers as a group.

(5) Excludes an aggregate of 5,700 shares owned by spouses where beneficial
ownership is disclaimed.

<PAGE>
CERTAIN BENEFICIAL OWNERS

The following table sets forth, as of May 1, 1997, and as adjusted to
reflect the sale of the shares of Common Stock offered hereby, the number of
shares of Common Stock owned by each person known by the Company to own of
record or beneficially 5% or more of the outstanding shares of Common Stock.

<TABLE>
<CAPTION>
PERCENT OF CLASS
PRIOR TO AFTER
NAME OF PERSON NUMBER OF SHARES OFFERING OFFERING
<S> <C> <C> <C>
David L. Babson and Company Incorporated 723,691(1) 5.2% 4.5%
One Memorial Drive
Cambridge, Massachusetts 02142-1300..........................................
The Prudential Insurance Company of America 1,276,302(2) 9.2% 7.9%
751 Broad Street
Newark, New Jersey 07102-3777................................................
</TABLE>

(1) Based solely on information set forth in a Schedule 13G dated February 7,
1997 filed with the Commission.

(2) Based solely on information set forth in a Schedule 13G dated January 27,
1997 filed with the Commission.

DESCRIPTION OF CAPITAL STOCK

The authorized capital stock of the Company consists of 20,000,000 shares
of Common Stock, $1.00 par value, and 2,000,000 shares of Preferred Stock, $1.00
par value (the "Preferred Stock"), of which 200,000 shares are designated as
Junior Participating Preferred Stock, Series A ("Series A Preferred Stock"). As
of April 30, 1997, there were 13,797,429 shares of Common Stock and no shares of
Preferred Stock issued and outstanding.

The following summary of the Company's capital stock is qualified in its
entirety by reference to the Company's Certificate of Incorporation (the
"Certificate of Incorporation"), its Bylaws (the "Bylaws"), and the Delaware
General Corporation Law, as amended (the "DGCL").

COMMON STOCK

Each holder of Common Stock is entitled to one vote per share on all
matters presented to the shareholders for action. There are no cumulative voting
rights. Holders of Common Stock are entitled to such dividends as the Board of
Directors of the Company may declare out of funds legally available therefor
and, upon dissolution or liquidation, to share ratably in the assets available
for distribution after all prior claims and the liquidation rights of the
holders of any shares of preferred stock of the Company that may be outstanding.
Holders of Common Stock do not have preemptive rights to subscribe for any
securities of the Company.

PREFERRED STOCK PURCHASE RIGHTS

On April 24, 1997, the Board of Directors of the Company declared a
distribution of one Preferred Stock Purchase Right (a "Right") for each
outstanding share of Common Stock to shareholders of record at the close of
business on April 30, 1997.

Under certain circumstances, each Right entitles the registered holder to
purchase from the Company one one-hundredth of a share of Series A Preferred
Stock or, in certain circumstances, either Common Stock or common stock of an
acquiring company at one-half of its market price. The Rights are designed to
make it more likely that all of the Company's shareholders receive fair and
equal treatment in the event of any proposed takeover of the Company and to
guard against the use of coercive tactics to gain control of the Company. The
Rights also provide protection against a controlling shareholder taking
advantage of its position by engaging in transactions for its benefit and to
shareholders' detriment. The description and terms of the Rights are set forth
in a Rights Agreement dated as of April 30, 1997 (the "Rights Agreement")
between the Company and Harris Trust and Savings Bank, as Rights Agent. When
exercisable, except as set forth below, each Right entitles the registered
holder to purchase from the Company one one-hundredth of a share of Series A
Preferred Stock at a price of $80.00, subject to adjustment in certain
circumstances to prevent dilution.

Currently, the Rights are not exercisable, are evidenced by the Common
Stock certificate, are transferred with and only with the Common Stock, and
trade automatically with the Common Stock. The Rights will separate from the
Common Stock and certificates representing the Rights will be distributed upon
occurrence of certain events that may lead to a concentration of ownership of
Common Stock. At that time, each holder of a Right will have the right to
receive, upon exercise, shares of

<PAGE>
Common Stock (or, in certain circumstances, cash, property or other securities
of the Company) having a value equal to two times the purchase price of the
Right then in effect. All Rights that are, or (under certain circumstances
specified in the Rights Agreement) were, beneficially owned by any person or
group of persons that has acquired, or has obtained the right to acquire,
beneficial ownership of 15% or more of the Common Stock will be null and void.
The Rights will expire on April 30, 2007, but may be redeemed by the Company
prior to such date under certain circumstances at a redemption price of $.001
per Right, subject to adjustment.

PREFERRED STOCK

The Company is authorized to issue 2,000,000 shares of Preferred Stock, in
one or more series, with such designations, and such voting, dividend, and
conversion rights, and such other relative, participating, optional or other
special rights, qualifications, limitations or restrictions as the Board of
Directors of the Company may determine by resolutions providing for the issue of
such preferred stock. The authority of the Board of Directors of the Company
includes, but is not limited to, the determination or fixing of the following
with respect to shares of such class or any series thereof: (i) the number of
shares and designation; (ii) the dividend rate and whether dividends are to be
cumulative; (iii) whether shares are to be redeemable and, if so, the terms and
amount of any sinking fund providing for the purchase or redemption of such
shares; (iv) whether shares shall be convertible and, if so, the applicable
terms and provisions; (v) what voting rights are to apply; and (vi) what
restrictions are to apply, if any, on the issue or reissue of any additional
Preferred Stock.

SERIES A PREFERRED STOCK

Each share of Series A Preferred Stock purchasable upon exercise of the
Rights will be entitled to receive, subject to a minimum dividend of $60 per
year, a dividend of 100 times the dividend declared on the shares of Common
Stock. In the event of liquidation, the holders of the shares of Series A
Preferred Stock will be entitled to receive, subject to a minimum liquidation
payment of $100 per share, an aggregate liquidation payment equal to 100 times
the payment made per share of Common Stock. Each share of Series A Preferred
Stock will have one hundred votes, voting together with the shares of Common
Stock. In the event of any merger, consolidation or other transaction in which
shares of Common Stock are exchanged, each share of Series A Preferred Stock
will be entitled to receive 100 times the amount and type of consideration
received per share of Common Stock. The rights of the shares of Series A
Preferred Stock as to dividends and liquidation, and in the event of mergers and
consolidation, are protected by antidilution provisions.

Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends. While the distribution of the Rights will not
be taxable to shareholders or to the Company, shareholders may, depending upon
the circumstances, recognize taxable income if the Rights become exercisable for
Common Stock (or other consideration) of the Company or for common stock of an
acquiring company as set forth above.

ANTI-TAKEOVER CONSIDERATIONS

The Company is subject to the provisions of Section 203 of the DGCL. In
general, this statute prohibits a publicly-held Delaware corporation from
engaging, under certain circumstances, in a "business combination" with an
"interested shareholder" for a period of three years after the date of the
transaction in which the person became an interested shareholder unless either
(i) prior to the date at which the shareholder became an interested shareholder
the Board of Directors approved either the business combination or the
transaction in which the person became an interested shareholder, (ii) the
shareholder owned more than 85% of the outstanding voting stock of the
corporation (excluding shares held by directors who are officers or held in
certain employee stock plans) upon commencement of the transaction in which the
shareholder became an interested shareholder or (iii) the business combination
is approved by the Board of Directors and by two-thirds of the outstanding
voting stock of the corporation (excluding shares held by the interested
shareholder) at a meeting of the shareholders (and not by written consent) held
on or subsequent to the date on which the person became an "interested
shareholder" of the business combination.

An "interested shareholder" is a person who owns (or is an affiliate or
associate of the corporation and at any time within the prior three years did
own) 15% or more of the corporation's voting stock, and the affiliates and
associates of such person. Section 203 defines a "business combination" to
include, without limitation, mergers, consolidations, stock sales and asset
based transactions and other transactions resulting in a financial benefit to
the interested shareholder.

The Company's Certificate of Incorporation and Bylaws contain a number of
provisions relating to corporate governance and to the rights of shareholders.
Certain of these provisions may be deemed to have a potential "anti-takeover"
effect in

<PAGE>
that such provisions may delay, defer or prevent a change of control of the
Company. These provisions include (i) the classification of the Board of
Directors into three classes, each class serving for staggered three-year terms;
(ii) the authority of the Board of Directors to determine the size of the Board
of Directors, subject to certain minimums and maximums; (iii) the authority of
the Board of Directors to fill vacancies on the Board of Directors; (iv) a
requirement that special meetings of shareholders may be called only by the
Company's Chief Executive Officer or by the Board of Directors; (v) the
requirement that the only business that may be conducted at a special meeting of
shareholders is that which is set forth in the Company's notice of such meeting;
(vi) the authority of the Board of Directors to issue series of Preferred Stock
with such voting rights and other powers as the Board of Directors may
determine; and (vii) the requirement that the Company's security holders may
amend the Bylaws only by the affirmative vote of the holders of at least 70% of
the voting securities (of all of the outstanding shares of stock) of the
Company. See " -- Preferred Stock Purchase Rights" for a description of rights
to purchase Common Stock or Series A Preferred Stock that are exercisable upon
the occurrence of certain events.

INDEMNIFICATION AND LIMITED LIABILITY

The Company's Certificate of Incorporation and Bylaws require the Company
to indemnify the directors and officers of the Company to the fullest extent
permitted by law. In addition, as permitted by the DGCL, the Company's
Certificate of Incorporation and Bylaws provide that no director of the Company
will be personally liable to the Company or its shareholders for monetary
damages for such director's breach of duty as a director. This limitation of
liability does not relieve directors from liability for (i) any breach of the
director's duty of loyalty to the Company or its shareholders; (ii) acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law; (iii) any liability under Section 174 of the DGCL for unlawful
distributions or (iv) any transaction from which the director derived an
improper personal benefit. This provision of the Certificate of Incorporation
will limit the remedies available to a shareholder who is dissatisfied with a
decision of the Board of Directors protected by this provision, and such
shareholder's only remedy in that circumstance may be to bring a suit to prevent
the action of the Board of Directors. In many situations this remedy may not be
effective, including instances when shareholders are not aware of a transaction
or an event prior to action of the Board of Directors in respect of such
transaction or event.

TRANSFER AGENT

Harris Trust and Savings Bank, located in Chicago, Illinois, is the
Transfer Agent and Registrar for the Common Stock.

<PAGE>
UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, the
Underwriters named below, for whom The Robinson-Humphrey Company, Inc., Furman
Selz LLC and PaineWebber Incorporated are acting as representatives
(collectively, the "Representatives"), have severally agreed to purchase from
the Company, and the Company has agreed to sell to the Underwriters, the number
of shares of Common Stock set forth opposite their respective names below:

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
<S> <C>
The Robinson-Humphrey Company, Inc..................................................
Furman Selz LLC.....................................................................
PaineWebber Incorporated............................................................

Total..................................................................... 2,350,000
</TABLE>

The Underwriting Agreement provides that the obligations of the several
Underwriters thereunder are subject to approval of certain legal matters by
counsel and to various other conditions. The nature of the Underwriters'
obligations is such that they are committed to purchase all shares of Common
Stock offered hereby if any are purchased.

The Underwriters propose to offer the shares of Common Stock directly to
the public at the Price to Public set forth on the cover page of this Prospectus
and to certain dealers at such price less a concession not in excess of
$ per share. The Underwriters may allow, and such dealers may reallow,
a concession not in excess of $ per share in sales to certain other
dealers. After this offering, the Price to Public and other selling terms may be
changed.

The Company and each of its directors and executive officers have agreed
that they will not offer, sell or otherwise dispose of any shares of Common
Stock (other than the shares offered by the Company in this offering), subject
to certain exceptions, for a period of 90 days from the date of this Prospectus
without the prior written consent of the Representatives.

The Company has granted the Underwriters an option exercisable for 30 days
after the date of this Prospectus to purchase up to 150,000 additional shares of
Common Stock to cover over-allotments, if any, at the public offering price less
the underwriting discount, as set forth on the cover page of this Prospectus. If
the Underwriters exercise their over-allotment option, the Underwriters have
severally agreed, subject to certain conditions, to purchase approximately the
same percentage thereof that the number of shares to be purchased by each of
them, as shown in the foregoing table, bears to the 2,350,000 shares of Common
Stock offered hereby. The Underwriters may exercise such option only to cover
over-allotments in connection with the sale of the shares of Common Stock
offered hereby.

The Company has agreed to indemnify the several Underwriters against
certain liabilities, including liabilities under the Securities Act.

The Underwriters do not intend to confirm sales to any accounts over which
they exercise discretionary authority.

Until the distribution of the Common Stock is completed, rules of the
Securities and Exchange Commission (the "Commission") may limit the ability of
the Underwriters to bid for and purchase shares of Common Stock. As an exception
to these rules, the Representatives are permitted to engage in certain
transactions that stabilize the price of the Common Stock. Such transactions may
consist of bids or purchases for the purpose of pegging, fixing or maintaining
the price of the Common Stock. If the Underwriters create a short position in
the Common Stock in connection with this offering (i.e., if they sell more
shares of Common Stock than are set forth on the cover page of this Prospectus),
the Representatives may reduce the short position by purchasing Common Stock in
the open market. The Representatives may elect to reduce any short position by
exercising all or part of the over-allotment option described herein.

<PAGE>
The Representatives also may impose a penalty bid on certain Underwriters
and selling group members. This means that if the Representatives purchase
shares of Common Stock in the open market to reduce the Underwriters' short
position or to stabilize the price of the Common Stock, they may reclaim the
amount of the selling concession from the Underwriters and selling group members
who sold those shares as part of this offering. In general, purchases of a
security for the purpose of stabilization or to reduce a syndicate short
position could cause the price of the security to be higher than it might
otherwise be in the absence of such purchases. The imposition of a penalty bid
might have an effect on the price of a security to the extent that it were to
discourage resales of the security by purchasers in the offering.

Neither the Company nor any of the Underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the Common Stock. In addition, neither
the Company nor any of the Underwriters makes any representation that the
Representatives will engage in such transactions or that such transactions, once
commenced, will not be discontinued without notice.

William M. Kearns, Jr., a director of the Company, serves as an outside
consultant to Furman Selz LLC, one of the Representatives.

LEGAL MATTERS

The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Rudnick & Wolfe, Chicago, Illinois. Certain legal
matters relating to this offering will be passed upon for the Underwriters by
Smith, Gambrell & Russell, LLP, Atlanta, Georgia.

EXPERTS

The financial statements and schedule of the Company as of December 31,
1996 and 1995 and for each of the three years in the period ended December 31,
1996 included and incorporated by reference in this Prospectus and elsewhere in
the registration statement, to the extent and for the periods indicated in their
reports, have been audited by Arthur Andersen LLP, independent public
accountants, and are included herein in reliance upon the authority of said firm
as experts in accounting and auditing in giving said reports.

The combined financial statements of Kysor as of December 31, 1996 and for
the year ended December 31, 1996 are incorporated by reference in this
Prospectus in reliance on the report of Coopers & Lybrand L.L.P., independent
public accountants, given on authority of that firm as experts in accounting and
auditing.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents filed with the Commission by the Company (File No.
1-7695) pursuant to the Exchange Act, are hereby incorporated by reference in
this Prospectus:

(i) Annual Report on Form 10-K for the fiscal year ended December 31,
1996;

(ii) Quarterly Report on Form 10-Q for the quarter ended March 31,
1997;

(iii) Current Report on Form 8-K dated March 10, 1997;

(iv) Current Report on Form 8-K/A (Amendment No. 1) dated March 10,
1997;

(v) Current Report on Form 8-K dated April 24, 1997;

(vi) Current Report on Form 8-K dated May 28, 1997; and

(vii) Description of the Company's common stock, par value $1.00 per
share, and Preferred Stock Purchase Rights contained in the
Company's registration statements on Form 8-A.

All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of this offering shall be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the date of filing
such documents. Any statement contained herein or in a document incorporated by
reference or deemed to be incorporated by reference herein shall be deemed to be
modified or superseded for purposes of this Prospectus to the extent that a
statement contained in this Prospectus or in any other subsequently filed
document that also is or is deemed to be incorporated by reference in this
Prospectus modifies or supersedes such statement.

<PAGE>
Any such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.

All documents that are incorporated by reference in this Prospectus but
which are not delivered herewith are available without charge (other than
exhibits to such documents which are not specifically incorporated by reference
therein) upon request from the Company, Attention: Investor Relations, 3
Skidaway Village Square, Savannah, Georgia 31411 (telephone: 912/598-7809).

AVAILABLE INFORMATION

The Company has filed a Registration Statement on Form S-3 (the
"Registration Statement") under the Securities Act, with the Commission covering
the shares of Common Stock offered hereby. As permitted by the rules and
regulations of the Commission, this Prospectus omits certain information,
exhibits and undertakings contained in the Registration Statement. For further
information pertaining to the securities offered hereby, reference is made to
the Registration Statement, including the exhibits filed as a part thereof.

The Company is subject to the informational requirements of the Exchange
Act, and, in accordance therewith, file reports, proxy statements and other
information with the Commission. Reports, proxy statements and other information
filed by the Company can be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549; and at its Regional Offices located at Suite 1400, 500 West Madison
Street, Chicago, Illinois 60661; and Seven World Trade Center, New York, New
York 10048. Copies of such material can be obtained from the Public Reference
Section of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. The Commission maintains a Web site that contains reports,
proxy and information statements and other information regarding registrants
that file electronically within the Commission. The address of the Commission's
Web site is: http://www.sec.gov. The Common Stock is listed on the NYSE and such
reports, proxy statements and other information concerning the Company can be
inspected at the offices of the NYSE, 20 Broad Street, New York, New York 10005.

<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE

<S> <C>
Report of Independent Public Accountants............................................................................... F-2

Consolidated Statements of Income for the years ended
December 31, 1994, 1995 and 1996 and
the three months ended March 31, 1996 and 1997 (unaudited)........................................................... F-3

Consolidated Balance Sheets as of December 31, 1995
and 1996, and as of March 31, 1997 (unaudited)....................................................................... F-4

Consolidated Statements of Cash Flows for the years ended
December 31, 1994, 1995 and 1996, and the three
months ended March 31, 1996 and 1997 (unaudited)..................................................................... F-5

Consolidated Statements of Shareholders' Equity for the years
ended December 31, 1994, 1995 and 1996, and for
the three months ended March 31, 1997 (unaudited).................................................................... F-6

Notes to Consolidated Financial Statements............................................................................. F-7
</TABLE>

F-1

<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

TO THE SHAREHOLDERS OF KUHLMAN CORPORATION:

We have audited the accompanying consolidated balance sheets of Kuhlman
Corporation (a Delaware corporation) and subsidiaries as of December 31, 1995
and 1996, and the related consolidated statements of income, shareholders'
equity and cash flows for each of the three years in the period ended December
31, 1996. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Kuhlman Corporation and
subsidiaries as of December 31, 1995 and 1996, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1996, in conformity with generally accepted accounting principles.

/s/ ARTHUR ANDERSEN LLP

Louisville, Kentucky
February 3, 1997 (except with respect to the matters discussed in Note 17 and
the last two paragraphs of Note 5,
as to which the dates are March 10, 1997 and May 27, 1997, respectively)

F-2

<PAGE>
CONSOLIDATED STATEMENTS OF INCOME

KUHLMAN CORPORATION AND SUBSIDIARIES

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
1994 1995 1996 1996 1997
<S> <C> <C> <C> <C> <C>
IN THOUSANDS, EXCEPT PER SHARE AMOUNTS (UNAUDITED)
Net sales........................................................ $396,117 $425,384 $456,465 $103,457 $134,148
Cost of goods sold............................................... 320,232 341,277 355,530 81,993 104,406
Gross profit................................................... 75,885 84,107 100,935 21,464 29,742
Selling, engineering, general and administrative expenses........ 52,601 54,946 62,524 13,722 18,491
Operating profit.......................................... 23,284 29,161 38,411 7,742 11,251
Other income(expense):
Interest expense, net............................................ (6,969) (7,066) (6,981) (1,563) (1,938)
Merger expenses.................................................. -- (4,510) -- -- --
Other, net....................................................... (712) 493 (2,087) (437) (315)
Total other income (expense), net.............................. (7,681) (11,083) (9,068) (2,000) (2,253)
Income before taxes and extraordinary item....................... 15,603 18,078 29,343 5,742 8,998
Taxes on income.................................................. 5,633 8,034 12,007 2,324 3,716
Income before extraordinary item................................. 9,970 10,044 17,336 3,418 5,282
Extraordinary item (net of tax effect of $1,175)................. -- (1,861) -- -- --
Net income................................................ $ 9,970 $ 8,183 $ 17,336 $ 3,418 $ 5,282
Per share amounts:
Primary:
Income before extraordinary item.......................... $ 0.73 $ 0.76 $ 1.26 $ 0.26 $ 0.36
Extraordinary item........................................ -- (0.14) -- -- --
Net income................................................ $ 0.73 $ 0.62 $ 1.26 $ 0.26 $ 0.36
Fully diluted:
Income before extraordinary item.......................... $ 0.73 $ 0.76 $ 1.21 $ 0.25 $ 0.36
Extraordinary item, net of tax............................ -- (0.14) -- -- --
Net income................................................ $ 0.73 $ 0.62 $ 1.21 $ 0.25 $ 0.36
Average shares outstanding
Primary................................................... 13,647 13,178 13,760 13,181 14,479
Fully diluted............................................. 13,647 13,178 14,384 13,656 14,574
</TABLE>

The Notes to Consolidated Financial Statements should be read in conjunction
with these statements.

F-3

<PAGE>
CONSOLIDATED BALANCE SHEETS

KUHLMAN CORPORATION AND SUBSIDIARIES

<TABLE>
<CAPTION>
DECEMBER 31,
1995 1996 MARCH 31, 1997
<S> <C> <C> <C>
IN THOUSANDS (UNAUDITED)
ASSETS
Current assets
Cash and cash equivalents............................................................ $ 581 $ 2,209 $ 6,781
Accounts receivable, less reserves of $1,442 and $2,344 at December 31, 1995 and 1996
and $3,722 at March 31, 1997, respectively......................................... 55,753 70,079 93,356
Inventories.......................................................................... 41,833 52,530 68,338
Deferred income taxes................................................................ 4,901 7,810 10,338
Prepaid expenses and other current assets............................................ 3,535 3,502 4,464
Total current assets............................................................ 106,603 136,130 183,277
Plant and equipment
Land................................................................................. 2,275 3,075 3,570
Buildings and leasehold improvements................................................. 34,802 39,138 48,411
Machinery, fixtures and equipment.................................................... 111,175 122,655 155,982
Construction in progress............................................................. 2,241 2,825 3,352
150,493 167,693 211,315
Less -- accumulated depreciation and amortization.................................... (84,244) (89,829) (92,943)
Plant and equipment -- net...................................................... 66,249 77,864 118,372
Intangible assets, net of amortization of $2,672 and $4,441 at December 31, 1995 and
1996, and $4,918 at March 31, 1997, respectively................................... 37,201 58,326 105,733
Other assets......................................................................... 4,849 5,096 12,607
$214,902 $277,416 $419,989
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt.................................................... $ 10,522 $ 2,295 $ 12,528
Accounts payable..................................................................... 28,542 35,410 47,296
Accrued liabilities.................................................................. 28,357 43,833 69,312
Total current liabilities....................................................... 67,421 81,538 129,136
Long-term debt
Bank debt............................................................................ 60,217 87,764 163,184
Other long-term debt................................................................. 3,436 4,538 4,499
Total long-term debt............................................................ 63,653 92,302 167,683
Accrued postretirement benefits...................................................... 8,462 8,859 19,403
Other long-term liabilities.......................................................... 1,134 3,143 8,859
Total liabilities............................................................... 140,670 185,842 325,081
Shareholders' equity
Preferred stock, par value $1.00, 2,000 shares authorized, none issued; Junior
participating preferred stock, Series A, no par value 200 shares authorized, none
issued............................................................................. -- -- --
Common stock, par value $1.00, 20,000 shares authorized, 13,240, 13,803 and 13,835
shares issued at December 31, 1995 and 1996, and March 31, 1997, respectively...... 13,240 13,803 13,835
Additional paid-in capital........................................................... 26,217 32,749 33,174
Retained earnings.................................................................... 37,988 47,272 50,490
Foreign currency translation adjustments............................................. (1,911) (640) (981)
Minimum pension liability............................................................ (382) (690) (690)
75,152 92,494 95,828
Less -- treasury stock at cost (72 shares for all periods)........................... (920) (920) (920)
Total shareholders' equity...................................................... 74,232 91,574 94,908
$214,902 $277,416 $419,989
</TABLE>

The Notes to Consolidated Financial Statements should be read in conjunction
with these statements.

F-4

<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS

KUHLMAN CORPORATION AND SUBSIDIARIES

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
1994 1995 1996 1996 1997
<S> <C> <C> <C> <C> <C>
IN THOUSANDS (UNAUDITED)
Cash flows from operating activities:
Net income........................................................... $ 9,970 $ 8,183 $17,336 $ 3,418 $ 5,282
Adjustments to reconcile net income to net cash provided by operating
activities:
Extraordinary item, net........................................... -- 1,861 -- -- --
Merger expenses................................................... -- 4,510 -- -- --
Depreciation and amortization..................................... 11,207 11,320 12,470 3,026 3,988
Deferred income taxes............................................. 2,435 3,501 (25) 708 (539)
Provision for losses on accounts receivable....................... 250 1,211 685 138 121
Other, net........................................................ 558 67 (217) (200) 55
Changes in operating assets and liabilities:(1)
Accounts receivable............................................. (4,885) (885) (4,780) (1,487) (4,216)
Inventories..................................................... 3,719 (2,057) (1,300) (2,340) (3,077)
Prepaid expenses and other current assets....................... (3,536) 2,240 274 863 56
Accounts payable................................................ 4,708 1,049 3,915 5,530 4,009
Accrued liabilities............................................. (5,545) (2,869) 9,325 1,254 3,449
Net cash provided by operating activities............................ 18,881 28,131 37,683 10,910 9,128
Cash flows from investing activities:
Capital expenditures................................................. (13,048) (15,200) (10,980) (1,753) (2,606)
Acquisition of businesses, net of cash acquired...................... -- -- (39,863) (31,826) (85,375)
Proceeds from sales of assets........................................ 346 7,248 126 -- 52
Net cash used for investing activities............................... (12,702) (7,952) (50,717) (33,579) (87,929)
Cash flows from financing activities:
Net change in revolving loan facility................................ (13,941) (4,160) (21,572) (10,452) (4,319)
Proceeds from issuance of long-term debt............................. 685 25,016 39,439 36,020 90,000
Repayment of long-term debt.......................................... (8,259) (32,108) (1,850) (664) (754)
Dividends paid....................................................... (3,640) (5,814) (7,967) (1,975) (2,060)
Stock options exercised.............................................. 1,176 933 2,000 64 457
Payments for merger and related expenses............................. -- (5,612) -- -- --
Issuance of common stock............................................. -- -- 4,905 -- --
Repurchase of common stock........................................... -- (920) -- -- --
Restricted cash...................................................... 1,800 -- -- -- --
Other................................................................ -- (23) (534) (2) (14)
Net cash provided (used) for financing activities.................... (22,179) (22,688) 14,421 22,991 83,310
Effect of exchange rate changes on cash and cash equivalents........... 42 54 241 95 63
Increase (decrease) in cash and cash equivalents....................... (15,958) (2,455) 1,628 417 4,572
Cash and cash equivalents, beginning of year........................... 18,994 3,036 581 581 2,209
Cash and cash equivalents, end of year................................. $ 3,036 $ 581 $ 2,209 $ 998 $ 6,781
</TABLE>

(1) Net of the effects of acquisition and foreign currency translation, where
applicable. See Note 15 for information on non-cash investing and financing
activities.

The Notes to Consolidated Financial Statements should be read in conjunction
with these statements.

F-5

<PAGE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

KUHLMAN CORPORATION AND SUBSIDIARIES

<TABLE>
<CAPTION>
FOREIGN
ADDITIONAL CURRENCY MINIMUM
COMMON PAID-IN RETAINED TRANSLATION PENSION TREASURY
STOCK(1) CAPITAL EARNINGS ADJUSTMENT LIABILITY STOCK TOTAL
<S> <C> <C> <C> <C> <C> <C> <C>
IN THOUSANDS
Balance -- December 31, 1993.................. $12,914 $ 23,513 $ 30,364 $ (2,359) $ (245 ) $ -- $64,187
Net income.................................... -- -- 9,970 -- -- -- 9,970
Cash dividends declared ($0.60 per share)
(2)......................................... -- -- (3,662) -- -- -- (3,662)
Exercise of stock options..................... 134 1,042 -- -- -- -- 1,176
Issuance of common stock...................... 52 745 -- -- -- -- 797
Minimum pension liability..................... -- -- -- -- 202 -- 202
Currency translation adjustment............... -- -- -- 546 -- -- 546
Balance -- December 31, 1994.................. $13,100 $ 25,300 $ 36,672 $ (1,813) $ (43 ) $ -- $73,216
Net income.................................... -- -- 8,183 -- -- -- 8,183
Cash dividends declared ($0.60 per share)
(2)......................................... -- -- (6,867) -- -- -- (6,867)
Exercise of stock options..................... 127 806 -- -- -- -- 933
Issuance of common stock...................... 16 176 -- -- -- -- 192
Repurchase of common stock.................... -- -- -- -- -- (920) (920)
Minimum pension liability..................... -- -- -- -- (339 ) -- (339)
Currency translation adjustment............... -- -- -- (98) -- -- (98)
Other......................................... (3) (65) -- -- -- -- (68)
Balance -- December 31, 1995.................. $13,240 $ 26,217 $ 37,988 $ (1,911) $ (382 ) $ (920) $74,232
Net income.................................... -- -- 17,336 -- -- -- 17,336
Cash dividends declared ($0.60 per share)..... -- -- (8,052) -- -- -- (8,052)
Exercise of stock options..................... 223 1,777 -- -- -- -- 2,000
Issuance of common stock...................... 340 4,755 -- -- -- -- 5,095
Minimum pension liability..................... -- -- -- -- (308 ) -- (308)
Currency translation adjustment............... -- -- -- 1,271 -- -- 1,271
Balance -- December 31, 1996.................. $13,803 $ 32,749 $ 47,272 $ (640) $ (690 ) $ (920) $91,574
Net income.................................... -- -- 5,282 -- -- -- 5,282
Cash dividends declared ($0.15 per share)..... -- -- (2,064) -- -- -- (2,064)
Currency translation adjustment............... -- -- -- (341) -- -- (341)
Exercise of stock options..................... 32 425 -- -- -- -- 457
Balance -- March 31, 1997 (unaudited)......... $13,835 $ 33,174 $ 50,490 $ (981) $ (690 ) $ (920) $94,908
</TABLE>

(1) Shares outstanding were 13,167, 13,731 and 13,763, net of 72 treasury
shares, at December 31, 1995 and 1996, and March 31, 1997 (unaudited),
respectively.

(2) Dividends per share have not been restated to reflect the Schwitzer merger.

The Notes to Consolidated Financial Statements should be read in conjunction
with these statements.

F-6

<PAGE>
KUHLMAN CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION

The consolidated financial statements include the accounts of Kuhlman
Corporation and all majority owned subsidiaries (the "Company"). Investments of
50% or less in affiliated companies are accounted for under the equity method.
All significant intercompany transactions have been eliminated. The consolidated
statements of income include the results of acquired businesses accounted for
under the purchase method of accounting from the date of acquisition. Further
information pertaining to the acquisitions is presented in Note 3, "Acquisitions
and Divestiture."

On May 31, 1995, the Company merged Schwitzer, Inc. ("Schwitzer") with a
wholly-owned subsidiary of the Company. The merger was accounted for as a
pooling of interests. The consolidated financial statements for all periods
prior to the merger have been restated to present the combined balance sheets
and results of operations of both companies as if the merger had been in effect
for all periods presented. The consolidated statements of shareholders' equity
reflect the accounts of the Company as if the additional common stock had been
issued during all periods presented. Certain amounts in the 1994 Schwitzer
financial statements were reclassified to conform with the presentation used by
the Company. Further information pertaining to the merger is presented in Note
2, "Merger."

Certain amounts in the Company's 1994 and 1995 financial statements have
been reclassified to conform with the 1996 presentation.

INTERIM STATEMENTS (UNAUDITED)

The consolidated balance sheet at March 31, 1997 and the related
consolidated statements of income, cash flows and shareholders' equity for the
three months ended March 31, 1996 and 1997, have been prepared by the Company
without audit. In the opinion of management, all adjustments (which include only
normal recurring adjustments) necessary to present fairly the financial position
of the Company at March 31, 1997 and the results of operations, cash flows and
shareholders' equity for three months ended March 31, 1996 and 1997, have been
made. Certain information in the 1996 consolidated financial statements have
been reclassified to conform with the 1997 presentation.

Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been omitted from the accompanying statements. These consolidated financial
statements, including the notes thereto, should be read in conjunction with the
Company's audited consolidated financial statements as of and for the three
years in the period ended December 31, 1996. The results of operations for the
three months ended March 31, 1997 are not necessarily indicative of the results
to be expected for the full year 1997.

ACCOUNTING ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles ("GAAP") 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 as changes in
estimates do and will continue to occur due to changes in available relevant
data and consummation of the events and transactions.

REVENUE RECOGNITION

The Company recognizes sales of its products when the products are shipped
to customers.

CASH AND CASH EQUIVALENTS

The Company considers short-term investments with an original maturity of
three months or less to be cash equivalents, which are reflected at their
approximate fair value.

INVENTORIES

Inventories are stated at the lower of cost or market and are determined by
either the last-in, first-out (LIFO) or first-in, first-out (FIFO) method for
domestic inventories. Inventories of foreign operations are determined
principally by the first-in,

F-7

<PAGE>
KUHLMAN CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- CONTINUED
first-out (FIFO) method. Approximately 50% and 62% of the inventories at
December 31, 1995 and 1996, respectively, were determined using the LIFO method.
Inventory costs include material, labor and manufacturing overhead.

PLANT AND EQUIPMENT

Plant and equipment are carried at cost and are depreciated over their
estimated useful lives, ranging from 3 to 40 years, using principally the
straight-line method for financial reporting purposes and accelerated methods
for tax reporting purposes. Plant and equipment obtained through the acquisition
of a company are recorded at estimated fair value as of the date of acquisition.
All additions subsequent to the acquisition date are recorded at cost.

INTANGIBLE ASSETS

Intangible assets consist primarily of goodwill related to the acquisition
of businesses. Goodwill is being amortized on a straight-line basis over a
period not to exceed forty years. In accordance with Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes," ("SFAS No. 109")
adjustments relating to preacquisition income tax contingencies will result in
corresponding adjustments to goodwill. During 1995, the Company reduced goodwill
by $725,000 as a result of changes in the status of certain tax contingencies.
When factors indicate that goodwill should be evaluated for possible impairment,
the Company uses an estimate of the related operation's discounted cash flows
over the remaining life of goodwill in measuring whether or not the goodwill is
recoverable. Other intangible assets are amortized to expense using the
straight-line method over three to six years.

LONG-LIVED ASSETS

On January 1, 1996, the Company adopted Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of" ("SFAS No. 121"). The new standard, under
certain circumstances, requires the business to recognize an impairment. SFAS
No. 121 requires that an impairment for long-lived assets and long-lived assets
to be disposed of be based on the fair value of the asset or the fair value less
the cost to sell, respectively. Application of this standard did not impact the
financial position or results of operations of the Company.

ENGINEERING

Engineering expenses include activities associated with product
development, the application of products to specific customer needs, and ongoing
efforts to refine and enhance existing products. These costs are expensed as
incurred and totaled approximately $7,574,000, $6,745,000 and $7,009,000 in
1994, 1995 and 1996, respectively.

ENVIRONMENTAL REMEDIATION AND COMPLIANCE

Environmental liabilities for remediation costs are accrued based on
estimates of known environmental remediation exposures. The measurement of
environmental liabilities is based on an evaluation of currently available facts
with respect to each individual site and considers factors such as existing
technology, presently enacted laws and regulations, and prior experience in
remediation of contaminated sites. Liabilities are recognized for remedial
activities when they can be reasonably estimated. Environmental compliance
costs, which include maintenance and operating costs with respect to pollution
control equipment, cost of ongoing monitoring programs and similar costs are
expensed as incurred. Environmental costs are capitalized if the costs increase
the value of the property and/or mitigate or prevent contamination from future
operations.

FOREIGN CURRENCY TRANSLATION

A subsidiary of the Company has foreign subsidiaries located primarily in
the United Kingdom (U.K.) and Brazil. Financial data of the U.K. subsidiary is
translated into U.S. dollars at current exchange rates and translation
adjustments are accumulated as a separate component of shareholders' equity.
Foreign currency transaction gains and losses of the U.K. subsidiary are
credited or charged to income as they occur. The Brazilian subsidiary operates
in a hyperinflationary economy. Accordingly, financial data stated in Brazilian
currencies are remeasured into U.S. dollars at both current (monetary items) and
approximate historical (non-monetary items) exchange rates and the resulting
transaction adjustments are charged or credited to income. Transaction
adjustments for the Brazilian subsidiary included in other, net on the
consolidated statements

F-8

<PAGE>
KUHLMAN CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- CONTINUED
of income were a loss of $847,000 in 1994 and income of $75,000 and $193,000 in
1995 and 1996, respectively. The transaction adjustments for 1994, 1995 and 1996
are stated net of imputed interest income (expense) of $(589,000), $390,000 and
$194,000, respectively, realized on net monetary assets and liabilities.

INCOME TAXES

The provision for income taxes includes Federal, state and foreign income
taxes currently payable and those deferred or prepaid because of temporary
differences between financial statement and tax bases of assets and liabilities.
The Company records income taxes under the liability method. Under this method,
deferred income taxes are recognized for the estimated future tax effects of
differences between the tax bases of assets and liabilities and their financial
reporting amounts based on enacted tax laws. Valuation allowances are
established when necessary to reduce deferred tax assets to the amount expected
to be realized.

FINANCIAL INSTRUMENTS AND HEDGING

Certain financial instruments are used to hedge risk caused by fluctuating
commodity prices, foreign currencies and interest rates. The Company enters into
futures or option contracts to hedge price fluctuations for commodities used in
the manufacture of its products and in currencies to hedge certain import or
export transactions. The terms of the contracts are consistent with the terms of
the underlying transaction they are designed to hedge. As a result, gains or
losses on the transactions included in the Company's results of operations
offset losses and gains of the underlying transactions being hedged.

In addition, the Company uses interest rate swap agreements to manage
interest costs and risks associated with changing interest rates. The
differential to be paid or received under these agreements is accrued as
interest rates change and is recognized in interest expense consistent with the
terms of the agreements. The counterparty to the interest rate swap agreements
is a major financial institution. The possibility of credit loss from
counterparty non-performance is remote and not anticipated.

STOCK BASED COMPENSATION

During 1996, the Company adopted Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation," ("SFAS No.123").
The Company has applied APB Opinion 25 and related interpretations in accounting
for its stock-based compensation plans, and has adopted the disclosure option
related to SFAS No. 123. See Note 11., "Stock Based Compensation Plans," for
related disclosures.

PER SHARE INFORMATION

YEAR-END STATEMENTS

Earnings per share amounts are based on the weighted average number of
common shares outstanding during each period, as adjusted for all materially
dilutive common equivalent shares. Common equivalent shares, which include stock
options and warrants, were determined under the treasury stock method. Primary
and fully dilutive shares used in the per share calculation in 1996 included
371,000 and 653,000 shares, respectively, resulting from the dilutive effects of
common stock equivalents. There was no materially dilutive effect of common
stock equivalents in 1995. Primary and fully dilutive shares used in the per
share calculation in 1994 included 638,000 shares resulting from the dilutive
effects of common stock equivalents.

INTERIM STATEMENTS (UNAUDITED)

Earnings per share in the accompanying consolidated statements of income
for the three months ended March 31, 1996 and 1997 have been computed based on
the weighted average number of shares of common stock and common stock
equivalents, if any, outstanding throughout the period. Primary and fully
diluted shares used in the per share calculation in 1997 included approximately
734,000 and 811,000 shares, respectively, resulting from the dilutive effect of
common stock equivalents. Fully diluted shares used in the per share calculation
in 1996 included 475,000 shares resulting from the dilutive effect of common
stock equivalents. There was no materially dilutive effect on primary earnings
per share during the first quarter of 1996.

F-9

<PAGE>
KUHLMAN CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- CONTINUED
In March 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS No. 128").
This standard modifies disclosure requirements for companies required to report
earnings per share ("EPS") to include presentations of Basic EPS (which includes
no dilution of common stock equivalents) and, if applicable, Diluted EPS (which
reflects the potential dilution of common stock equivalents). The standard will
not be effective for the Company until the completion of its fourth quarter and
year-end for 1997. The pro forma Basic and Diluted EPS for the first quarter of
1996 and 1997 (unaudited), respectively, assuming the application of SFAS No.
128 at the beginning of those periods, is as follows:

<TABLE>
<CAPTION>
IN THOUSANDS, EXCEPT PER SHARE DATA 1996 1997
<S> <C> <C> <C>
(UNAUDITED)
Earnings per share:
Basic.............................................................. $ 0.26 $ 0.38
Diluted............................................................ 0.25 0.36
Average shares outstanding:
Basic.............................................................. 13,181 13,746
Diluted............................................................ 13,559 14,479
Number of common stock equivalents in diluted shares outstanding..... 378 733
</TABLE>

NOTE 2 -- MERGER

On May 31, 1995, the Company merged Schwitzer, a New York Stock Exchange
listed company, with a wholly-owned subsidiary of the Company. The merger was
accounted for under the pooling of interests method of accounting. As provided
for in the merger agreement, each share of Schwitzer common stock was converted
into 0.9615 share of the Company's common stock, resulting in the Company
issuing approximately 6,980,000 shares of stock. Transaction expenses and other
charges related to the merger totaled approximately $5,600,000 net of tax ($0.43
per share), including $1,861,000 related to refinancing of substantially all of
Schwitzer's domestic debt ("Merger Expenses"). These costs were charged to
expense in the quarter ended June 30, 1995.

In accordance with the pooling of interests method of accounting, the
Company's financial statements have been restated for all periods presented to
include the results of Schwitzer. Operating results for the Company and
Schwitzer for the year ended December 31, 1994 prior to restatement, is
presented as the following:

<TABLE>
<CAPTION>
YEAR ENDED
IN THOUSANDS DECEMBER 31, 1994
<S> <C>
Net sales:
Kuhlman.......................................................................... $ 242,846
Schwitzer........................................................................ 153,271
Combined......................................................................... $ 396,117
Net income:
Kuhlman.......................................................................... $ 1,617
Schwitzer........................................................................ 8,930
Adjustment to valuation allowance (1)............................................ (577)
Combined........................................................................... $ 9,970
</TABLE>

(1) The tax provision in 1994 for the combined company was adjusted to reflect
changes in the valuation allowance under SFAS No. 109 as if the companies
had been combined during the period.

F-10

<PAGE>
KUHLMAN CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 3 -- ACQUISITIONS AND DIVESTITURE

ACQUISITION OF COMMUNICATION CABLE, INC.

On February 16, 1996, the Company, through a wholly-owned subsidiary,
completed a tender offer for the outstanding shares of Communication Cable, Inc.
("CCI"), a North Carolina corporation, at $14.00 per share in cash. The purchase
of the tendered shares, which was consummated on February 21, 1996, along with
subsequent actions have resulted in CCI becoming a wholly-owned subsidiary of
the Company as of June 28, 1996. The aggregate total cost of the acquisition of
the outstanding shares of CCI, which was primarily funded through bank debt, was
approximately $43,800,000. CCI engineers, designs and manufactures a wide
variety of low voltage electronic wire and cable products.

The transaction has been accounted for as a purchase and the excess
purchase price over the fair market value of the assets is being amortized over
40 years. The results of operations of CCI are included in the consolidated
financial statements of the Company subsequent to February 21, 1996.

The following unaudited pro forma information for the periods shown below
gives effect to the acquisition of CCI as if it had occurred at the beginning of
each period.

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
IN THOUSANDS EXCEPT PER SHARE DATA 1995 1996
<S> <C> <C>
Net sales..................................................................... $479,610 $465,700
Net income before extraordinary item.......................................... 10,237 17,358
Net income.................................................................... 8,376 17,358
Fully diluted per share amounts:
Net income before extraordinary item........................................ 0.78 1.21
Net income.................................................................. 0.64 1.21
</TABLE>

The unaudited pro forma information assumes that the Company owned the
outstanding shares of CCI at the beginning of the periods presented, and
accordingly, includes adjustments for goodwill amortization, interest expense,
certain administrative costs and income taxes. The unaudited pro forma financial
data is presented for information purposes only and is not necessarily
indicative of the results of operations that actually would have been achieved
had the acquisition of CCI been consummated at the beginning of these periods,
and is not intended to be a projection of future results or trends.

ACQUISITION OF WEB WIRE

On October 8, 1996, a subsidiary of the Company acquired substantially all
of the assets of Web Wire Products, Inc. ("Web Wire") in exchange for
approximately 329,000 shares of the Company's common stock. Web Wire is a
manufacturer of battery cables, ignition wire sets and related accessories for
the automotive aftermarket. Net sales of Web Wire for the twelve months ended
December 31, 1996 were approximately $6,300,000. The impact on operations of
this acquisition was not significant for any of the periods presented, and
therefore, pro forma amounts were not presented giving effect to the
transaction.

ACQUISITION OF THE KYSOR TRANSPORTATION PRODUCTS GROUP

See Note 17, "Subsequent Event: Acquisition of the Kysor Transportation
Products Group."

DIVESTITURE OF NEHRING

In the fourth quarter of 1995, Coleman Cable Systems, Inc. ("Coleman") sold
the net assets of its subsidiary, Nehring Electrical Works Company ("Nehring"),
for approximately book value. Coleman received approximately $6,509,000 in cash
plus a $1,500,000 note for the net assets of Nehring. In 1995, Nehring had sales
of approximately $41,800,000, minimal operating earnings, and total assets of
approximately $10,500,000.

F-11

<PAGE>
KUHLMAN CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 4 -- DEBT

On July 1, 1996, the Company amended and restated its bank credit
agreement. The amended and restated credit agreement has two components. The
first component is a $125,000,000 revolving credit facility which is to be used
for general corporate purposes and is due on July 1, 2001. The second component
is a 364-day, $125,000,000 facility that is available primarily to finance
future acquisitions, and any amounts drawn, would convert to a four-year term
loan commencing on July 1, 1997 with equal quarterly installments. There were no
borrowings at December 31, 1996 under the 364-day facility. Interest rates on
amounts borrowed under each facility are based principally on the London
Inter-bank Offered Rate (LIBOR) plus an applicable margin factor. The Company
also pays a commitment fee on the unused portion of each facility. The margin
factor and the commitment fee rate are determined based on the Company's
leverage ratio (as defined). The credit facility is subject to various
covenants, including financial covenants relating to minimum levels of net
worth, interest coverage and the leverage ratio. Under the most restrictive
covenant (minimum net worth) contained in the bank credit facility, the Company
had approximately $16,600,000 of consolidated retained earnings at December 31,
1996, free of any restrictions as to the payment of dividends. The average
interest rate as of December 31, 1996 under the Company's bank credit facility
was 6.8%.

At December 31, 1996, the Company had unused availability under its
revolving credit facilities of approximately $40,400,000, excluding the 364-day
facility.

At December 31, 1995 and 1996, and at March 31, 1997 (unaudited) long-term
debt consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
IN THOUSANDS 1995 1996 1997
<S> <C> <C> <C>
(UNAUDITED)
Variable rate notes supported by revolving and term loan agreement with banks,
maturing through 2001....................................................... $ 67,900 $87,500 $ 174,000
Miscellaneous other long-term debt, rates up to 18%, payable
through 2011................................................................ 6,275 7,097 6,211
74,175 94,597 180,211
Less -- current portion.................................................. (10,522) (2,295) (12,528)
$ 63,653 $92,302 $ 167,683
</TABLE>

The minimum scheduled principal payments on long-term debt outstanding at
December 31, 1996 are as follows:

<TABLE>
<CAPTION>
IN THOUSANDS
<S> <C>
1997....................................................................................... $ 2,295
1998....................................................................................... 927
1999....................................................................................... 681
2000....................................................................................... 523
2001....................................................................................... 87,730
Thereafter................................................................................. 2,441
Total minimum scheduled principal payments............................................... $94,597
</TABLE>

On March 10, 1997, the Company borrowed $90,000,000 under its 364-day
credit facility to finance the acquisition of Kysor and other working capital
needs. The minimum scheduled principal payments on long-term debt as of March
31, 1997 (unaudited) are as follows, in thousands: 1997 (nine months) -- $7,034;
1998 -- $23,427; 1999 -- $23,181; 2000 -- $23,023; 2001 -- $101,105; and
2,002 -- $2,441.

NOTE 5 -- COMMITMENTS AND CONTINGENCIES

OPERATING LEASES

The Company leases certain of its buildings, machinery and equipment under
operating lease agreements which expire at various dates over the next six
years.

F-12

<PAGE>
KUHLMAN CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 5 -- COMMITMENTS AND CONTINGENCIES -- CONTINUED
The following is a summary of rent expense under all operating leases:

<TABLE>
<CAPTION>
IN THOUSANDS 1994 1995 1996
<S> <C> <C> <C>
Minimum rentals.......................................................... $3,229 $3,171 $3,248
</TABLE>

Minimum future rental payments under noncancellable operating leases for
each of the next five years and in the aggregate are as follows:

<TABLE>
<CAPTION>
IN THOUSANDS
<S> <C>
1997....................................................................................... $ 3,040
1998....................................................................................... 2,471
1999....................................................................................... 2,234
2000....................................................................................... 2,038
2001....................................................................................... 1,303
Subsequent to 2001......................................................................... 408
Total minimum rental payments............................................................ $11,494
</TABLE>

CAPITAL LEASES

The Company leases various manufacturing, office and warehouse properties
and office equipment under capital leases which expire at various dates through
2009. The assets and liabilities under capital leases are recorded at the lower
of the present value of the minimum lease payments or the fair value of the
assets. The assets are depreciated over the shorter of their related lease terms
or their estimated productive lives. Depreciation of assets under capital leases
is included in depreciation expense.

At December 31, 1995 and 1996, property under capital leases included with
plant and equipment in the accompanying consolidated balance sheet is as
follows:

<TABLE>
<CAPTION>
IN THOUSANDS 1995 1996
<S> <C> <C>
Building and improvements.......................................................... $2,360 $2,360
Machinery and equipment............................................................ 247 391
2,607 2,751
Less-accumulated depreciation...................................................... (964) (964)
Plant and equipment, net........................................................... $1,643 $1,787
</TABLE>

Minimum future lease payments under capital leases as of December 31, 1996
are as follows:

<TABLE>
<CAPTION>
IN THOUSANDS
<S> <C>
1997....................................................................................... $ 442
1998....................................................................................... 439
1999....................................................................................... 434
2000....................................................................................... 509
2001....................................................................................... 384
Subsequent to 2001......................................................................... 2,638
Total minimum lease payments............................................................... 4,846
Less-amounts representing interest......................................................... (2,434)
Present value of net minimum lease payments................................................ 2,412
Less-current portion....................................................................... (125)
Long-term obligations under capital leases................................................. $ 2,287
</TABLE>

F-13

<PAGE>
KUHLMAN CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 5 -- COMMITMENTS AND CONTINGENCIES -- CONTINUED
Obligations under capital leases are included with debt in the accompanying
consolidated balance sheets. Certain capital leases provide for purchase
options. Generally, purchase options are at prices representing the expected
fair value of the property at the expiration of the lease term.

ENVIRONMENTAL MATTERS

The Company has accrued for certain investigatory and non-capital
environmental remediation costs consistent with the policy set forth in Note 1.
These costs are accrued on the balance sheet and are not significant. Based on
the information currently available, management does not expect that any sums
that may have to be paid in connection with these environmental matters would
have a material effect on the consolidated financial position or results of
operations of the Company.

LEGAL MATTERS

The Company is involved in various legal matters. In the opinion of
management, the outcome of these current matters will not have a material effect
on the consolidated financial position or results of operations of the Company.

SEVERANCE AND CONTROL AGREEMENTS

The Company maintains a severance policy applicable to certain of its
executive officers. The severance policy provides that if an executive officer's
employment is terminated, the executive's base pay, medical and dental coverage,
health and accident insurance, and disability and group life insurance will be
continued for a period of up to twenty-four months, subject to certain
conditions. The aggregate maximum commitment under the executive severance
policy should all four covered employees be terminated is up to approximately
$3,000,000.

The Company modified its existing severance policy for its executive
officers during 1996 to include change of control agreements ("Control
Agreements"). Under the Control Agreements, upon a change of control, as
defined, each such officer would be entitled to receive, among other things,
three times his current annual pay, three times his highest cash bonus in the
past three years, and the payment of the value of any stock options and stock
appreciation rights. Each of the aforementioned would be adjusted for any
resulting income or excise tax liabilities to the officer. These Control
Agreements are subject to amendment or waiver by the Company's Board of
Directors prior to any change in control, as defined. Although the aggregate
commitment of the Company pursuant to the Control Agreements cannot be
specifically determined until the occurrence of such change of control event,
such payments could have a material effect on the consolidated financial
position and results of operations of the Company. The Control Agreements are
designed to encourage the continuity of management in view of the possibility of
a change of control. The Control Agreements were not entered into in response to
any specific action to acquire control of the Company, and the Company is not
aware of any such action.

LONG-TERM INCENTIVE PLAN

On August 9, 1996, the Board of Directors adopted the Kuhlman Corporation
Long-Term Incentive Plan (the "Long-Term Incentive Plan") for certain key
employees of the Company. The Long-Term Incentive Plan was approved by the
shareholders of the Company on April 24, 1997. Under the terms of the Long-Term
Incentive Plan, awards may be made of incentive and nonqualified stock options,
stock appreciation rights, and restricted stock to eligible employees. In
addition, awards may also be made to eligible employees with a value tied to
specific performance goals and, after a specified period, the value of those
awards may be paid with Common Stock of the Company or cash, or a combination of
the two. Non-employee directors of the Company are eligible to participate in
the Long-Term Incentive Plan, but only for the award of nonqualified stock
options.

Pursuant to the Long-Term Incentive Plan, on August 9, 1996 the Board of
Directors approved, subject to shareholder approval, awards whereby certain key
employees would receive a payout after the attainment of each of two share price
thresholds for stock of the Company within three years from the program
commencement date, subject to certain vesting requirements. The stock price
thresholds are $23 and $27 per share. In addition, subsequent to the acquisition
of Kysor, additional awards were granted to certain executives of Kysor at the
$27 threshold. If both thresholds are attained, the total pre-tax cost of such
awards would be approximately $7,775,000, with approximately $3,600,000 and
$4,175,000 to be paid after the attainment of the above price thresholds,
respectively. Each award consists of two-thirds Company stock and one-

F-14

<PAGE>
KUHLMAN CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 5 -- COMMITMENTS AND CONTINGENCIES -- CONTINUED
third cash and the level of award varies by participant. After achievement of
each threshold, the payout to the eligible participants will be made in four
quarterly installments subject to certain vesting requirements. The related
compensation expense will be recorded as the awards vest. As of April 10, 1997,
the Company had achieved the $23 threshold with payouts to twenty eligible
participants commencing on May 1, 1997. Based on the weighted average shares
outstanding as of March 31, 1997, the effect of the attainment of the first
award based on the above vesting schedule would be a charge of approximately
$0.04 per share per quarter. As of May 27, 1997, the Company had achieved the
$27 threshold with payouts to twenty-six eligible participants commencing on
June 1, 1997. Based on the weighted average shares outstanding as of March 31,
1997, the effect of attainment of the second award based on the above vesting
schedule would be an additional charge of approximately $0.04 per share per
quarter.

NOTE 6 -- INVENTORIES

Inventories at December 31, 1995 and 1996, and March 31, 1997 (unaudited)
consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
IN THOUSANDS 1995 1996 1997
<S> <C> <C> <C>
(UNAUDITED)
FIFO cost:
Raw materials...................................................... $20,630 $24,648 $29,312
Work-in-progress................................................... 7,359 9,790 16,744
Finished products.................................................. 16,276 19,440 24,199
44,265 53,878 70,255
Excess of FIFO over LIFO cost...................................... (2,432) (1,348) (1,917)
$41,833 $52,530 $68,338
</TABLE>

NOTE 7 -- ACCRUED LIABILITIES

Accrued liabilities at December 31, 1995 and 1996 consisted of the
following:

<TABLE>
<CAPTION>
IN THOUSANDS 1995 1996
<S> <C> <C>
Salaries, wages and employee benefits........................................... $13,891 $19,791
Accrued income taxes............................................................ 998 3,173
Warranty related accruals....................................................... 2,554 2,965
Dividends payable............................................................... 1,975 2,060
Other........................................................................... 8,939 15,844
$28,357 $43,833
</TABLE>

NOTE 8 -- INCOME TAXES

Income before taxes and extraordinary item was as follows:

<TABLE>
<CAPTION>
IN THOUSANDS 1994 1995 1996
<S> <C> <C> <C>
Domestic............................................................. $11,270 $13,270 $26,190
Foreign.............................................................. 4,333 4,808 3,153
$15,603 $18,078 $29,343
</TABLE>

F-15

<PAGE>
KUHLMAN CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 8 -- INCOME TAXES -- CONTINUED
The provision for income taxes consisted of the following:

<TABLE>
<CAPTION>
IN THOUSANDS 1994 1995 1996
<S> <C> <C> <C>
Current:
Federal............................................................... $1,388 $3,784 $ 8,938
State................................................................. 280 630 1,460
Foreign............................................................... 1,750 1,680 1,252
3,418 6,094 11,650
Deferred:
Federal............................................................... 2,393 1,738 439
State................................................................. 305 204 136
Foreign............................................................... (483) (2) (218)
2,215 1,940 357
Total................................................................. $5,633 $8,034 $12,007
</TABLE>

The significant components of the provision for deferred income taxes,
resulting from differences in the timing of recognition of income and expenses
for income tax and financial reporting purposes, consist of the following:

<TABLE>
<CAPTION>
IN THOUSANDS 1994 1995 1996
<S> <C> <C> <C>
Net operating loss carryforwards......................................... $ 67 $ 425 $ (177)
Restructuring costs...................................................... 1,342 (326) --
Depreciation............................................................. (540) 47 (304)
Employee compensation and benefits....................................... (407) 566 1,025
Additional taxes provided................................................ 490 -- --
Postretirement benefits.................................................. 309 217 53
Other.................................................................... 954 1,011 (240)
Total.................................................................... $2,215 $1,940 $ 357
</TABLE>

The effective income tax provision differs from the amount calculated using
the statutory United States Federal income tax rate, principally due to the
following:

<TABLE>
<CAPTION>
1994 1995 1996
PERCENTAGE PERCENTAGE PERCENTAGE
OF INCOME OF INCOME OF INCOME
IN THOUSANDS AMOUNT BEFORE TAXES AMOUNT BEFORE TAXES AMOUNT BEFORE TAXES
<S> <C> <C> <C> <C> <C> <C>
Statutory United States Federal
income tax................... $5,305 34.0% $6,147 34.0% $10,271 35.0%
State income taxes, net of
Federal income tax effect.... 359 2.3 550 3.0 1,037 3.5
Amortization of goodwill....... 326 2.1 332 1.8 479 1.6
Effect of foreign
subsidiaries................. (403 ) (2.6) 75 0.4 (70) (.2)
Merger costs................... -- -- 949 5.3 -- --
Other.......................... 46 0.3 (19 ) (0.1) 290 1.0
$5,633 36.1% $8,034 44.4% $12,007 40.9%
</TABLE>

F-16

<PAGE>
KUHLMAN CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 8 -- INCOME TAXES -- CONTINUED
The net deferred tax asset recognized in the consolidated statements of
financial position as of December 31, 1995 and 1996, consists of the following:

<TABLE>
<CAPTION>
IN THOUSANDS 1995 1996
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards................................................. $1,729 $1,469
Postretirement benefits.......................................................... 3,830 3,984
Employee compensation & benefits................................................. 2,053 4,144
Other............................................................................ 3,441 3,383
Total deferred tax assets..................................................... 11,053 12,980
Deferred tax liabilities:
Depreciation..................................................................... (3,755) (6,975)
Prepaid expenses and other....................................................... (2,217) (1,037)
Total deferred tax liabilities................................................ (5,972) (8,012)
Net deferred tax asset........................................................ $5,081 $4,968
</TABLE>

One of the Company's wholly-owned subsidiaries has available net operating
losses which expire as follows (in thousands):

The application of these net operating loss carry forwards against future
taxable income is limited under the provisions of Internal Revenue Code Section
382 to $455,000 per taxable period. Management expects that the full amount of
these carryovers will be utilized over the next ten years.

Undistributed earnings of the Company's foreign subsidiaries are considered
to be indefinitely reinvested and, accordingly, no provision for United States
Federal and state income taxes has been provided thereon. If distribution of
those earnings in the form of dividends or otherwise were to occur, the Company
may be subject to both United States income taxes and withholding taxes payable
to the various foreign countries. Determination of the amount of unrecognized
deferred United States income tax liability is not reasonably determinable until
such distribution actually occurs because of the variability of factors
associated with the tax liability calculation, including reductions associated
with any foreign tax credits.

NOTE 9 -- EMPLOYEE BENEFIT PLANS

EMPLOYEE RETIREMENT PLANS

The Company has various employee retirement plans which provide pension
benefits to substantially all of its employees. Defined benefit plans provide
benefits of stated amounts based on an employee's years of service and for
certain plans, compensation for a specified period of time before retirement.

F-17

<PAGE>
KUHLMAN CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 9 -- EMPLOYEE BENEFIT PLANS -- CONTINUED
The total expense under these plans amounted to $1,686,000, $1,556,000 and
$1,767,000 in 1994, 1995 and 1996, respectively. Pension expense for the defined
benefit plans in 1994, 1995 and 1996 is comprised of the following elements:

<TABLE>
<CAPTION>
IN THOUSANDS 1994 1995 1996
<S> <C> <C> <C>
Current service cost..................................................... $1,669 $1,576 $1,803
Interest on projected benefit obligations................................ 1,878 2,008 2,167
Actual return on assets.................................................. 933 (3,151) (3,322)
Gain due to curtailment.................................................. (138) -- --
Net amortization and deferral............................................ (2,656) 1,123 1,119
$1,686 $1,556 $1,767
</TABLE>

The Company's funding policy is to make annual contributions required by
applicable regulations, which may, from time to time, exceed the Internal
Revenue Service deductibility limits by immaterial amounts. The Company annually
contributes to the defined benefit plans amounts which are actuarially
determined to provide the plans with sufficient assets to meet future benefit
payment requirements. Plan assets consist substantially of investments in pooled
funds which are comprised primarily of equity securities, U.S. Government
securities, corporate bonds and investments in short-term investment funds.

The following table summarizes the funded status of the Company's defined
benefit pension plans and the related amounts recognized in the Company's
consolidated balance sheets as of December 31, 1995 and 1996:

<TABLE>
<CAPTION>
1995 1996
ASSETS ACCUMULATED ASSETS ACCUMULATED
EXCEED BENEFITS EXCEED BENEFITS
ACCUMULATED EXCEED ACCUMULATED EXCEED
IN THOUSANDS BENEFITS ASSETS BENEFITS ASSETS
<S> <C> <C> <C> <C>
Actuarial present value of benefit
obligations:
Vested..................................... $17,578 $ 3,216 $19,115 $ 3,839
Non-vested................................. 1,138 707 1,760 817
Accumulated benefit obligations.............. 18,716 3,923 20,875 4,656
Effects of salary progression................ 5,879 -- 6,963 --
Projected benefit obligations................ 24,595 3,923 27,838 4,656
Plan assets at fair value.................... 22,649 2,889 26,599 3,276
Plan assets under projected benefit
obligations................................ (1,946) (1,034) (1,239) (1,380)
Unrecognized transition (asset) liability.... 319 (76) (124) (66)
Unrecognized net loss........................ 1,852 551 1,895 1,161
Unrecognized prior service cost.............. 669 580 599 510
Adjustment to recognize minimum liability.... -- (1,130) -- (1,605)
(Accrued) prepaid pension expense............ $ 894 $(1,109) $ 1,131 $(1,380)
Intangible asset............................. $ -- $ 498 $ -- $ 460
Pre-tax reduction to shareholders' equity.... -- 632 -- 1,145
</TABLE>

The assumptions used as of December 31, 1994, 1995 and 1996 in determining
pension expense and funded status information shown above are as follows:

<TABLE>
<CAPTION>
1994 1995 1996
<S> <C> <C> <C>
Discount rate................................................................. 7.5-8.7% 7.5 % 7.5 %
Rate of salary progression.................................................... 4.2-5.0% 4.2 % 4.2 %
Long-term rate of return on assets............................................ 8.0-9.7% 9.7 % 9.7 %
</TABLE>

F-18

<PAGE>
KUHLMAN CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 9 -- EMPLOYEE BENEFIT PLANS -- CONTINUED
In addition to providing pension benefits, the Company and certain
operating subsidiaries provide savings plans for management and other employees.
The plans provide for matching contributions based on the terms of such plans to
the accounts of plan participants. The Company and its operating subsidiaries
expensed $377,000, $664,000 and $831,000 in the years ended December 31, 1994,
1995 and 1996, respectively, related to these savings plans.

POSTRETIREMENT BENEFITS OTHER THAN PENSIONS

The Company charges the cost of postretirement benefits other than pensions
to earnings during the active service period of its employees.

Net periodic postretirement benefit cost for 1994, 1995 and 1996 included
the following components:

<TABLE>
<CAPTION>
IN THOUSANDS 1994 1995 1996
<S> <C> <C> <C>
Service cost-benefits attributed to service during the period............ $ 94 $ 80 $ 126
Interest cost on accumulated postretirement benefit obligation........... 894 968 929
Net deferral and amortization............................................ 28 26 133
Net periodic postretirement benefit cost................................. $1,016 $1,074 $1,188
</TABLE>

The amounts recognized in the Company's consolidated balance sheet at
December 31, 1995 and 1996 were as follows:

<TABLE>
<CAPTION>
IN THOUSANDS 1995 1996
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees...................................................................... $11,326 $10,492
Fully eligible active plan participants....................................... 442 446
Fully eligible................................................................ 11,768 10,938
Other active plan participants................................................ 1,481 1,215
Accumulated benefit obligation................................................ 13,249 12,153
Unrecognized net loss......................................................... (3,019) (1,877)
Postretirement liability recognized in financial statements................... 10,230 10,276
Less: Current portion......................................................... (1,768) (1,417)
$ 8,462 $ 8,859
</TABLE>

The accumulated postretirement obligation was determined using a discount
rate of approximately 7.5%. An increase of approximately 9% in per capita claims
cost was assumed for 1997. The assumption provides for this rate to decline by
approximately 1% per year through 2000 and then remain constant at 5.5%
thereafter.

A 1% increase in the health care cost trend rate would increase the
estimated accumulated postretirement benefit obligation as of December 31, 1996
by approximately $1,024,000. The impact on net periodic cost is minimal. The
Company's post-retirement benefit plans are unfunded.

NOTE 10 -- STOCK RELATED INFORMATION

PREFERRED STOCK PURCHASE RIGHTS.

The Company has distributed one preferred stock purchase right for each
outstanding share of common stock. Each right entitles the holder to purchase
one one-hundredth (1/100) of a share of newly authorized Junior Participating
Preferred Stock at a price of $55 per right. The rights, which do not have
voting rights, will be exercisable only if a person or group acquires 20% or
more of the Company's common stock without the Company's prior consent or
announces a tender offer which would result in such ownership of 30% or more of
the common stock. In the event the rights become exercisable and thereafter the
Company is acquired in a merger or other business combination, each right will
entitle its holder to purchase, at the right's then-current exercise price,
common stock of the acquiring Company having a value of twice the exercise price
of the right.

F-19

<PAGE>
KUHLMAN CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 10 -- STOCK RELATED INFORMATION -- CONTINUED
The rights expire on April 30, 1997, and may be redeemed by the Company at
a price of $0.01 per right at any time prior to 10 days after a 20% position has
been acquired and under certain circumstances thereafter.

STOCK REPURCHASE

In August 1995, the Board of Directors authorized the repurchase of up to
$1,000,000 of the Company's "odd-lot" common shares on the open market; odd-lots
are defined as blocks of less than 100 shares of the Company's stock held by a
single individual, trust or institution. The program was instituted to reduce
the Company's administrative costs related to the odd-lot shares. The repurchase
of shares was accounted for under the cost method. In the fourth quarter of
1995, the Company repurchased 72,388 of its common shares at an aggregate cost
of $920,000, including expenses of the program.

WARRANTS

The Company issued detachable warrants in 1992 to a former lender of
Schwitzer. The warrants give the holder the right to purchase 480,750 shares, in
the aggregate, of the Company's common stock at an exercise price of $8.32 per
share, subject to certain conditions. The Company has the right, subject to
certain conditions, to repurchase the warrants, which expire on April 15, 2002.
The warrants were exercisable at December 31, 1996.

NOTE 11 -- STOCK BASED COMPENSATION PLANS

NON-EMPLOYEE DIRECTOR'S STOCK PLAN

In 1993, the Board of Directors adopted and the shareholders approved the
1993 Non-Employee Director's Stock Plan ("New Director's Plan"). Pursuant to the
New Director's Plan, each non-employee director receives annually a number of
shares equal to an aggregate fair market value of $24,000 concurrent with the
meeting of the Board of Directors held each year following the Annual Meeting of
Stockholders. A total of 25,863 shares were available for grants as of December
31, 1996.

STOCK APPRECIATION RIGHTS PLAN

In 1994, the Company adopted the 1994 Stock Appreciation Rights Plan (the
"SAR Plan"). The SAR Plan provides for discretionary grants to key employees of
cash-only stock appreciation rights in shares of the Company's common stock.
Each Stock Appreciation Right ("SAR") measures the change in value of a share of
the Company's common stock from the date of grant to the date of exercise. All
SARs vest and are exercisable five years after the award date. Unearned
compensation, representing changes in the estimated market value of the SAR, has
been charged to income in the period incurred. A total of 1,500,000 SARs are
authorized to be granted under the SAR Plan. As of December 31, 1996, 131,000
SARs with a basis of $13.88 had been awarded and were outstanding under the SAR
Plan.

STOCK OPTION PLANS

The Company has four employee stock option plans -- 1983, 1986, 1989 and
1994, and the 1988 stock option plan for non-employee directors. The 1994 Plan
provides for the granting of up to 800,000 options to purchase common shares of
the Company. All options under the 1994 Plan are granted at prices equal to the
market value at the date of grant, fully vest six months after the date of
grant, and may be exercised up to ten years from the grant date. As of December
31, 1996, there were 210,663 options available for grant under the 1994 Plan.
The 1983, 1986, 1988 and 1989 stock option plans have been terminated except to
the extent that options remain outstanding.

F-20

<PAGE>
KUHLMAN CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 11 -- STOCK BASED COMPENSATION PLANS -- CONTINUED
The following is a summary of options outstanding as of December 31, 1996:

<TABLE>
<CAPTION>
OPTIONS IN THOUSANDS
<S> <C> <C> <C>
WEIGHTED
AVERAGE AVERAGE
EXERCISE REMAINING
EXERCISE PRICE OPTIONS PRICE LIFE
$4.81-$7.20.......................................................... 170 $ 5.78 4.3 yrs.
$7.20-$10.80......................................................... 211 8.78 4.8 yrs.
$10.80-$16.20........................................................ 880 13.83 7.5 yrs.
$16.20-$17.75........................................................ 260 17.20 7.1 yrs.
1,521
</TABLE>

STOCK BASED COMPENSATION

Had compensation for the Company's stock option plans been determined based
on the fair value at the grant dates for awards under those plans, consistent
with the guidelines of SFAS No. 123, the Company's net income and earnings per
share would have been reduced to the pro forma amounts listed below:

<TABLE>
<CAPTION>
IN THOUSANDS, EXCEPT PER SHARE DATA 1995 1996
<S> <C> <C>
Net income
As reported.................................................................... $8,183 $17,336
Pro Forma...................................................................... 8,038 17,068
Primary earnings per share
As reported.................................................................... 0.62 1.26
Pro Forma...................................................................... 0.61 1.24
Fully diluted earnings per share
As reported.................................................................... 0.62 1.21
Pro Forma...................................................................... 0.61 1.19
</TABLE>

Because the method of accounting required by SFAS No. 123 has not been
applied to options granted prior to January 1, 1995, the resulting pro forma
compensation cost may not be representative of that to be expected in future
years.

In accordance with SFAS No.123, the Company measures compensation cost for
disclosure purposes using the Black-Scholes model with the following assumptions
for 1995 and 1996: dividend yields of 3.7%; an expected life of 4 to 6 years;
expected volatility of approximately 32%; and risk free interest rates ranging
from 5.9% to 7.5%.

The following table summarizes the transactions pursuant to the Company's
stock option plans for the three-year period ended December 31, 1996:
<TABLE>
<CAPTION>
1994 1995 1996
WEIGHTED AVG. WEIGHTED AVG.
EXERCISE EXERCISE
SHARES IN THOUSANDS SHARES PRICE SHARES PRICE SHARES
<S> <C> <C> <C> <C> <C>
Outstanding at beginning of year..................... 1,343 $ 10.51 1,549 $ 12.09 1,572
Granted.............................................. 383 16.39 382 12.21 310
Exercised............................................ (137 ) 8.87 (134 ) 7.70 (308 )
Forfeited............................................ (39 ) 11.11 (219 ) 14.88 (24 )
Expired.............................................. (1 ) 7.06 (6 ) 12.32 (29 )
Outstanding at end of year........................... 1,549 12.09 1,572 12.08 1,521
Exercisable at end of year........................... 1,411 12.55 1,420 12.43 1,434
Weighted average fair value of options granted....... 3.99

<CAPTION>
WEIGHTED AVG.
EXERCISE
SHARES IN THOUSANDS PRICE
<S> <C>
Outstanding at beginning of year..................... $ 12.08
Granted.............................................. 14.14
Exercised............................................ 9.82
Forfeited............................................ 16.16
Expired.............................................. 16.90
Outstanding at end of year........................... 12.81
Exercisable at end of year........................... 13.03
Weighted average fair value of options granted....... 3.97
</TABLE>

F-21

<PAGE>
KUHLMAN CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 12 -- OTHER, NET

Other, net for the years ended December 31, 1994, 1995 and 1996 consisted
of the following:

<TABLE>
<CAPTION>
IN THOUSANDS 1994 1995 1996
<S> <C> <C> <C>
Non-operating postretirement benefits..................................... $(826) $(815) $(1,065)
Covenant not to compete................................................... 1,250 624 --
Settlement of certain liabilities......................................... -- 1,586 --
Foreign currency translation adjustments.................................. (847) 75 193
Expenses of terminated merger............................................. (530) -- --
Miscellaneous............................................................. 241 (977) (1,215)
$(712) $ 493 $(2,087)
</TABLE>

NOTE 13 -- BUSINESS AND GEOGRAPHICAL SEGMENT INFORMATION

The Company's operations are organized into two business segments which are
defined as Electrical Products and Industrial Products. The Electrical Products
Segment manufactures and markets distribution, power and instrument transformers
for domestic electrical utilities and certain industrial users; and electrical
and electronic wire and cable products for consumer, commercial and industrial
applications domestically. The Industrial Products Segment designs, produces and
markets various industrial products, including turbochargers, fan drives,
cooling fans and crankshaft vibration dampers for enhancing the efficiency of
diesel and gasoline engines used in light-, medium- and heavy-duty trucks,
agricultural, construction and other industrial applications. In addition,
operations in this segment manufacture and distribute a variety of springs and
metal parts used by other manufacturers in their products or production
processes. Approximately two-thirds of the Industrial Products Segments' sales
are made to domestic customers with the balance sold throughout the world.

Net sales represent shipments to unaffiliated customers. Operating earnings
for each segment includes all costs and expenses directly related to the segment
before financing charges or corporate allocations. Corporate items principally
represent general and administrative costs. Identifiable assets are those used
in the operations of each business or geographic segment. Corporate assets
consist primarily of property, plant and equipment.

F-22

<PAGE>
KUHLMAN CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 13 -- BUSINESS AND GEOGRAPHICAL SEGMENT INFORMATION -- CONTINUED
The Company's operations by business segment and geographic area for the
years ended December 31, 1994, 1995 and 1996, including certain information for
the three months ended March 31, 1996 and 1997 (unaudited) are as follows:

FINANCIAL DATA BY BUSINESS SEGMENT

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
IN THOUSANDS 1994 1995 1996 1996 1997
<S> <C> <C> <C> <C> <C>
(UNAUDITED)
NET SALES (1)
Electrical....................................................... $235,274 $243,761 $268,846 $ 57,449 $ 72,483
Industrial....................................................... 160,843 181,623 187,619 46,008 61,665
$396,117 $425,384 $456,465 $103,457 $134,148
INCOME BEFORE TAXES AND EXTRAORDINARY ITEM
Electrical....................................................... $ 8,611 $ 13,639 $ 20,103 $ 3,397 $ 4,170
Industrial....................................................... 17,096 19,541 22,386 5,104 8,843
Operating earnings (2)......................................... 25,707 33,180 42,489 8,501 13,013

Corporate........................................................ (3,855) (4,156) (6,165) (1,196) (2,077)
Interest expense, net............................................ (6,969) (7,066) (6,981) (1,563) (1,938)
Merger expenses.................................................. -- (4,510) -- -- --
Unallocated...................................................... 720 630 -- -- --
$ 15,603 $ 18,078 $ 29,343 $ 5,742 $ 8,998
IDENTIFIABLE ASSETS
Electrical....................................................... $142,190 $127,760 $182,468
Industrial....................................................... 85,447 84,145 91,353
Corporate/unallocated............................................ 1,548 2,997 3,595
$229,185 $214,902 $277,416
CAPITAL EXPENDITURES
Electrical....................................................... $ 6,283 $ 4,287 $ 5,134
Industrial....................................................... 6,211 9,183 5,615
Corporate/unallocated............................................ 554 1,730 231
$ 13,048 $ 15,200 $ 10,980
DEPRECIATION AND AMORTIZATION
Electrical....................................................... $ 5,406 $ 5,667 $ 6,643
Industrial....................................................... 5,771 5,606 5,633
Corporate/unallocated............................................ 30 47 194
$ 11,207 $ 11,320 $ 12,470
</TABLE>

(1) In 1994, 1995 and 1996, sales to a long time customer of the Company's
Industrial Products Segment represented 11%, 10% and 9%, respectively, of
the Company's net sales. No other customer represents more than 5% of the
Company's net sales.

(2) Operating earnings is defined as operating profit plus other, net directly
attributable to each segment or corporate.

F-23

<PAGE>
KUHLMAN CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 13 -- BUSINESS AND GEOGRAPHICAL SEGMENT INFORMATION -- CONTINUED
FINANCIAL DATA BY GEOGRAPHIC SEGMENT

<TABLE>
<CAPTION>
IN THOUSANDS 1994 1995 1996
<S> <C> <C> <C>
NET SALES
United States.................................................... $347,173 $363,050 $397,393
Europe........................................................... 38,630 50,632 50,757
Other............................................................ 10,314 11,702 8,315
$396,117 $425,384 $456,465
INCOME BEFORE TAXES AND EXTRAORDINARY ITEM
United States.................................................... $ 20,854 $ 28,256 $ 39,077
Europe........................................................... 3,304 4,601 3,045
Other............................................................ 1,549 323 367
Operating Earnings............................................. 25,707 33,180 42,489
Corporate........................................................ (3,855) (4,156) (6,165)
Interest expense, net............................................ (6,969) (7,066) (6,981)
Merger expenses.................................................. -- (4,510) --
Unallocated...................................................... 720 630 --
$ 15,603 $ 18,078 $ 29,343
IDENTIFIABLE ASSETS
United States.................................................... $194,933 $178,702 $236,441
Europe........................................................... 23,925 26,308 30,544
Other............................................................ 8,779 6,895 6,836
Corporate........................................................ 1,548 2,997 3,595
$229,185 $214,902 $277,416
</TABLE>

NOTE 14 -- FINANCIAL INSTRUMENTS

FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

The Company has only limited involvement with derivative financial
instruments and does not use them for speculation or trading purposes. The
Company hedges the effects of fluctuations in commodity prices, principally
copper, through commodity futures contracts, currency fluctuations for certain
international transactions and interest rates through interest rate swap
agreements.

At December 31, 1995 and 1996, the Company had $1,328,000 and $26,000,
respectively, of commodity hedging futures contracts outstanding, substantially
all of which were for copper. The hedging contracts have maturities that do not
exceed four months.

At December 31, 1996, the Company had $750,000 of currency hedging futures
contracts outstanding for the British Pound. The hedging contracts have
maturities that do not exceed four months.

As of December 31, 1996, the Company had entered into four interest rate
swap agreements to reduce the risk of movements in interest rates on a portion
of its variable rate debt. The terms of the agreements, which have a combined
notional principal amount of $75,000,000 allow the Company to receive or make
payments on the difference between the stated LIBOR rate and current market
rates. The LIBOR rates are fixed and range from 5.40% to 6.35%. The agreements
commenced on various dates starting on June 30, 1995 and mature on various
dates, the latest of which is July, 1998.

F-24

<PAGE>
KUHLMAN CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 14 -- FINANCIAL INSTRUMENTS -- CONTINUED
FAIR VALUE OF FINANCIAL INSTRUMENTS

The book values of cash and cash equivalents, trade receivables and trade
payables are considered to be representative of their respective fair values
because of the immediate or short-term maturity of these financial instruments.
The fair value of the Company's debt instruments approximated the book value
because a substantial portion of the underlying instruments are variable rate
notes which re-price frequently.

The fair value of the Company's futures contracts are estimated based on
current settlement values. The fair value of the interest rate swaps are based
on valuations from a financial institution. The fair value of the futures and
swap agreements approximate the unrealized gain or loss on these instruments.
Realized gains or losses during 1996 and unrealized gains or losses at December
31, 1996 on the commodity and currency futures contracts and interest rate swaps
were minimal.

CONCENTRATIONS OF CREDIT RISK

Financial instruments, which potentially subject the Company to
concentrations of credit risk, consist principally of trade accounts receivable.
The risk is limited due to the large number of entities comprising the Company's
customer base and their dispersion across many different industries and
geographies. At December 31, 1996, the Company had no significant concentrations
of credit risk.

GUARANTEES

The Company has guaranteed the payment obligations for certain leases and
certain payment commitments of its subsidiaries. These guarantees amounted to
$1,600,000 at December 31, 1996. The Company is of the opinion that its
subsidiaries will be able to perform under their respective obligations and that
no payments will be required and no losses will be incurred under such
guarantees.

LETTERS OF CREDIT AND SURETY BONDS

At December 31, 1996, the Company had letters of credit and surety bonds
outstanding totaling $3,350,000 which guarantee certain of the Company's
activities, primarily performance of the Company's obligations under certain
self-insured workers' compensation insurance programs. The Company is of the
opinion that no losses will be incurred due to non-performance of these
obligations.

NOTE 15 -- SUPPLEMENTAL CASH FLOW INFORMATION

Cash payments for interest and net cash payments for income taxes are as
follows:

<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
IN THOUSANDS 1994 1995 1996 1996 1997
<S> <C> <C> <C> <C> <C>
(UNAUDITED)
Interest............................................. $7,642 $6,743 $6,419 $1,483 $2,076
Income taxes, net of refunds......................... 3,600 1,726 9,758 (580) 581
</TABLE>

SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES

In 1994, the Company issued 28,169 shares of its common stock to an
executive in a non-cash transaction. The shares vested over a one-year period.
The fair market value of the stock at the time of issuance was approximately
$500,000 and approximately $375,000 of this amount was charged to expense during
1994 and the balance in 1995.

In 1994, 1995, and 1996, the Company issued 10,816, 16,000 and 10,736
shares of its common stock, respectively, under the 1993 Non-Employee Director's
Stock Plan in non-cash transactions. The fair market value of the stock at the
time of issuance was approximately $192,000 in each year, and this amount was
amortized to expense over the one-year term of the grants.

F-25

<PAGE>
KUHLMAN CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 15 -- SUPPLEMENTAL CASH FLOW INFORMATION -- CONTINUED
See Note 3, "Acquisitions and Divestiture" for additional supplemental
information on non-cash investing and financing activities.

NOTE 16 -- QUARTERLY FINANCIAL DATA (UNAUDITED)

The Company's quarterly results are summarized below for the years ended
December 31, 1995 and 1996.

IN THOUSANDS, EXCEPT PER SHARE DATA
<TABLE>
<CAPTION>
QUARTER
1995 FIRST SECOND(1) THIRD FOURTH TOTAL
<S> <C> <C> <C> <C> <C>
Net sales................................ $106,926 $102,814 $108,561 $107,083 $425,384
Gross profit............................. 20,713 19,391 22,061 21,942 84,107
Operating profit......................... 7,191 6,000 7,911 8,059 29,161
Income before extraordinary item......... 3,548 (725) 3,393 3,828 10,044
Extraordinary item, net.................. -- (1,861) -- -- (1,861)
Net income............................... 3,548 (2,586) 3,393 3,828 8,183

Earnings per share (Primary and fully
diluted):
Income before extraordinary item....... 0.27 (0.06) 0.26 0.29 0.76
Extraordinary item, net................ -- (0.14) -- -- (0.14)
Net income............................. 0.27 (0.20) 0.26 0.29 0.62

QUARTER
1996 FIRST SECOND THIRD FOURTH TOTAL
<S> <C> <C> <C> <C> <C>
Net sales................................ $103,457 $112,200 $119,198 $121,610 $456,465
Gross profit............................. 21,464 23,724 27,264 28,483 100,935
Operating profit......................... 7,742 8,502 11,241 10,926 38,411
Net income............................... 3,418 3,732 5,129 5,057 17,336
Earnings per share:
Net Income -- Primary.................. 0.26 0.27 0.37 0.36 1.26
Net Income -- Fully diluted............ 0.25 0.27 0.37 0.35 1.21
</TABLE>

(1) Net income for the second quarter and full year of 1995 includes
approximately $5,600 or $0.43 per share for Merger Expenses.

NOTE 17 -- SUBSEQUENT EVENT: ACQUISITION OF THE KYSOR TRANSPORTATION PRODUCTS
GROUP

On March 10, 1997, the Company purchased certain assets of the
Transportation Products Group ("Kysor") of Kysor Industrial Corporation, a
Michigan Corporation traded on the New York Stock Exchange. The purchase price
for Kysor was $86,000,000 in cash plus the assumption of certain liabilities in
the amount of approximately $46,000,000. The purchase of Kysor was financed from
borrowings under the Company's existing 364-day credit facility.

The transaction is being accounted for as a purchase, and the goodwill
associated with the transaction will be amortized over 40 years. The purchase
price has been allocated to the assets based on their estimated fair market
value, subject to adjustment should new or additional facts about the business
become known. The excess of the purchase price over the fair value of assets is
approximately $47,700,000, subject to future adjustments, if any. The results of
operations for Kysor are included in the consolidated financial statements of
the Company from the date of acquisition.

F-26

<PAGE>
KUHLMAN CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 17 -- SUBSEQUENT EVENT: ACQUISITION OF THE KYSOR TRANSPORTATION PRODUCTS
GROUP -- CONTINUED
The following unaudited pro forma information for the periods shown below
gives effect to the Kysor acquisition as if it had occurred as of the beginning
of each period.

<TABLE>
<CAPTION>
QUARTER ENDED
MARCH 31,
IN THOUSANDS, EXCEPT PER SHARE DATA 1996 1997
<S> <C> <C>
(UNAUDITED)
Net sales..................................................................... $138,357 $160,957
Net income.................................................................... 4,353 6,107
Fully diluted per share amounts:
Net income.................................................................. 0.32 0.42
</TABLE>

The unaudited pro forma information assumes the acquisition of the net
assets at the beginning of the periods presented and, accordingly includes
adjustments for goodwill amortization, interest expense, certain administrative
costs and income taxes. The unaudited pro forma financial data is presented for
information purposes only and is not necessarily indicative of the results of
operations that actually would have been achieved had the acquisition been
consummated at the beginning of the periods presented.

F-27

<PAGE>

(Kuhlman logo appears here)

KUHLMAN PRODUCTION PROCESSES

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(Photo of assembly of power transformer) (Photo of wire braiding equipment)
Assembly of a KUHLMAN power transformer. Wire braiding equipment at COLEMAN CABLE.
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(Picture of turbocharger manufacturing line)
SCHWITZER turbocharger manufacturing line.

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NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY OF THE COMMON STOCK IN ANY JURISDICTION TO
ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH
JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE
HEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE SUCH
DATE.

TABLE OF CONTENTS

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Prospectus Summary................................... 3
Risk Factors......................................... 7
Use of Proceeds...................................... 9
Price Range of Common Stock and Dividends............ 9
Capitalization....................................... 10
Selected Historical and Pro Forma Financial
Data............................................... 11
Management's Discussion and Analysis of
Financial Condition and Results of
Operations......................................... 14
Business............................................. 20
Board of Directors and Executive Officers............ 26
Principal Shareholders............................... 28
Description of Capital Stock......................... 29
Underwriting......................................... 32
Legal Matters........................................ 33
Experts.............................................. 33
Incorporation of Certain Documents By
Reference.......................................... 33
Available Information................................ 34
Index to Consolidated Financial Statements........... F-1
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2,350,000 SHARES
(Kuhlman logo appears here)
KUHLMAN CORPORATION

COMMON STOCK

P R O S P E C T U S
THE ROBINSON-HUMPHREY
COMPANY, INC.

FURMAN SELZ

PAINEWEBBER INCORPORATED

, 1997

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PART II -- INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

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Registration fee to the Securities and Exchange Commission........................................................ $ 20,834
NASD Fee.......................................................................................................... 7,375
New York Stock Exchange Listing Fee............................................................................... 7,000
Transfer Agent and Registrar's Fees............................................................................... 2,500
Printing fees and expenses........................................................................................ 130,000
Legal fees and expenses (excluding Blue Sky fees and expenses).................................................... 150,000
Accounting fees and expenses...................................................................................... 50,000
Blue Sky fees and expenses (including fees of counsel)............................................................ 5,000
Miscellaneous expenses............................................................................................ 27,291
Total........................................................................................................ $400,000
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The foregoing items, except for the SEC registration fee, the NASD fee and
the New York Stock Exchange listing fee, are estimated.

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 145 of the Delaware General Corporation Law authorizes
indemnification of directors, officers, employees and agents of the Company;
allows the advancement of costs of defending against litigation; and permits
companies incorporated in Delaware to purchase insurance on behalf of directors,
officers, employees and agents against liabilities whether or not in the
circumstances such companies would have the power to indemnify against such
liabilities under the provisions of the statute. The Company's Certificate of
Incorporation and Bylaws provide for indemnification of its officers and
directors to the extent permitted by Section 145 of the Delaware General
Corporation Law. Pursuant to such provisions, the Company has purchased such
insurance on behalf of its directors and officers.

The Company's Certificate of Incorporation eliminates, to the fullest
extent permitted by Delaware law, liability of a director to the Company or its
shareholders for monetary damages for a breach of such director's fiduciary duty
of care except for liability where a director (a) breaches his or her duty of
loyalty to the Company or its shareholders, (b) fails to act in good faith or
engages in intentional misconduct or knowing violation of law, (c) authorizes
payment of an illegal dividend or stock repurchase or (d) obtains an improper
personal benefit. This provision only pertains to breaches of duty by directors
as directors and not breaches of duty by directors in any other corporate
capacity, such as any capacity as an officer. While liability for monetary
damages has been eliminated, equitable remedies such as injunctive relief or
rescission remain available. In addition, a director is not relieved of his
responsibilities under any other law, including the federal securities laws.

ITEM 16. EXHIBITS

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1.1 Form of Underwriting Agreement (to be filed by amendment)
5.1 Form of Opinion of Rudnick & Wolfe
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Coopers & Lybrand L.L.P.
23.3 Consent of Rudnick & Wolfe (included in Exhibit 5.1 hereof)
24 Power of Attorney
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ITEM 17. UNDERTAKINGS

The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial BONA FIDE offering thereof.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the

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payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.

The undersigned registrant hereby undertakes that:

1. For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.

2. For the purpose of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial BONA FIDE offering thereof.

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Savannah, State of Georgia, on this 29th day of May,
1997.

KUHLMAN CORPORATION

By: /s/ ROBERT S. JEPSON, JR.
ROBERT S. JEPSON, JR.
CHAIRMAN OF THE BOARD AND CHIEF
EXECUTIVE OFFICER

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

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NAME TITLE DATE

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ROBERT S. JEPSON, JR.* Chairman of the Board and Chief Executive Officer
(Principal Executive Officer) and Director

VERNON J. NAGEL* Executive Vice President of Finance, Chief
Financial Officer and Treasurer (Principal
Financial and Accounting Officer)

CURTIS G. ANDERSON* President, Chief Operating Officer and Director

WILLIAM E. BURCH* Director

STEVE CENKO* Director May 29, 1997

GARY G. DILLON* Director

ALEXANDER W. DREYFOOS, JR.* Director

WILLIAM M. KEARNS, JR.* Director

GEORGE J. MICHEL, JR.* Director
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GENERAL H. NORMAN SCHWARZKOPF* Director

* BY /S/ ROBERT S. JEPSON, JR. Individually and as Attorney-in-Fact
ROBERT S. JEPSON, JR.
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EXHIBIT INDEX

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1.1 Form of Underwriting Agreement (to be filed by amendment)
5.1 Form of Opinion of Rudnick & Wolfe
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Coopers & Lybrand L.L.P.
23.3 Consent of Rudnick & Wolfe (included in Exhibit 5.1 hereof)
24 Power of Attorney
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EXHIBIT 5.1

[LETTERHEAD OF RUDNICK & WOLFE]
FORM OF OPINION

, 1997

The Board of Directors
Kuhlman Corporation
3 Skidaway Village Square
Savannah, Georgia 31411

Dear Sirs:

We have examined the registration statement filed with the Securities and
Exchange Commission on May 29, 1997 (Registration Statement No. 333- )
and all amendments thereto filed on or before the date of this opinion for
registration under the Securities Act of 1933, as amended, of 2,500,000 shares
of common stock, par value $1.00 per share, of Kuhlman Corporation (the
"Company"), including 150,000 shares which may be sold pursuant to the
over-allotment option. We have examined pertinent corporate documents and
records of the Company, including its Certificate of Incorporation and its
By-Laws, and we are familiar with the corporate proceedings had and contemplated
in connection with the issuance of shares by the Company. We have also made such
other examinations and reviewed such other opinions of counsel as we have deemed
necessary or appropriate as a basis for the opinion hereinafter expressed.

On the basis of the foregoing, we are of the opinion that the 2,500,000
shares of common stock to be offered by the Company have been duly authorized,
and, when issued and paid for on the basis referred to in the aforementioned
registration statement, such shares will be legally issued, fully paid and
non-assessable.

We hereby consent to the filing of this opinion as an exhibit to the
registration statement and to the reference to our firm in the prospectus under
the caption "Legal Matters."

Very truly yours,

RUDNICK & WOLFE

By:
, a partner
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EXHIBIT 23.1

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our
reports (and to all references to our Firm) included in or made a part of this
registration statement.

/s/ ARTHUR ANDERSEN LLP

ARTHUR ANDERSEN LLP

Louisville, Kentucky,
May 28, 1997
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EXHIBIT 23.2

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the incorporation by reference in the registration statement
of Kuhlman Corporation on Form S-3 of our report dated February 3, 1997 on our
audit of the combined financial statements of Kysor Transportation Products
Group as of December 31, 1996 and for the year then ended, which report is
included in Amendment No. 1 to Form 8-K/A.

We also consent to the reference to our firm under the caption "Experts".

/s/ Coopers & Lybrand L.L.P.

Detroit, Michigan
May 28, 1997
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EXHIBIT 24

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned, being a
director or officer, or both, of KUHLMAN CORPORATION, a Delaware corporation
(the "Company"), does hereby constitute and appoint ROBERT S. JEPSON, JR.,
CURTIS G. ANDERSON, VERNON J. NAGEL, AND RICHARD A. WALKER, with full power to
each of them to act alone, as the true and lawful attorneys and agents of the
undersigned, with full power of substitution and resubstitution to each of said
attorneys to execute, file or deliver any and all instruments and to do all acts
and things which said attorneys and agents deem advisable to enable the Company
to comply with the Securities Act of 1933, as amended, and any requirements or
regulations of the Securities and Exchange Commission in respect thereof, in
connection with the registration under said Securities Act of up to 3,000,000
shares of common stock of the Company, including specifically, but without
limitation of the general authority hereby granted, the power and authority to
sign his name as a director or officer or both, of the Company, as indicated
below opposite his signature, to the registration statement, and any amendment,
post-effective amendment, supplement or papers supplemental thereto, to be filed
with respect to said shares of common stock; and each of the undersigned does
hereby fully ratify and confirm all that said attorneys and agents, or any of
them, or the substitute of any of them, shall do or cause to be done by virtue
hereof.

IN WITNESS WHEREOF, each of the undersigned has subscribed these presents,
this 24th day of April, 1997.

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/s/ ROBERT S. JEPSON, JR. /s/ GARY G. DILLON
ROBERT S. JEPSON, JR., GARY G. DILLON,
CHAIRMAN OF THE BOARD AND DIRECTOR
CHIEF EXECUTIVE OFFICER (PRINCIPAL
EXECUTIVE OFFICER) AND DIRECTOR

/s/ VERNON J. NAGEL /s/ ALEXANDER W. DREYFOOS, JR.
VERNON J. NAGEL, ALEXANDER W. DREYFOOS, JR.,
EXECUTIVE VICE PRESIDENT OF FINANCE, DIRECTOR
CHIEF FINANCIAL OFFICER AND TREASURER
(PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER)

/s/ CURTIS G. ANDERSON /s/ WILLIAM M. KEARNS, JR.
CURTIS G. ANDERSON, WILLIAM M. KEARNS, JR.,
PRESIDENT, CHIEF OPERATING DIRECTOR
OFFICER AND DIRECTOR

/s/ WILLIAM E. BURCH /s/ GEORGE J. MICHEL, JR.
WILLIAM E. BURCH, GEORGE J. MICHEL, JR.,
DIRECTOR DIRECTOR

/s/ STEVE CENKO /s/ GENERAL H. NORMAN SCHWARZKOPF
STEVE CENKO, GENERAL H. NORMAN SCHWARZKOPF,
DIRECTOR DIRECTOR
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