LADISH CO INC, 424B4, 1998-03-10

LADISH CO INC
424B4, 1998-03-10
METAL FORGINGS & STAMPINGS

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<PAGE>
FILED PURSUANT TO RULE NO. 424(b)(4)
REGISTRATION NO. 333-43011

6,385,459 Shares

LADISH CO., INC.

Common Stock
($.01 par value)

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

Of the 6,385,459 shares of common stock, par value $.01 per share (the "Common
Stock"), offered hereby (the "Offering"), 2,336,000 shares are being sold by
Ladish Co., Inc. (the "Company") and 4,049,459 shares are being sold by the
Selling Shareholders. See "Principal and Selling Shareholders". The Company
will not receive any of the proceeds from the sale of Common Stock being
sold by the Selling Shareholders. The Company's Common Stock is thinly
traded in the over-the-counter market under the symbol "LDSH" and is
quoted on the OTC Electronic Bulletin Board, a quotation system. For
information relating to factors considered in determining the initial
price, see "Underwriting". The Common Stock has been approved for
quotation on The Nasdaq Stock Market's National Market under the
symbol "LDSH".

FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION
WITH AN INVESTMENT IN THE COMMON STOCK, SEE "RISK FACTORS" BEGINNING ON PAGE 9
HEREIN.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR 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.

<TABLE>
<CAPTION>
UNDERWRITING PROCEEDS TO
PRICE TO DISCOUNTS AND PROCEEDS TO SELLING
PUBLIC COMMISSIONS COMPANY (1) SHAREHOLDERS
----------- ------------- ----------- ------------
<S> <C> <C> <C> <C>
Per Share.................... $13.50 $0.87 $12.63 $12.63
Total (2).................... $86,203,697 $5,555,349 $29,503,680 $51,144,668
</TABLE>
(1)Before deduction of expenses payable by the Company estimated at $600,000.
(2) The Company and the Selling Shareholders have granted the Underwriters an
option, exercisable for 30 days from the date of this Prospectus, to
purchase a maximum of 957,819 additional shares to cover over-allotments
of the Common Shares. If such option is exercised in full, the total Price
to Public will be $99,134,253, Underwriting Discounts and Commissions will
be $6,388,652, Proceeds to Company will be $35,833,053 and Proceeds to
Selling Shareholders will be $56,912,548.

The shares of Common Stock are offered by the several Underwriters when, as
and if delivered to and accepted by the Underwriters and subject to their
right to reject orders in whole or in part. It is expected that the shares of
Common Stock will be ready for delivery on or about March 13, 1998, against
payment in immediately available funds.

CREDIT SUISSE FIRST BOSTON BT ALEX. BROWN

Prospectus dated March 9, 1998.
<PAGE>

[inside front cover: Photos of jet engine components manufactured by Company
with cutaway of engine labeled "fan, compressor, turbine" and the following
caption: "Unique Equipment, Forging Expertise, Specialized Processes, High
Quality Parts, Critical Aerospace and Industrial Markets"]

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE SECURITIES
OFFERED HEREBY, INCLUDING OVER-ALLOTMENT, STABILIZING TRANSACTIONS, SYNDICATE
SHORT COVERING TRANSACTIONS AND PENALTY BIDS. FOR A DESCRIPTION OF THESE
ACTIVITIES, SEE "UNDERWRITING".
<PAGE>

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by, and should be read in
conjunction with, the more detailed information and financial statements and
the related notes thereto included elsewhere in this Prospectus. As used in
this Prospectus, unless the context otherwise requires, the term "Ladish" or
"Company" means Ladish Co., Inc. Except as otherwise indicated, all information
in this Prospectus has been adjusted to give effect to a one for six reverse
split of the Common Stock which occurred effective December 12, 1997.
Information in this Prospectus concerning the number of shares of Common Stock
outstanding assumes that the Underwriters have not exercised their over-
allotment option, and does not, except where otherwise indicated, assume the
exercise of currently outstanding and exercisable warrants to purchase an
aggregate of 7,588,614 shares (except that information as of the completion of
the Offering assumes the exercise of warrants to purchase an aggregate of
2,634,233 shares, which are being exercised in connection with the Offering).

THE COMPANY

Ladish Co., Inc. ("Ladish" or the "Company") is a leading producer of highly
engineered, technically advanced components for the jet engine, aerospace and
general industrial markets.

Ladish engineers, produces and markets high-strength, high-technology forged
and formed metal components for a wide variety of load-bearing and fatigue-
resisting applications in the jet engine, aerospace and industrial markets. The
Company has been engaged in producing parts for aircraft engines and other
military, aerospace and general industrial applications for over 50 years.
Products developed by Ladish include (i) rotating jet engine parts, such as
fan, compressor and turbine discs, and jet engine casings, (ii) other aerospace
products, including structural aircraft components, landing gear components,
flap tracks, helicopter rotor parts and shafts and large missile components and
(iii) general industrial forgings such as large crankshafts for power
generation equipment. These products require a high degree of engineering skill
and technical expertise and are generally manufactured from titanium, high-
temperature alloys, steel or aluminum. Components for such rigorous
applications often necessitate manufacture through forging, which yields a
seamless product with a high strength-to-weight ratio relative to castings.
Principal customers include all of the major jet engine manufacturers, as well
as both commercial and government aircraft and satellite manufacturers, power
plants and manufacturers of farm and heavy-duty off-road equipment.
Approximately 89% of the Company's 1997 sales were to the aerospace industry.

Since late 1995, demand for forged components has strengthened, primarily due
to increased demand from the commercial aerospace industry. The Company
believes the principal reasons for the recent improvement in new aircraft
orders include increased demand for air travel in Asia, the recent improved
profitability of U.S. commercial airlines and U.S. Environmental Protection
Agency rules requiring airlines to reduce noise, which, in turn, have prompted
airlines to modernize their fleets. Accordingly, airlines have been
retrofitting existing aircraft or purchasing new jet engines.

In addition to the favorable trends in commercial aviation discussed above,
world airframe manufacturers are seeking to improve the affordability and
efficiency of their products by reducing the number of engines on airplanes.
Newer engines, therefore, must be bigger and run faster and at higher
temperatures, which in turn has increased demand for components that are
structurally larger and more metallurgically complex. The Company believes that
it is well positioned to capitalize on the current upturn in the commercial
aerospace industry in wide-body aircraft as well as regional and business jets.
The Company believes that the combination of its unique equipment,
metallurgical expertise and leading-edge computer process modeling of forging,
heat treating and machining operations, together with its industry-recognized
core competencies in large and complex forgings, will enable the Company to
compete effectively for this demand.

3
<PAGE>

BUSINESS STRATEGY

The Company's goal is to generate profitable growth and to enhance
shareholder value by capitalizing on Ladish's reputation for quality and value
and its unique manufacturing equipment. To accomplish this goal, management
intends to continue pursuing the following strategies:

Maximize Benefits from Industry Upturn

Ladish intends to capitalize on the current upturn in the aerospace industry
by continuing to manufacture components that meet the demand by airframe
manufacturers for stronger, larger and more metallurgically complex parts. The
Company believes that it is well positioned to benefit from the reduction in
excess capacity in the U.S. airline industry, the other trends in the
commercial aerospace industry and the corresponding increase in demand for new
aircraft and parts.

Make Strategic Acquisitions

As a part of the global consolidation of the aerospace industry, management
believes there are numerous opportunities to grow and enhance the Company
through strategic acquisitions. As an example of these opportunities, in June
1997, Ladish acquired substantially all of the assets and assumed a portion of
the liabilities of Stowe Machine Co., Inc. ("Stowe"). Located in Windsor,
Connecticut, Stowe provides finish machining services and products to the jet
engine industry. Operating Stowe will further Ladish's efforts to capitalize on
the upturn in the jet engine industry through the value-added services provided
by Stowe to the Company's existing customer base and the vertical integration
opportunities offered through Stowe. With a customer list which mirrors that of
Ladish, Stowe provides Ladish with the ability to integrate vertically and
offer further value-added services to its core markets.

Leverage Core Competencies into New Products and Markets

The Company's growth strategy also includes continuing to identify new
products and markets where it can become a leading supplier by using its core
competencies in metallurgy, precision metal-working and the management of
complex manufacturing processes. The Company has expanded its processing
technology to alloys such as aluminum-lithium in order to compete for both
solid and liquid fuel motor cases for future generations of launch vehicles
such as the Expendable Extended Launch Vehicle ("EELV"). In addition, the
Company's ability to shear-form various alloys has enabled it to develop
technically advanced domes, rings and cylinders for launch vehicles and
seamless titanium drums used to manufacture copper foil for use by the
telecommunications industry. Ladish's metallurgical expertise, combined with
the world's largest counterblow hammer, has enabled it to become the leading
supplier of titanium hemispheres in the commercial satellite industry and large
steel crankshafts in the power generation industry.

Additionally, the Company believes that its manufacturing, engineering and
technical expertise gives it the ability to develop and process next generation
jet engine components for increased performance of high-temperature materials
as well as to develop products for non-aerospace applications such as farm and
heavy-duty off-road machinery. For example, the Company is currently producing
what the Company believes is the world's largest crankshaft in a closed-die for
use in the international power generation market.

Enhance Market Access Through Customer Cooperation and Strategic Alliances

Ladish intends to continue its long-standing practice of working closely with
its customers and strategic participants in the forging industry. The Company
works closely with customers by using its manufacturing and technical expertise
to engineer, tool and manufacture new products according to customer
specification. In exchange, the Company is often designated as the sole-source
supplier by its customers for the life of the

4
<PAGE>

program. In addition, Ladish's well-respected research and development
departments have enabled the Company to establish and maintain strong
relationships with GE, Rolls-Royce PLC ("Rolls-Royce"), Pratt & Whitney,
Lockheed Martin Corp. and the United States Air Force on a number of
development projects, many of which are customer funded. Management believes
that these projects position the Company to win early production contracts on
new equipment.

In addition to working closely with customers, Ladish intends to develop
strategic alliances with other participants in the forging industry to take
advantage of synergy opportunities. In September 1995, the Company entered into
a joint venture with Weber Metals, Inc. ("Weber"), a subsidiary of German
conglomerate Otto Fuchs Metallwerke KG, whereby the Company combines its
engineering and metallurgical expertise with the capabilities of Weber's 38,000
ton hydraulic press. The product which results from the combination of the
Company's technology with Weber's press frees up Company capacity, reduces
manufacturing costs and gives the Company access to high-temperature niches of
the jet engine market. Under the terms of the Weber agreement, Ladish purchases
forging time from Weber at a fixed rate. The resultant products are sold by
Ladish, and the profits are divided between the parties according to a formula
agreed between the parties on a product-by-product basis. The agreement has a
term of ten years and is not terminable by either party during the first five
years; after five years either party may give the other 365 days notice of its
intent to terminate. No other such alliances have yet been formed.

Improve Profitability Through Operating Efficiencies and Lower Costs

Since mid-1995, the Company has significantly reduced overhead costs,
improved worker productivity, shortened production cycle times and rationalized
its product mix in order to improve operating margins and lower its break-even
point. During this time, management has invested in new technologies, developed
more efficient manufacturing processes and focused on selling higher value-
added products. By reducing lot sizes, set-up times and process times
throughout its facility, the Company has reduced its average cycle time by
approximately 75% from 1994 to 1997. In addition, pieces per man-hour increased
16% from 1995 through 1997. Sales per employee have increased 22% from 1996 to
1997. As a result of the implementation of process improvement techniques
coupled with applied synchronous manufacturing concepts, the Company has
reduced its costs and improved product quality as measured by the reduction of
rework and scrap. In addition, the Company is currently computerizing the
operation of its hammers, which the Company believes will lead to additional
operational efficiency and further improve the quality of its forgings. Ladish
is also implementing cellular manufacturing techniques in an effort to further
decrease production times and reduce costs.

Focus on Core Business

In the fourth quarter of 1996, the Company decided to focus its efforts on
its core forging business and the markets it serves. Consequently, Ladish
determined that its Industrial Products Division ("IPD"), with its commodity
fitting and valve business, was not strategic to the future direction of the
Company. In May 1997, the Company sold substantially all of the assets of IPD
to a subsidiary of Trinity Industries, Inc. for cash consideration of $36.5
million and the assumption of certain liabilities. Ladish utilized proceeds
from the sale of IPD to reduce debt and fund the Stowe acquisition, and intends
to use the remainder of the proceeds to fund a significant portion of its
underfunded pension liability. The sale has also allowed management to focus
its time and energy on the growth of the core business and to identify
strategic acquisition opportunities such as Stowe.

HISTORY

The Ladish forge shop was founded in 1905. For the next 75 years, Ladish Co.
continued to grow its operations under the control of the Ladish family. During
this period, Ladish Co. supplied forged products to virtually every industry,
including the aerospace industry beginning in the 1930s, and became a leader
within the commercial and military aerospace industry for forged products and
material application.

5
<PAGE>

Beginning in 1981, Ladish Co. experienced a series of ownership changes. The
Company was incorporated as the successor to Ladish Co. in connection with one
of these transactions. From 1991 until the middle of 1995, the aerospace
industry experienced a severe cyclical downturn. This decline resulted from a
combination of reduced demand from the commercial airline industry, which was
suffering from weak passenger revenues and overcapacity, and reduced military
budgets as a result of the end of the Cold War. At the same time, the Company
faced substantial debt service on $110 million of subordinated debentures
publicly issued in connection with a 1987 leveraged buyout. In February 1993,
the Company filed a voluntary petition for reorganization under Chapter 11 of
the U.S. Bankruptcy Code. Under this "pre-packaged" plan, the subordinated
debentures were converted to equity at a ratio of $1,000.00 of principal amount
of subordinated debentures for approximately 43 shares of Common Stock,
including the debentures held by the Company's largest current shareholder; no
other class of creditor was affected. The plan was confirmed and the Company
emerged from reorganization in April 1993.

Beginning in 1995, the Company implemented a program to reduce overhead
costs, improve worker productivity, shorten production cycle times and
rationalize product mix. This program has resulted in improved operating
margins and a lower break-even point. Over the same time period, the market for
forged components strengthened due primarily to increased demand from the
commercial airline industry. This resurgence in demand, which the Company
believes is attributable to a number of factors affecting airlines in the U.S.
and throughout the world, has resulted in strong revenue growth for the
Company. The Company's income before taxes increased from $2.1 million in 1996
to $20.5 million in 1997, due principally to the substantial increase in net
sales.

The Company has elected to undertake an initial public offering at this time
in order (i) to raise capital to reduce debt and other liabilities and thereby
improve its balance sheet, and (ii) to create a more liquid market for the
present and future shareholders of the Company.

Certain principal shareholders of the Company are Selling Shareholders in the
Offering and will benefit in the amount of the net proceeds received for the
shares of Common Stock sold by them hereunder. See "Principal and Selling
Shareholders".

6
<PAGE>

THE OFFERING

<TABLE>
<C> <S>
Common Stock offered by:
The Company...................................... 2,336,000 shares
Selling Shareholders............................. 4,049,459 shares
------------
Total(1)..................................... 6,385,459 shares
------------
------------

Common Stock and equivalents to be outstanding after
the Offering(1)(2)................................. 15,260,405 shares
Use of Proceeds..................................... The proceeds to the Company from the sale
of Common Stock by the Company are expected
to be approximately $29 million (net of
underwriting discounts and estimated
expenses payable by the Company). The net
proceeds from the sale of shares by the
Company will be used primarily to repay
subordinated debt and a portion of
outstanding indebtedness under the
Company's senior credit facility, and to
contribute to certain underfunded pension
plans. The Company will not receive any
proceeds from the sale of shares by the
Selling Shareholders. See "Use of Proceeds"
and "Principal and Selling Shareholders".
Dividend policy..................................... The Company currently intends to retain all
of its earnings to finance its operations
and future growth and does not expect to
pay any dividends for the foreseeable
future. See "Dividend Policy".
Nasdaq National Market symbol....................... "LDSH".
</TABLE>
- --------
(1) Does not include up to 957,819 shares of Common Stock issuable upon
exercise of the Underwriters' over-allotment option in full.
(2) Includes 7,588,614 shares subject to outstanding common stock purchase
warrants as of the date of this Prospectus, but excludes (i) 322,500 shares
issuable pursuant to outstanding options under the Incentive Plan (as
hereinafter defined) and (ii) 496,188 shares reserved for issuance upon
exercise of outstanding options previously granted to former employees and
others. See "Management--Incentive Stock Option Plan", "Certain
Relationships and Related Party Transactions", and Note 4 to Financial
Statements.

7
<PAGE>

SUMMARY FINANCIAL DATA

The following table sets forth certain historical financial data for the
fiscal years 1995 through 1997. Such data were derived from the audited
financial statements of the Company included elsewhere herein. The Company's
Industrial Products Division, which was sold during 1997, has been treated as a
discontinued operation and its results of operations are excluded from the
table.

The historical financial data are not necessarily indicative of the results
of operations for any future period. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations".

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------
1995 1996 1997
------------ ------------ ------------
(DOLLARS IN
THOUSANDS, EXCEPT EARNINGS PER SHARE)
<S> <C> <C> <C>
RESULTS OF OPERATIONS:
Net sales............................ $ 115,738 $ 162,002 $ 209,816
Cost of sales........................ 128,351 149,637 178,051
------------ ------------ ------------
Gross profit (loss).................. (12,613) 12,365 31,765
Selling, general & administrative
expenses............................ 6,139 6,556 7,378
------------ ------------ ------------
Income (loss) from operations........ (18,752) 5,809 24,387
Interest expense..................... 3,339 3,703 3,334
Other income (expense), net.......... (55) 29 (549)
------------ ------------ ------------
Income (loss) from operations before
provision for income taxes.......... (22,146) 2,135 20,504
Provision for income taxes........... -- -- 1,602
------------ ------------ ------------
Net income (loss) from continuing
operations.......................... $ (22,146) $ 2,135 $ 18,902
============ ============ ============
Basic earnings per share from
continuing operations(1)............ $ (4.40) $ 0.42 $ 3.63
Diluted earnings per share from
continuing operations(1)............ $ (4.40) $ 0.20 $ 1.52
OTHER DATA:
EBITDA(2)............................ $ (9,899) $ 14,974 $ 33,635
Capital expenditures................. 2,865 4,997 9,217
Depreciation expense................. 8,908 9,136 9,773
Cash used for operating activities... (10,749) (2,374) (2,135)
Cash provided by (used for) investing
activities.......................... (1,847) (4,927) 16,088
Cash provided by (used in) financing
activities.......................... 12,295 7,066 (13,489)
BALANCE SHEET (AT END OF PERIOD):
Total assets......................... $ 164,696 $ 170,270 $ 165,461
Total debt........................... 43,932 51,848 39,716
Stockholders' equity (deficit)....... (9,751) (16,287) 5,017
BACKLOG(3)........................... $ 150,493 $ 233,730 $ 278,171
</TABLE>
- --------
(1) Calculated in accordance with Note 14 to Financial Statements.
(2) EBITDA from continuing operations for any relevant period presented above
represents net income (loss) from continuing operations, plus income taxes
and interest expense, plus depreciation and amortization of goodwill and
other intangibles. EBITDA may not be comparable to similarly titled
measures reported by other companies. While EBITDA should not be construed
as a substitute for operating income or a better indicator of liquidity
than cash flow from operating activities, which is determined in accordance
with generally accepted accounting principles, it is included herein to
provide additional information with respect to the ability of the Company
to meet its future debt service, capital expenditure and working capital
requirements. EBITDA is not necessarily a measure of the Company's ability
to fund its cash needs. See the Company's Financial Statements and the
related notes thereto appearing elsewhere herein.
(3) Backlog represents unfilled purchase orders received by the Company as of
the end of each period.

8
<PAGE>

RISK FACTORS

Prior to making any investment decision, prospective investors should
carefully consider the risk factors set forth below in addition to the other
information presented in this Prospectus.

HISTORY OF RECENT LOSSES

Although the Company reported net income from continuing operations of $2.1
million in 1996 and $18.9 million in 1997, the Company reported net losses for
each of the years ended December 31, 1991 through 1995. In addition, the
Company reported gross losses for 1994 and 1995 and had an accumulated deficit
of approximately $32.8 million at December 31, 1997. In 1993, the Company was
unable to service its subordinated debt and consequently underwent a financial
restructuring pursuant to Chapter 11 of the United States Bankruptcy Code, in
which the subordinated debt was converted into Common Stock. The Company has
implemented changes designed to improve its cost structure and increase
efficiency and productivity at its facilities, which the Company believes have
enabled it to increase profitability and to withstand better the volatility
inherent in its primary markets. There can be no assurance, however, that the
Company's operations will be profitable in the future.

CYCLICALITY OF THE AEROSPACE AND JET ENGINE INDUSTRIES

Substantially all of the Company's revenues are derived from the aerospace
and jet engine industries, which are cyclical in nature and subject to changes
based on general economic conditions, airline profitability and international
relations. The duration and severity of upturns and downturns in these
industries are influenced by a variety of factors, including those set forth
herein. Accordingly, they cannot be predicted with any certainty.
Historically, orders for new commercial aircraft and related commercial
aerospace components have been driven by the operating profits or losses of
commercial airlines. Purchases by customers in the military aerospace sector
are dependent upon defense budgets. The commercial aerospace industry
experienced a greatly reduced volume of orders between 1992 and early 1995,
although this decline has been reversed in 1996 and 1997. Events adversely
affecting the aircraft industry, such as cyclical overcapacity and inability
to maintain profitable fare structures, would likely have a material adverse
effect on the financial condition and results of operations of the Company.
See "Management's Discussion and Analysis of Financial Condition and Results
of Operations".

REDUCTIONS IN GOVERNMENT SPENDING

Since 1990, almost one-quarter of the Company's revenue has been derived
from the government-sponsored aerospace industry, an industry that is
dependent upon government budgets and, in particular, the United States
government budget. In general, defense and space budgets in the United States
have been declining in recent years, resulting in reduced demand for new
aircraft and spare parts. While the effect of U.S. defense and space budget
reductions may be offset in part by foreign military sales, such sales are
affected by U.S. governmental regulation, regulation by the purchasing
government and political uncertainties in the United States and abroad. There
can be no assurance that U.S. defense and space budgets and the related demand
for defense and space equipment will not continue to decline or that sales of
defense and space equipment to foreign governments will continue at present
levels.

COMPETITION

The sale of metal components for the aerospace, jet engine and industrial
markets is highly competitive. Many Ladish products are readily
interchangeable with the products manufactured by Ladish's competitors. Many
of the Company's products are sold under long-term contracts which are bid
upon by several suppliers. Ladish's principal competitor, Wyman-Gordon
Company, is substantially larger than Ladish and has greater financial
resources. See "Business--Competition".

9
<PAGE>

RELIANCE ON MAJOR CUSTOMERS

The Company's three largest customers accounted for approximately 54% of the
Company's revenues in 1996 and 59% in 1997. Because of the small number of
customers for some of the Company's principal products, those customers
exercise significant influence over the Company's prices and other terms of
trade. The loss of any of the Company's largest customers could have a
material adverse effect on the Company's financial condition and results of
operations. See "Business--Customers".

DEPENDENCE ON KEY PERSONNEL

The Company has been and continues to be dependent on certain key management
personnel. The Company's ability to maintain its competitive position will
depend, in part, upon its ability to retain these key managers and to continue
to attract and retain highly qualified managerial, manufacturing and sales and
marketing personnel. There can be no assurance that the loss of key personnel
would not have a material adverse effect on the Company's results of
operations or that the Company will be able to recruit and retain such
personnel. See "Management".

PRODUCT LIABILITY EXPOSURE

The Company produces many critical engine and structural parts for
commercial and military aircraft and for other specialty applications. As a
result, the Company has an inherent risk of exposure to product liability
claims. The Company currently maintains product liability insurance, but there
can be no assurance that insurance coverage will continue to be available on
terms acceptable to the Company or that such coverage will be adequate for any
liabilities that might be incurred.

AVAILABILITY AND PRICE OF RAW MATERIALS

The largest single component of the Company's cost of goods sold is raw
material costs. The Company manufactures products in a wide variety of
specialty metals and alloys, some of which can only be purchased from a
limited number of suppliers. The Company holds limited quantities of raw
materials in inventory but, for the principal part of its business, seeks to
procure delivery of raw materials in quantities and at times matching
customers' orders. The Company, along with other entities in the industry, has
experienced periods of increased delivery times for nickel-based and titanium
alloys and certain stainless steels, which account for a significant portion
of the Company's raw materials. Significant scarcity of supply of raw
materials used by the Company could have a material adverse effect on the
Company's results of operations by affecting both the timing of delivery and
the cost of purchasing such materials. Many of the Company's products are sold
pursuant to long-term agreements with its customers, which currently provide
the Company the right to pass through material cost increases. Any inability
to obtain such rights in future long-term agreements could have a material
adverse effect on the Company's results of operations. See "Business--Raw
Materials".

LABOR CONTRACTS

Approximately 84% of the Company's employees are represented by eight
collective bargaining units. Contracts are typically renegotiated every three
years with each union. While management does not expect that work stoppages
will arise in connection with the renewal of labor agreements expiring in the
foreseeable future, no assurance can be given that work stoppages will not
occur. An extended or widespread work stoppage could have a material adverse
effect on the Company's results of operations. See "Business--Employees".

PENSION AND OTHER POSTRETIREMENT BENEFIT OBLIGATIONS

The Company's employees are eligible to participate in various Company-
sponsored pension plans. In addition to pension benefits, the Company provides
health care and life insurance benefits to its eligible employees and
retirees. The pension benefits have been and will continue to be funded
through contributions to pension trusts, while health care and life insurance
benefits are paid as incurred.

10
<PAGE>

The Company has several pension plans, certain of which are underfunded. The
aggregate liability recorded for the Company's pension plans on the balance
sheet at December 31, 1997 was approximately $37 million. The Company has
entered into an agreement with the Pension Benefit Guarantee Corporation
requiring minimum contributions to the underfunded plans of $18 million in
1997, $7.4 million in 1998 and $7.8 million in 1999 in order to substantially
reduce this liability. In addition, approximately $15 million of the net
proceeds from the Offering will be used to make a further contribution to
these plans. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations--Pensions" and Note 8 to Financial Statements.

The liability recorded for postretirement health care and life insurance
benefits on the balance sheet at December 31, 1997 was approximately $49
million on an actuarial basis and will be paid as incurred annually. See Note
9 to Financial Statements.

COMPLIANCE WITH ENVIRONMENTAL AND OTHER GOVERNMENT REGULATIONS

The Company's operations are subject to extensive environmental, health and
safety laws and regulations promulgated by federal, state and local
governments. Many of these laws and regulations provide for substantial fines
and criminal sanctions for violations. The nature of the Company's business
exposes the Company to risks of liability due to the use and storage of
materials that can cause contamination or personal injury if released into the
environment. In addition, environmental laws may have a significant effect on
the nature, scope and cost of cleanup of contamination at operating
facilities. It is difficult to predict the future development of such laws and
regulations or their impact on future earnings and operations, but the Company
anticipates that these standards will continue to require increased capital
expenditures. There can be no assurance that the Company will not incur
material costs and liabilities in the future relating to environmental
matters.

Based upon information presently available, the Company does not expect that
costs for future environmental compliance and remediation will have a material
adverse effect on its competitive or financial position or its ongoing results
of operations. However, it is not possible to predict accurately the amount or
timing of costs of any future environmental remediation requirements. Such
costs could be material to future results of operations. In addition, the
"Superfund" statutes may impose joint and several liability for the costs of
remedial investigations and actions on the entities that arranged for disposal
of the wastes, the waste transporters that delivered materials to the disposal
sites and the past and present owners and operators of such sites; responsible
parties may be required to bear all costs, regardless of fault, legality of
the original disposal or ownership of the disposal site. The Company has been
named a potentially responsible party at three sites and has reserved
approximately $300,000 for such liability. The Company believes that the
amount for which it is liable at such sites will not be material; however,
there can be no assurances that the amount for which the Company will be
responsible will not be significantly greater than anticipated. See
"Business--Environmental, Health and Safety Matters".

SIGNIFICANT SHAREHOLDERS

After the Offering, ING Equity Partners, L.P. I and ING Barings (U.S.)
Capital Corporation (collectively the "ING entities") will continue to own
228,340 shares of Common Stock plus warrants to purchase another 228,341
shares, which in the aggregate would represent (if such warrants were
exercised) approximately 4.3% of the outstanding shares of Common Stock. Grace
Brothers, Ltd. ("Grace") will also own warrants to purchase 2,862,573 shares
of Common Stock which, if exercised, would represent approximately 21.7% of
the then outstanding shares. Consequently, the ING entities and Grace have and
will continue to have significant influence over the affairs of the Company.
See "Principal and Selling Shareholders" and "Certain Relationships and
Related Transactions". If the Underwriters' over-allotment option is exercised
in full, the ING entities will own no shares or warrants after the Offering.

NET OPERATING LOSS CARRYFORWARDS

11
<PAGE>

taxes of the Company in future years, and therefore increase its after-tax
cash flow. Under Section 382 of the Internal Revenue Code of 1986, as amended
(the "Code"), certain restrictions on the utilization of NOLs or credit
carryforwards will apply in the event of an ownership change of a corporation
entitled to use such carryforwards. It is likely that the sale of Common Stock
pursuant to the Offering, combined with sales of Common Stock within the past
three years, will cause an ownership change of the Company (within the meaning
of Section 382 of the Code), resulting in restrictions on the Company's
ability to utilize its NOLs during all taxable years (including partial
taxable years) after the date of such ownership change. Assuming that this
ownership change occurs, based on the Company's estimate of its fair market
value, an additional restriction of approximately $8 million on the
utilization of the Company's NOLs would be created after the date of such
change in ownership.

Based on the limitations noted above, and the Company's recent history of
losses, the Company has recorded a valuation allowance against the entire
amount of these NOLs. The Company will continue to evaluate the ultimate
realizability of the NOLs in the future. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Net Operating Loss
Carryforwards" and Note 7 to Financial Statements.

DILUTION

Purchasers of Common Stock in the Offering will experience immediate
dilution of $10.76 per share of Common Stock purchased, using the offering
price of $13.50 per share and assuming exercise of all of the Company's
outstanding warrants. See "Dilution". In connection with the Company's
December 1995 and February 1996 private offering of senior subordinated
secured notes (the "Subordinated Notes"), the Company issued warrants to
acquire 7,775,722 shares of Common Stock. Each warrant entitles the holder to
purchase one share of Common Stock at a price of $1.20 per share. The exercise
price may be paid in cash, or by the surrender of outstanding Common Stock,
Subordinated Notes or other warrants having a fair value equal to the exercise
price. An aggregate of 187,108 of such warrants have subsequently been
exercised prior to the Offering and another 2,634,233 warrants will be
exercised in connection with the Offering. Additionally, there are options to
acquire 322,500 shares of Common Stock at an exercise price of $6.00 per share
pursuant to the Company's Incentive Stock Option Plan, and options to purchase
an additional 496,188 shares at exercise prices ranging from $12.00 to $21.00
per share issued in 1993 in consideration of consulting services. The exercise
of all outstanding options would result in the issuance by the Company of up
to 818,688 additional shares of Common Stock, and would result in substantial
additional dilution to investors purchasing Common Stock in the Offering.

LIMITED PRIOR MARKET FOR COMMON STOCK; POSSIBLE VOLATILITY OF COMMON STOCK AND
THE SECURITIES MARKETS

Although the Common Stock of the Company has been quoted on the OTC
Electronic Bulletin Board prior to the Offering, trading has been sporadic.
The Common Stock has been approved for quotation on the Nasdaq National
Market. The initial public offering price of the Common Stock was determined
through negotiations among the Company, the Selling Shareholders and the
representatives of the Underwriters. There can be no assurance that the
initial public offering price will correspond to the price at which the Common
Stock will trade in the public market subsequent to the Offering or that an
active trading market for the Common Stock will develop and continue after the
completion of the Offering. See "Underwriting". In addition, the market price
of the Common Stock upon the completion of the Offering could be subject to
significant fluctuations in response to variations in the Company's quarterly
financial results or other developments, such as announcements of new products
by the Company or the Company's competitors, enactment of legislation or
regulation affecting the aerospace industry, interest rate movements or
general economic conditions.

SHARES ELIGIBLE FOR FUTURE SALE; REGISTRATION RIGHTS; POSSIBLE ADVERSE EFFECT
ON FUTURE MARKET PRICES

Upon completion of the Offering, there will be 10,306,024 shares of Common
Stock outstanding. An additional 5,773,069 shares will be reserved against the
exercise of outstanding warrants and options. The 6,385,459 shares sold in the
Offering will be immediately tradeable without restriction by persons other
than

12
<PAGE>

those who may be deemed "affiliates" of the Company, as that term is defined
in Rule 144 under the Securities Act. Substantially all the 5,335,791 shares
of Common Stock outstanding prior to the Offering were issued in 1993 in
connection with the reorganization of the Company. Of these shares, those held
by persons who are not "affiliates" of the Company (believed by management to
number approximately 3,213,956 shares) will be freely tradeable after the
Offering. The shares held by "affiliates" (which the Company believes will
number approximately 776,096 after the Offering) may be sold only pursuant to
a registration statement under the Securities Act or under Rule 144 or another
available exemption. The Underwriters have conditioned the Offering on the
receipt of agreements of the holders of substantially all Common Stock
purchase warrants, all persons selling shares in the Offering, all holders of
registration rights with respect to the Company's securities and all executive
officers and directors of the Company, that they will not sell any shares of
Common Stock without the consent of Credit Suisse First Boston Corporation, on
behalf of the Underwriters, for a period of 180 days following the date of
this Prospectus. After the Offering, the holders of an aggregate of 25% of the
Company's then outstanding warrants and shares then issued upon exercise of
such warrants will have the right to require the Company to register all or a
portion of the shares underlying such warrants under the Securities Act to
permit the public sale of such shares.

The shares issuable upon the exercise of the Company's outstanding options
and warrants, and not sold in the Offering, will be "restricted shares" as
that term is defined in Rule 144. As a result, such shares, if and when
issued, will only be subject to resale pursuant to a registration statement
under the Securities Act or under Rule 144 or other available exemption.

Significant sales of shares of Common Stock under a registration statement,
pursuant to Rule 144 or otherwise in the future, or the prospect of such
sales, may depress the price of the shares of Common Stock or any market that
may develop. See "Shares Eligible for Future Sale" and "Certain Relationships
and Related Party Transactions--Registration Rights".

FORWARD-LOOKING STATEMENTS

This Prospectus contains certain forward-looking statements. Forward-looking
statements are statements other than historical information or statements of
current condition. Some forward-looking statements may be identified by use of
terms such as "believes", "anticipates", "intends" or "expects". The forward-
looking statements contained and incorporated by reference in this Prospectus
are generally located in the material set forth under the headings "Prospectus
Summary", "Risk Factors", "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Business" but may be found in other
locations as well. These forward-looking statements relate to the plans and
objectives of the Company for future operations. In light of the risks and
uncertainties inherent in all future projections, including but not limited to
those set forth under the heading "Risk Factors", the inclusion of the
forward-looking statements in this Prospectus should not be regarded as a
representation by the Company or any other person that the objectives or plans
of the Company will be achieved. Many factors could cause the Company's actual
results to differ materially from those in the forward-looking statements,
including in particular unanticipated fluctuation in demand for the Company's
products which are sold in markets subject to severe cyclicality. The
foregoing review of important factors should not be construed as exhaustive
and should be read in conjunction with other cautionary statements that are
included in this Prospectus. The Company undertakes no obligation to release
publicly the results of any future revisions it may make to forward-looking
statements to reflect events or circumstances after the date hereof or to
reflect the occurrence of unanticipated events.

DIVIDEND POLICY

The declaration of dividends is within the discretion of the Company's Board
of Directors. The Company has not paid a dividend on its Common Stock since
1987. The Company currently intends to retain all of its earnings from periods
following the Offering to finance its operations and future growth and,
accordingly, does not expect to pay any dividends for the foreseeable future.
The Board of Directors will review this dividend policy from time to time in
light of the conditions then existing, including the Company's financial
condition,

13
<PAGE>

results of operations, capital requirements, restrictions (if any) contained
in financing or other agreements binding upon the Company, and such other
factors as the Board of Directors deems relevant. The Company's senior credit
facility currently prohibits the payment of dividends.

USE OF PROCEEDS

The proceeds to the Company from the sale of shares of Common Stock by the
Company are estimated to be approximately $29 million (net of underwriting
discounts and estimated expenses payable by the Company). The company will
also receive approximately $3.2 million in proceeds from the exercise of
common stock purchase warrants being exercised in connection with the
Offering. The net proceeds from the sale of shares by the Company will be used
primarily (i) to repay all of the Company's senior subordinated secured notes,
due in February 2000, $11.3 million aggregate principal amount of which was
outstanding at December 31, 1997, and which bear interest at the rate of 12%
per year, (ii) to repay approximately $5.7 million of outstanding indebtedness
under the Company's current senior credit facility, which had an outstanding
balance of approximately $27 million at December 31, 1997, and (iii) to make
contributions in the amount of approximately $15 million to certain pension
plans to reduce their underfunded status to approximately $22 million. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Pensions". Some of these uses of proceeds will require the consent
of the Company's lender under the senior credit facility, which consent is
anticipated prior to the consummation of the Offering. The Company will not
receive any proceeds from the sale of shares by the Selling Shareholders. See
"Principal and Selling Shareholders".

14
<PAGE>

MARKET FOR COMMON STOCK

Prior to the Offering, limited trading of Common Stock has occurred in the
over-the-counter market. The Common Stock has not previously been registered
under either the Securities Act of 1933, as amended (the "Securities Act") or
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), nor is
such stock listed on any exchange or on Nasdaq. The Company has been informed
that three market-makers in the Common Stock regularly publish bid quotations.

The following table sets forth, for the fiscal periods indicated, the high
and low bid prices for the Common Stock in the over-the-counter market as
reported on the OTC Electronic Bulletin Board. Such quotations reflect the 1
for 6 reverse split of the Common Stock and reflect inter-dealer bid prices,
without retail mark-up, mark-down or commission, and do not necessarily
represent actual transactions.

<TABLE>
<CAPTION>
BID PRICE
-------------
HIGH LOW
------ ------
<S> <C> <C>
1996
First Quarter............................................. $ 4.50 $ 1.14
Second Quarter............................................ 11.40 3.90
Third Quarter............................................. 11.40 8.70
Fourth Quarter............................................ 12.00 9.60
1997
First Quarter............................................. 12.60 9.90
Second Quarter............................................ 13.50 9.90
Third Quarter............................................. 22.80 12.60
Fourth Quarter............................................ 19.80 17.10
1998
First Quarter............................................. 22.50 15.00
</TABLE>

On February 23, 1998, as reported on the OTC Electronic Bulletin Board, 300
shares of Common Stock were traded at a price of $18.00 per share. As of March
9, 1998, there were approximately 100 record holders of the Common Stock. The
Company estimates that there are approximately 200 beneficial owners of the
Company's Common Stock.

The Common Stock has been approved for quotation on the Nasdaq National
Market under the symbol "LDSH". There can be no assurance that an active
market for the Common Stock will develop or, if developed, will continue. See
"Risk Factors--Limited Prior Market for Common Stock; Possible Volatility of
Common Stock Price and the Securities Markets" and "Underwriting".

15
<PAGE>

DILUTION

At December 31, 1997, the Company had a net tangible book value of $12.9
million (assuming exercise of all warrants as described below) or $1.00 per
share of Common Stock. Net tangible book value per share is determined by
dividing the Company's tangible net book value (total tangible assets less
total liabilities) by the total number of shares of Common Stock outstanding.
After giving effect to the sale of the 2,336,000 shares offered by the Company
hereby, at the initial offering price of $13.50 per share, and deducting the
underwriting discounts and commissions and estimated Offering expenses payable
by the Company, the net tangible book value of the Company at December 31,
1997 would have been approximately $41.8 million, or $2.74 per share. This
represents an immediate increase in net tangible book value of $1.74 per share
to the existing shareholders and an immediate dilution in net tangible book
value of $10.76 per share to new investors purchasing Common Stock in the
Offering. The following table illustrates this dilution on a per share basis:

<TABLE>
<S> <C> <C>
Initial public offering price per share........................... $13.50
Net tangible book value per share, without giving effect
to the Offering.......................................... $1.00
Increase in net tangible book value per share attributable
to new investors......................................... 1.74
-----
Net tangible book value per share after the Offering.............. 2.74
------
Dilution per share to new investors............................... $10.76
======
</TABLE>

The following table sets forth the number of shares of Common Stock
purchased from the Company, the total consideration paid and the average price
per share paid by the Company's existing shareholders and to be paid by new
investors in the Offering, before deduction of estimated underwriting
discounts and commissions:

<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
PURCHASED TOTAL CONSIDERATION AVERAGE
------------------ ---------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
---------- ------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C>
Existing
shareholders(1)........ 12,924,405 84.7% $45,326,000(2) 59.0% $ 3.51
New investors(1)........ 2,336,000 15.3% 31,536,000 41.0% 13.50
---------- ------ ----------- ------
Total................. 15,260,405 100.0% $76,862,000 100.0%
========== ====== =========== ======
</TABLE>
- --------
(1) Sales by the Selling Shareholders in the Offering will reduce the number
of shares held by existing shareholders to 8,874,946 or approximately
58.2% of the total number of shares of Common Stock outstanding after the
Offering, and will increase the number of shares held by new investors to
6,385,459 or approximately 41.8% of the total number of shares of Common
Stock outstanding after the Offering.
(2) Amount represents the fair value of the Company's net assets as of the
financial reorganization, plus all consideration received for subsequent
stock issuance.

The foregoing tables assume exercise of all 7,588,614 outstanding warrants
to purchase Common Stock at an exercise price of $1.20 per share, but no
exercise of outstanding options and no exercise of any options that may be
granted under the Incentive Plan. See "Management--Executive Compensation--
Incentive Stock Option Plan". At December 31, 1997, there were outstanding
options to purchase 818,688 shares of Common Stock at a weighted average
exercise price of $12.06 per share. Based on the pro forma net tangible book
value of $2.74 per share after the Offering at the initial public offering
price of $13.50 per share, dilution to new investors would be $10.28 per share
if all of the outstanding options were exercised.

16
<PAGE>

CAPITALIZATION

The following table sets forth the consolidated capitalization of the
Company as of December 31, 1997, and as adjusted to reflect the sale of
2,336,000 shares of Common Stock offered by the Company hereby (at an initial
public offering price of $13.50 per share), and the application of the
proceeds therefrom and from the exercise of warrants which will be exercised
in connection with the Offering, net of estimated underwriting discounts and
expenses of the Offering. See "Use of Proceeds". This table should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the Company's Financial Statements and the
Notes thereto, included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
AS OF DECEMBER 31,
1997
---------------------
AS
ACTUAL ADJUSTED(1)
-------- -----------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Credit Agreement, including current portion....... $ 27,391 $ 21,651(2)
Notes payable, including current portion.......... 1,000 1,000
Subordinated debt................................. 11,325 --
Stockholders' equity:
Common Stock, $0.01 par value, 100,000,000
shares authorized, 5,315,473 actual shares
issued and outstanding, and 10,285,706 shares
issued and outstanding, as adjusted(3)......... 53 103
Additional paid in capital...................... 37,798 69,813
Accumulated deficit............................. (32,834) (32,834)
-------- --------
Total stockholders' equity.................... 5,017 37,082
-------- --------
Total capitalization.......................... $ 44,733 $ 59,733
======== ========
</TABLE>
- --------
(1) Does not reflect the contribution of approximately $15 million of net
proceeds to certain pension plans to reduce their underfunded status. See
"Use of Proceeds".
(2) The Company may borrow approximately another $29 million under this
facility.
(3) Does not include 7,608,932 shares (actual) and 4,974,699 shares (as
adjusted) reserved against the exercise of warrants.

17
<PAGE>

PRO FORMA CONSOLIDATED STATEMENT OF INCOME

The following Unaudited Pro Forma Consolidated Statement of Income for the
year ended December 31, 1997 has been prepared to reflect the following
transactions as if such transactions occurred on January 1, 1997: (i) the June
16, 1997 acquisition of Stowe, and (ii) the Offering and the application of
the estimated net proceeds to the Company from the Offering to repay certain
indebtedness and fund certain pension obligations. The pro forma information
set forth below is unaudited and not necessarily indicative of the results
that would actually have occurred if the transactions had been consummated as
of such dates or results that may be attained in the future. The pro forma
adjustments, as described in the Notes to the Unaudited Pro Forma Consolidated
Statement of Income, are based upon available information and upon certain
assumptions that the Company believes are reasonable. The Unaudited Pro Forma
Consolidated Statement of Income should be read in conjunction with "Selected
Financial Data", "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the Company's Consolidated Financial Statements
and related notes included elsewhere herein.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997
-------------------------------------------------
STOWE OFFERING
HISTORICAL ADJUSTMENTS(1) ADJUSTMENTS PRO FORMA
---------- -------------- ----------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Net sales................... $209,816 $3,703 $ -- $213,519
Cost of sales............... 178,051 3,037 (1,388)(2) 179,700
-------- ------ ------ --------
Gross profit................ 31,765 666 1,388 33,819
Selling, general &
administrative expenses.... 7,378 279 -- 7,657
-------- ------ ------ --------
Income from operations...... 24,387 387 1,388 26,162
Interest expense............ 3,334 590 (1,818)(3) 2,106
Other (income), net......... 549 -- -- 549
-------- ------ ------ --------
Income (loss) from
continuing operations
before income taxes........ 20,504 (203) 3,206 23,507
Provision (credit) for
income taxes............... 1,602 (15) 1,282 (4) 2,869
-------- ------ ------ --------
Net income (loss) from
continuing operations...... $ 18,902 $ (188) $1,924 $ 20,638
======== ====== ====== ========
Basic net income per share.. $ 3.63 $ 2.03
Diluted net income per share
from continuing operations. $ 1.52 $ 1.39
Basic weighted average
shares outstanding......... 5,208 10,178(5)
Diluted weighted average
shares outstanding......... 12,470 14,806(6)
</TABLE>

- --------
(1) Reflects the historical results of operations of Stowe, adjusted for the
period from January 1997 through the acquisition date as follows: (i)
additional depreciation expense of $119, (ii) additional interest expense
of $386 and (iii) amortization of goodwill of $21.

In connection with the acquisition of Stowe, the Company incurred
approximately $5,200 of additional related indebtedness. The adjustment for
additional interest expense assumes the indebtedness was incurred on
January 1, 1997 at an approximate rate of 8%.
(2) Reflects the reduction of pension expense due to the additional funding of
$15,000 to be contributed from the proceeds of the Offering, using an
actuarial assumption for return on assets of 9.25% and assuming the
contribution is made on January 1, 1997.
(3) Reflects the reduction of interest expense based on the repayment of the
Subordinated Notes and a portion of the indebtedness under the Credit
Agreement from the proceeds of the Offering.
(4) Reflects the pro forma tax effects of all adjustments using the Company's
statutory federal and state tax rate for the applicable period. See Note 7
to the Company's Financial Statements for a reconciliation from the
statutory tax rate to the effective tax rate.
(5) Reflects the historical weighted average shares outstanding, adjusted for
the 2,336 shares offered hereby. and the 2,634 warrant shares issued in
connection with the Offering.
(6) Reflects the historical weighted average shares outstanding, adjusted for
the 2,336 shares offered hereby.

18
<PAGE>

SELECTED FINANCIAL DATA

The following table sets forth certain historical financial data for fiscal
years (or periods) 1993 through 1997. The historical financial data for the
years ended December 31, 1995, 1996 and 1997 were derived from the audited
financial statements included elsewhere herein. The historical financial data
for the periods ended April 30 and December 31, 1993 and December 31, 1994
were derived from the audited financial statements of the Company not included
herein. The Company's Industrial Products Division, which was sold during
1997, has been treated as a discontinued operation and its results of
operations are excluded from the table.

<TABLE>
<CAPTION>
PERIODS FROM YEARS ENDED DECEMBER 31,
------------------------- --------------------------------------
JANUARY 1 MAY 1 TO
TO APRIL 30, DECEMBER 31,
1993(1)(2) 1993(1) 1994 1995 1996 1997
------------ ------------ -------- -------- -------- --------
(DOLLARS IN THOUSANDS, EXCEPT EARNINGS PER
SHARE)
<S> <C> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS:
Net sales............... $ 54,261 $ 86,628 $121,803 $115,738 $162,002 $209,816
Cost of sales........... 57,145 88,843 130,537 128,351 149,637 178,051
-------- -------- -------- -------- -------- --------
Gross profit (loss).... (2,884) (2,215) (8,734) (12,613) 12,365 31,765
Selling, general &
administrative
expenses............... 2,644 5,212 5,966 6,139 6,556 7,378
Restructuring charges... 2,115 -- -- -- -- --
-------- -------- -------- -------- -------- --------
Income (loss) from
operations............ (7,643) (7,427) (14,700) (18,752) 5,809 24,387
Interest expense....... 3,314 1,528 2,466 3,339 3,703 3,334
Other income (expense),
net................... (32) (4) 138 (55) 29 (549)
-------- -------- -------- -------- -------- --------
Income (loss) from
operations before
provision for income
taxes & cumulative
items................. (10,989) (8,959) (17,028) (22,146) 2,135 20,504
Reorganization credit.. 15,703 -- -- -- -- --
Provision for income
taxes................. -- -- -- -- -- 1,602
-------- -------- -------- -------- -------- --------
Net income (loss) from
continuing operations.. $ 4,714 $ (8,959) $(17,028) $(22,146) $ 2,135 $ 18,902
======== ======== ======== ======== ======== ========
Basic earnings per share
from continuing
operations(3).......... $ (3.39) $ (4.40) $ 0.42 $ 3.63
Diluted earnings per
share from continuing
operations(3).......... $ (3.39) $ (4.40) $ 0.20 $ 1.52
OTHER DATA:
EBITDA(4)............... $ (5,837) $ (9,899) $ 14,974 $ 33,635
Capital expenditures.... $ 965 $ 3,181 2,549 2,865 4,997 9,217
Depreciation expense.... 3,579 5,689 8,725 8,908 9,136 9,773
Cash used for operating
activities............. (1,644) (10,749) (2,374) (2,135)
Cash provided by (used
for) investing
activities............. (672) (1,847) (4,927) 16,088
Cash provided by (used
in) financing
activities............. 2,601 12,295 7,066 (13,489)
BALANCE SHEET (END OF
PERIOD)
Total assets............ $208,815 $182,235 $164,347 $164,696 $170,270 $165,461
Total debt.............. 39,200 29,108 31,665 43,932 51,848 39,716
Stockholders' equity
(deficit).............. 35,180 27,904 11,141 (9,751) (16,287) 5,017
BACKLOG(5).............. $236,901 $109,935 $100,648 $150,493 $233,730 $278,171
</TABLE>
- --------
(1) As a result of the Company's emergence from Chapter 11 bankruptcy
proceedings, the Company adopted "fresh start" accounting on April 30,
1993. As a result of the application of "fresh start" accounting, the
financial condition and results of operations of the Company for the dates
and periods subsequent to April 30, 1993 are not comparable to those prior
to May 1, 1993.
(2) The results of operations for the period from January 1 to April 30, 1993
do not include a $95,518 extraordinary gain on the forgiveness of
indebtedness and related interest thereon.
(3) Calculated in accordance with Note 14 to Financial Statements. The
earnings per share would not be meaningful for the periods ended April 30,
1993 and December 31, 1993 due to changes in the Company's capital
structure following the restructuring and change of ownership.
(4) EBITDA from continuing operations for any relevant period presented above
represents net income (loss) from continuing operations, plus income taxes
and interest expense, plus depreciation and amortization of goodwill and
other intangibles. EBITDA may not be comparable to similarly titled
measures reported by other companies. While EBITDA should not be construed
as a substitute for operating income or a better indicator of liquidity
than cash flow from operating activities, which are determined in
accordance with generally accepted accounting principles, it is included
herein to provide additional information with respect to the ability of
the Company to meet its future debt service, capital expenditure and
working capital requirements. EBITDA is not necessarily a measure of the
Company's ability to fund its cash needs. EBITDA is not presented for
partial periods. See the Company's Financial Statements and the related
notes thereto appearing elsewhere herein.
(5) Backlog represents unfilled purchase orders received by the Company as of
the end of each period.

19
<PAGE>

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

OVERVIEW

Substantially all of the Company's revenue is generated from the jet engine,
aerospace and general industrial markets. Approximately 59%, 67% and 73% of
the Company's revenues during 1995, 1996 and 1997, respectively, were derived
from the jet engine industry, an industry that is cyclical in nature and
subject to changes based on general economic conditions, airline profitability
and government spending. During the period from 1992 through 1994, the Company
experienced a significant deterioration in its core forging business. The
economic recession combined with an unprecedented decline in air traffic in
1992 led to a prolonged downturn in the jet engine and aerospace markets which
adversely impacted the Company's performance. Additionally, a reduction by the
U.S. government in military spending and reductions in the NASA budget
compounded the effects of the downturn in the jet engine and aerospace
markets.

Beginning in 1995, the Company implemented a program to reduce overhead
costs, improve worker productivity, shorten production cycle times and
rationalize product mix. This program has resulted in improved operating
margins and a lower break-even point. Over the same time period, the market
for forged components strengthened due primarily to increased demand from the
commercial airline industry. This resurgence in demand, which the Company
believes is attributable to a number of factors affecting airlines in the U.S.
and throughout the world, has resulted in strong revenue growth for the
Company. The Company recorded net sales of $162 million and net income of $2.1
million from continuing operations in 1996, and net sales of $210 million and
net income of $18.9 million from continuing operations in 1997.

The Company's sales are not subject to significant seasonal fluctuations.
However, production and resulting sales are subject to the number of "working
days" in any given period, with the fourth quarter containing more holidays
than each of the first three quarters of the year. Therefore, results for
various periods may vary materially due to the number of working days
available in any period, with the fourth quarter results typically lower than
the first three periods in any given year.

RECENT EVENTS

In June 1997, the Company acquired the assets and assumed certain of the
liabilities of Stowe. The acquisition price for Stowe was approximately $9.5
million. Located in Windsor, Connecticut, Stowe provides finish machining
services for jet engine components. With a customer list which mirrors that of
Ladish, Stowe provides Ladish with the ability to integrate vertically and
offer further value-added services to its core markets. See Note 15 to
Financial Statements.

On May 30, 1997, the Company sold substantially all of the assets, and
transferred a portion of the liabilities, of its Industrial Products Division
("IPD") to a subsidiary of Trinity Industries, Inc. As a part of the
consideration for the transaction, the Company received approximately $36.5
million in cash proceeds (of which $3.6 million is currently in escrow pending
resolution of post-closing issues). The Company elected to dispose of IPD in
order to better focus on its core forging business for the jet engine,
commercial and general industrial markets. IPD had been primarily focused on
the production of commodity fitting and flange products. The proceeds from the
sale were used to repay approximately $12 million of outstanding senior debt,
fund working capital requirements and finance $8.5 million of the Stowe
acquisition, and a portion has been applied to reduce the level of the
Company's unfunded pension liability. IPD has been treated as a discontinued
operation and its results of operations are excluded from those of the
continuing operations in the accompanying financial statements. See Note 13 to
Financial Statements.

RESULTS OF OPERATIONS

The following table sets forth for the periods indicated certain income
statement data from continuing operations of the Company expressed as a
percentage of net sales.

20
<PAGE>

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1995 1996 1997
----- ----- -----
<S> <C> <C> <C>
Net sales.......................................... 100.0% 100.0% 100.0%
Cost of sales...................................... 110.9 92.4 84.9
----- ----- -----
Gross profit (loss)................................ (10.9) 7.6 15.1
Selling, general & administrative expenses......... 5.3 4.0 3.5
----- ----- -----
Income (loss) from operations...................... (16.2) 3.6 11.6
Interest expense and other ........................ 2.9 2.3 1.8
----- ----- -----
Income (loss) from continuing operations before
provision for income taxes........................ (19.1) 1.3 9.8
Provision for income taxes......................... 0.0 0.0 0.8
----- ----- -----
Net income (loss) from continuing operations....... (19.1)% 1.3% 9.0%
===== ===== =====
</TABLE>

Year Ended December 31, 1997 Compared to Year Ended December 31, 1996

Net sales for the year ended December 31, 1997 were $209.8 million compared
to $162 million for 1996, an increase of 30%. The increase in sales in 1997
was largely the result of a continued resurgence in the jet engine market with
steady volume in the aerospace and general industrial markets. Ladish also
benefitted in 1997 as a result of increased sales and improved pricing due to
significant improvement in on-time deliveries and manufacturing productivity.
Gross profit increased by 157% in 1997 due to improved operating efficiencies,
greater absorption of fixed costs by higher sales volumes and improved pricing
in the commercial aerospace industry.

Selling, general and administrative expenses, as a percentage of sales, were
3.5% for 1997 compared to 4.0% for 1996. This reduced percentage, which
resulted primarily from the increase in sales, occurred even though foreign
sales, which involve greater commission expense than domestic sales, increased
from 40% of net sales in 1996 to 42% in 1997.

Interest expense for 1997 was $3.3 million compared to $3.7 million for
1996, a decrease of 11%. The decrease in interest expense was attributable to
lower loan balances of senior debt along with reduced interest rates.
Approximately $1.2 million of the interest expense in 1997 and $1.0 million in
1996 was attributable to non-cash payment-in-kind ("PIK") payments on certain
Subordinated Notes issued in late 1995 and early 1996. See "--Liquidity and
Capital Resources". As of December 31, 1997, the Company's senior debt had an
effective interest rate equal to the commercial paper rate plus 2.0% per annum
(reduced from 2.5% as of December 31, 1996). Effective interest rates averaged
8.3% during 1997 compared to 9.9% during 1996.

The Company's income before taxes increased from $2.1 million in 1996 to
$20.5 million in 1997, due principally to the substantial increase in net
sales.

The $1.6 million provision for taxes for 1997 represented a non-cash
accounting charge. The reversal of valuation allowances relating to pre-
restructuring NOLs requires the Company to record a tax provision and to
reflect the offset as an addition to paid-in capital, rather than as an offset
to the provision for income taxes. The Company intends to continue to use its
NOLs in the future to reduce actual payment of federal income taxes. The
future use of the NOLs is subject to certain statutory restrictions. See "--
Liquidity and Capital Resources--Net Operating Loss Carryforwards".

Contract backlog at December 31, 1997 was $278 million, compared to $234
million at December 31, 1996, an increase of 19%, due primarily to an increase
in orders.

Year Ended December 31, 1996 Compared to Year Ended December 31, 1995

The year 1996 represented a turn-around year for the Company as net sales
increased 40%, to $162 million from $115.7 million in 1995 and operating
earnings returned to a positive position for the first time in five years.

21
<PAGE>

The return to profitability was attributable to a significant increase in
sales to the jet engine market, a better product mix and improved operating
efficiencies throughout the Company. Gross profit increased by $25 million in
1996 over 1995 due to the increased volume of business in the jet engine
market, internal improvements accelerating the movement of product and pricing
increases associated with improved product mix and selection.

In 1996, selling, general and administrative expenses dropped to 4.0% of
sales from 5.3% in 1995. This reduction reflected improved cost controls
within the Company and an increased level of sales.

Interest expense for 1996 was $3.7 million compared to $3.3 million in 1995,
due to higher levels of indebtedness resulting from increased demands for
working capital in 1996. Approximately $1.0 million of the interest expense in
1996 was attributable to non-cash PIK payments on the Subordinated Notes.
Effective interest rates averaged 9.9% during 1996 compared with 11.1% during
1995.

The Company's income before taxes increased from a $22.1 million loss in
1995 to earnings of $2.1 million in 1996. This turnaround was attributable
principally to the increase in net sales, allowing fuller absorption of the
Company's fixed costs.

Contract backlog at December 31, 1996 was $234 million, compared to $150
million at December 31, 1995, an increase of 56%, due primarily to an increase
in orders.

LIQUIDITY AND CAPITAL RESOURCES

In July 1995, the Company entered into a credit agreement (the "Credit
Agreement") with General Electric Capital Corporation which expires on June
30, 2000. The Credit Agreement currently consists of two facilities: (i) a $45
million revolving line of credit (the "Revolving Credit Facility") and (ii) an
$8 million term loan (the "Term Loan"). All of the Company's assets have been
pledged to secure borrowings under the Credit Agreement. An affiliated party
of the senior lender is also a significant customer of the Company.

Borrowings under the Revolving Credit Facility bear interest at a rate equal
to the commercial paper rate plus 2.0% per annum (reduced from 2.5% as of
December 31, 1996). Availability under the Revolving Credit Facility is
subject to a borrowing base limitation which is calculated based upon eligible
accounts receivable and inventories reduced by the amount of any letters of
credit. At December 31, 1997, approximately $23 million was available and
undrawn under the Revolving Credit Facility.

The Term Loan is payable in 16 consecutive quarterly installments which
commenced on September 30, 1996. The first four quarterly installments were
$375,000 each, the next eight installments are $500,000 each beginning
September 30, 1997, and the last four installments are $625,000 each, with the
first installment due on September 30, 1999 and the last installment due on
June 30, 2000. Borrowings under the Term Loan bear interest at a rate equal to
the commercial paper rate plus 2.0% per annum. The Company may, at any time,
prepay the outstanding balance of the Term Loan, in whole or in part, subject
to a prepayment fee of 1% of the outstanding balance (or in the case of a
partial prepayment, of the amount prepaid) if the Term Loan is prepaid on or
before July 1, 1999. The balance of the Term Loan as of December 31, 1997 was
$5.5 million.

The Credit Agreement contains certain covenants, including, but not limited
to, restrictions on the incurrence of additional indebtedness and operations
and capital expenditures. In addition, the Company is required to maintain an
interest coverage ratio of 1.5 to 1 for 1997 and 2.0 to 1 thereafter and to
maintain a fixed charge coverage ratio of 1.0 to 1. At December 31, 1997, the
Company was in compliance with all covenants under the Credit Agreement and
believes that it will remain in compliance with such covenants for the
foreseeable future.

Transaction fees incurred in connection with the Credit Agreement were
approximately $1.1 million, $645,000 of which was refunded to the Company as a
result of its offering of Subordinated Notes in December 1995 and February
1996. In addition, the Company is required to pay an unused facility fee of
0.25% per annum on the average daily unused balance.

22
<PAGE>

In December 1995, the Company issued a total of $4.0 million of its 12%
senior subordinated secured notes due December 22, 2000 (the "Subordinated
Notes") to the ING entities and Grace. In February 1996, the Company completed
a second offering of Subordinated Notes when it issued an additional $5.3
million of Subordinated Notes to the ING entities, Grace and certain other
stockholders. The Subordinated Notes bear interest at a rate of 12% per annum,
are due in December 2000 and include detachable ten-year warrants to purchase
an aggregate of 7,775,722 shares of Common Stock at an exercise price of $1.20
per share. Interest on the Subordinated Notes is payable quarterly in the form
of additional Subordinated Notes. The Subordinated Notes are secured by a
second security interest in substantially all of the Company's assets, and are
subordinated to indebtedness under the Credit Agreement. The Subordinated
Notes include a number of affirmative and negative covenants, including, but
not limited to, restrictions on the incurrence of indebtedness junior to
obligations under the Credit Agreement and senior to the Subordinated Notes.
Upon a change in control of the Company, the Company is required to redeem the
outstanding Subordinated Notes at a price equal to the outstanding principal
amount plus accrued and unpaid interest. The Company believes that any
extraordinary gain or loss on the ultimate retirement of Subordinated Notes
would not be material to the financial statements. At December 31, 1997 the
Company was in compliance with all covenants under the Subordinated Notes.
Proceeds from the sale of the Subordinated Notes were used to fund working
capital requirements associated with an increase in customer orders. See Note
3 to Financial Statements.

During 1997, cash used for operations decreased from $2.4 million to $2.1
million. The decrease was due primarily to the significant improvement in net
income, offset by increases in accounts receivable and inventories and
decreases in accounts payable and accrued liabilities. The Company also
received $32.9 million upon the sale of IPD. The proceeds were used primarily
to repay senior debt and reduce pension liabilities.

Due to the significant increase in the Company's shipments and backlog,
accounts receivable increased to $27.6 million at December 31, 1997 from $21.8
million at December 31, 1996. During 1997, the Company's inventories increased
from $36.0 million to $48.8 million. Ladish funded this growth in working
capital through internally generated cash and a portion of the proceeds from
the sale of IPD.

Capital expenditures for 1997 were $9.2 million versus $5.0 million for
1996. For 1998, Ladish anticipates increasing its capital investment level to
approximately $12.0 million. In addition, a portion of the proceeds of the
Offering may be used to improve and expand the Company's operations. See "Use
of Proceeds".

Net Operating Loss Carryforwards

At December 31, 1997, the Company had approximately $57.0 million of net
operating loss carryforwards ("NOLs") for federal income tax purposes, of
which approximately $21.4 million are restricted due to the 1993 change of
ownership of the Company. To the extent that the Company generates taxable
income, these NOLs will reduce the federal income taxes of the Company in
future years, and therefore increase its after-tax cash flow. Under Section
382 of the Code, certain restrictions on the utilization of NOLs or credit
carryforwards will apply in the event of an ownership change of a corporation
entitled to use such carryforwards. Such an ownership change occurs when there
is a change in the ownership of the stock of such corporation of more than 50
percentage points over a period of not more than three years. Those
restrictions, if applicable, would permit the utilization of only a specified
portion of the NOLs in any taxable year following the ownership change.

It is likely that the sale of Common Stock pursuant to the Offering,
combined with sales of Common Stock by the Company's shareholders during the
past two years, will cause an ownership change of the Company (within the
meaning of Section 382 of the Code). If such an ownership change occurs, the
ability of the Company to fully utilize the NOLs could be adversely affected,
depending on factors such as the time at which the ownership change occurs,
the equity value of the Company at the time of such ownership change,
prevailing interest rates at the time of such change, the ability of the
Company to generate income to utilize the NOLs both before and after the
ownership change and the realization of any built-in gains. Based on the
limitations noted above, and the Company's recent history of losses, the
Company has recorded a valuation allowance against the entire amount of these
NOLs. Assuming that this ownership change occurs, based on the Company's
estimate of its fair market value, an additional restriction of approximately
$8 million on the utilization of the Company's NOLs would be created after the
date of such change in ownership. The Company will continue to evaluate the
ultimate realizability of the NOLs in the future. See Note 7 to Financial
Statements.

23
<PAGE>

Pensions

On June 17, 1996, the Company and the Pension Benefit Guarantee Corporation
(the "PBGC") entered into a Payment and Security Agreement (the "PBGC
Agreement") whereby the Company was able to defer the immediate payment of the
minimum funding for plan year 1995 for certain of the Company's defined
benefit pension plans. The PBGC Agreement also granted a third lien to the
PBGC on certain of the Company's physical assets in Wisconsin.

The Company and the PBGC entered into an Amended Payment and Security
Agreement on October 14, 1997 (the "Amended PBGC Agreement"). Pursuant to the
Amended PBGC Agreement, the Company agreed to increase the funding of six
underfunded pension plans by an aggregate of approximately $18 million. Of
this amount, the Company has discharged $14 million through cash
contributions, and intends to discharge approximately another $4 million
through the merger of certain overfunded plans into the underfunded plans. The
PBGC has agreed that the above increases in the funding levels for those plans
satisfy the Company's funding obligation for plan years 1995-1997 and satisfy
the Company's obligation under the PBGC Agreement which in turn obligate the
PBGC to release its third lien on the Company's physical assets in Wisconsin.

In addition to the amounts specified above and the $15 million of proceeds
from the Offering which the Company intends to contribute to the underfunded
plans, the Company intends to make cash contributions into the pension trust
for the underfunded plans of approximately $7.4 million in 1998 and $7.8
million in 1999.

Impact of Inflation

The Company's operating income is affected by changes in price levels and in
particular pricing from its raw material suppliers. The Company's contracts
with customers generally provide for fixed prices with limited protection
against cost increases. Gross margins, therefore, are affected by supplier
price changes during the duration of its customer contracts. The Company
attempts to minimize its risk by entering into fixed price contracts with its
raw material suppliers.

24
<PAGE>

BUSINESS

GENERAL

Ladish Co., Inc. ("Ladish" or the "Company") is a leading producer of highly
engineered, technically advanced components for the jet engine, aerospace and
general industrial markets.

Ladish engineers, produces and markets high-strength, high-technology forged
and formed metal components for a wide variety of load-bearing and fatigue-
resisting applications in the jet engine, aerospace and industrial markets.
The Company has been engaged in producing parts for aircraft engines and other
military, aerospace and general industrial applications for over 50 years.
Products developed by Ladish include (i) rotating jet engine parts, such as
fan, compressor and turbine discs, and jet engine casings, (ii) other
aerospace products, including structural aircraft components, landing gear
components, flap tracks, helicopter rotor parts and shafts and large missile
components and (iii) general industrial forgings such as large crankshafts for
power generation equipment. These products require a high degree of
engineering skill and technical expertise and are generally manufactured from
titanium, high-temperature alloys, steel or aluminum. Components for such
rigorous applications often necessitate manufacture through forging, which
yields a seamless product with a high strength-to-weight ratio relative to
castings. Principal customers include all of the major jet engine
manufacturers, as well as both commercial and government aircraft and
satellite manufacturers, power plants and manufacturers of farm and heavy-duty
off-road equipment. Approximately 89% of the Company's 1997 sales were to the
aerospace industry.

HISTORY

The Ladish forge shop was founded in 1905. For the next 75 years, Ladish Co.
continued to grow its operations under the control of the Ladish family.
During this period, Ladish Co. supplied forged products to virtually every
industry, including the aerospace industry beginning in the 1930s, and became
a leader within the commercial and military aerospace industry for forged
products and material application.

Beginning in 1981, Ladish Co. experienced a series of ownership changes. The
Company was incorporated as the successor to Ladish Co. in connection with one
of these transactions. From 1991 until the middle of 1995, the aerospace
industry experienced a severe cyclical downturn. This decline resulted from a
combination of reduced demand from the commercial airline industry, which was
suffering from weak passenger revenues and overcapacity, and reduced military
budgets as a result of the end of the Cold War. At the same time, the Company
faced substantial debt service on $110 million of subordinated debentures
publicly issued in connection with a 1987 leveraged buyout. In 1992, when the
number of owners of subordinated debentures fell below fifty, the Company
terminated its reporting obligations under the Exchange Act. In February 1993,
after missing two interest payments on the subordinated debentures, the
Company filed a voluntary petition for reorganization under Chapter 11 of the
U.S. Bankruptcy Code. Under this "pre-packaged" plan, each $1,000 principal
amount of subordinated debentures was converted into approximately 43 shares
of Common Stock; no other class of creditor was affected. The plan was
confirmed and the Company emerged from reorganization in April 1993.

Since late 1995, demand for forged components has strengthened, primarily
due to increased demand from the commercial aerospace industry. The Company
believes the principal reasons for the recent improvement in new aircraft
orders include increased demand for air travel in Asia, the recent improved
profitability of U.S. commercial airlines, and U.S. Environmental Protection
Agency rules requiring airlines to reduce noise, which, in turn, have prompted
airlines to modernize their fleets. Accordingly, airlines have been
retrofitting existing aircraft or purchasing new jet engines.

In addition to the favorable trends in commercial aviation discussed above,
world airframe manufacturers are seeking to improve the affordability and
efficiency of their products by reducing the number of engines on airplanes.
Newer engines, therefore, must be bigger and run faster and at higher
temperatures, which in turn has increased demand for components that are
structurally larger and more metallurgically complex. The Company believes
that it is well positioned to capitalize on the current upturn in the
commercial aerospace industry in wide-body aircraft as well as regional and
business jets. The Company believes that the combination of its unique

25
<PAGE>

equipment, metallurgical expertise and leading-edge computer process modeling
of forging, heat treating and machining operations, together with its
industry-recognized core competencies in large and complex forgings, will
enable the Company to compete effectively for this demand.

BUSINESS STRATEGY

Maximize Benefits from Industry Upturn

Make Strategic Acquisitions

As a part of the global consolidation of the aerospace industry, management
believes there are numerous opportunities to grow and enhance the Company
through strategic acquisitions. As an example of these opportunities, in June
1997, Ladish acquired substantially all of the assets and assumed a portion of
the liabilities of Stowe. Located in Windsor, Connecticut, Stowe provides
finish machining services and products to the jet engine industry. Operating
Stowe will further Ladish's efforts to capitalize on the upturn in the jet
engine industry through the value-added services provided by Stowe to the
Company's existing customer base and the vertical integration opportunities
offered through Stowe. With a customer list which mirrors that of Ladish,
Stowe provides Ladish with the ability to integrate vertically and offer
further value-added services to its core markets.

Leverage Core Competencies into New Products and Markets

The Company's growth strategy also includes continuing to identify new
products and markets where it can become a leading supplier by using its core
competencies in metallurgy, precision metal-working and the management of
complex manufacturing processes. The Company has expanded its processing
technology to alloys such as aluminum-lithium in order to compete for both
solid and liquid fuel motor cases for future generations of launch vehicles
such as the Expendable Extended Launch Vehicle ("EELV"). In addition, the
Company's ability to shear-form various alloys has enabled it to develop
technically advanced domes, rings and cylinders for launch vehicles and
seamless titanium drums used to manufacture copper foil for use by the
telecommunications industry. Ladish's metallurgical expertise, combined with
the world's largest counterblow hammer, has enabled it to become the leading
supplier of titanium hemispheres in the commercial satellite industry and
large steel crankshafts in the power generation industry.

Additionally, the Company believes that its manufacturing, engineering and
technical expertise gives it the ability to develop and process next
generation jet engine components for increased performance of high-temperature
materials as well as to develop products for non-aerospace applications such
as farm and heavy-duty off-road machinery. For example, the Company is
currently producing the largest known crankshaft in a closed-die for use in
the international power generation market.

Enhance Market Access Through Customer Cooperation and Strategic Alliances

Ladish intends to continue its long-standing practice of working closely
with its customers and strategic participants in the forging industry. The
Company works closely with customers by using its manufacturing and technical
expertise to engineer, tool and manufacture new products according to customer
specification. In

26
<PAGE>

exchange, the Company is often designated as the sole-source supplier by its
customers for the life of the program. In addition, Ladish's well-respected
research and development effort has enabled the Company to establish and
maintain strong relationships with GE, Rolls-Royce PLC ("Rolls-Royce"), Pratt
& Whitney, Lockheed Martin Corp. and the United States Air Force on a number
of development projects, many of which are customer funded. Management
believes that these projects position the Company to win early production
contracts on new equipment.

In addition to working closely with customers, Ladish intends to develop
strategic alliances with other participants in the forging industry to take
advantage of synergy opportunities. In September 1995, the Company entered
into a joint venture with Weber Metals, Inc. ("Weber"), a subsidiary of German
conglomerate Otto Fuchs Metallwerke KG, whereby the Company combines its
engineering and metallurgical expertise with the capabilities of Weber's
38,000 ton hydraulic press. The product which results from the combination of
the Company's technology with Weber's press frees up Company capacity, reduces
manufacturing costs and gives the Company significantly improved access to
high-temperature niches of the jet engine market. Under the terms of the Weber
agreement, Ladish purchases forging time from Weber at a fixed rate. The
resultant products are sold by Ladish, and the profits are divided between the
parties according to a formula agreed between the parties on a product-by-
product basis. The agreement has a term of ten years and is not terminable by
either party during the first five years; after five years either party may
give the other 365 days notice of its intent to terminate. No other such
alliances have yet been formed.

Improve Profitability Through Operating Efficiencies and Lower Costs

Since mid-1995, the Company has significantly reduced overhead costs,
improved worker productivity, shortened production cycle times and
rationalized its product mix in order to improve operating margins and lower
its break-even point. During this time, management has invested in new
technologies, developed more efficient manufacturing processes and focused on
selling higher value-added products. By reducing lot sizes, set-up times and
process times throughout its facility, the Company has reduced its average
cycle time by approximately 75% from 1994 to 1997. In addition, pieces per
man-hour increased 16% from 1995 through 1997. Sales per employee have
increased 22% from 1996 to 1997. As a result of the implementation of process
improvement techniques coupled with applied synchronous manufacturing
concepts, the Company has reduced its costs and improved product quality as
measured by the reduction of rework and scrap. In addition, the Company is
currently computerizing the operation of its hammers, which the Company
believes will lead to additional operational efficiency and further improve
the quality of its forgings. Ladish is also implementing cellular
manufacturing techniques in an effort to further decrease production times and
reduce costs.

Focus on Core Business

In the fourth quarter of 1996, the Company decided to focus its efforts on
its core forging business and the markets it serves. Consequently, Ladish
determined that IPD, with its commodity fitting and valve business, was not
strategic to the future direction of the Company. In May 1997, the Company
sold substantially all of the assets of IPD to a subsidiary of Trinity
Industries, Inc. for cash consideration of $36.5 million and the assumption of
certain liabilities. Ladish utilized the proceeds from the sale of IPD to
reduce debt, fund the Stowe acquisition and fund a significant portion of its
underfunded pension liability. The sale has also allowed management to focus
its time and energy on the growth of the core business and to identify
strategic acquisition opportunities such as Stowe.

PRODUCTS AND MARKETS

The Company markets its forging products primarily to manufacturers of jet
engines, commercial business and defense aircraft, helicopters, satellites,
heavy-duty off-road vehicles and industrial and marine turbines. The principal
forging markets served by the Company are jet engine, commercial aerospace
(defined by Ladish as

27
<PAGE>

satellite, rocket and aircraft components other than jet engines) and general
industrial forgings. The amount of revenue and the revenue as a percentage of
total revenue by market were as follows for the periods indicated:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------
1995 1996 1997
-------- -------- --------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Jet Engine Forgings......................... $ 69 59% $108 67% $153 73%
Aerospace Forgings.......................... 24 21 31 19 35 17
General Industrial Forgings................. 23 20 23 14 22 10
---- --- ---- --- ---- ---
Total..................................... $116 100% $162 100% $210 100%
==== === ==== === ==== ===
</TABLE>

Jet Engine Forgings

The Company is a market leader in manufacturing large, complex forged
components for use in jet engines. Products include fan, compressor and
turbine discs, shafts for large and small jet engines, and containment cases
for larger jet engines. The Company manufactures a variety of jet engine
forgings for virtually every active commercial and military jet engine program
in existence today, including those of GE, Rolls-Royce, Pratt & Whitney and
Allison.

Because jet engines may produce in excess of 100,000 pounds of thrust and
may subject components to temperatures exceeding 1,350 degrees Fahrenheit,
producing components for such extreme conditions requires precision
manufacturing and expertise with titanium, nickel-based superalloys and powder
metallurgy alloys. In addition, rotating parts such as fan, compressor and
turbine discs and shafts must be manufactured to precise quality
specifications. These products all require forging, which imparts structural
integrity into key engine parts and allows them to withstand high temperatures
and stress. Further, newer jet engines are bigger, run hotter and spin faster.
As this market shift continues, the demand for even larger forged components
utilizing materials that must withstand ever-greater stress at higher
operating temperatures is expected to grow. The Company believes it possesses
the industry's largest isothermal press, shear forming machine, ring rolling
machine and counterblow hammer. The Company believes combining these unique
pieces of equipment with years of material process technology expertise and
computer process modeling of the forging, heat treating, and machining
operations positions the Company to compete effectively for parts for these
newer engines. Furthermore, the Company's joint venture with Weber allows the
Company to free up Company capacity and reduce manufacturing costs, while
providing the Company access to a technically demanding niche of the jet
engine market.

Aerospace Forgings

The Company manufactures products utilized in commercial and military
aircraft (including both airplanes and helicopters), such as landing gear
components, rotors, hubs, shafts and wing structurals and beams. Critical
structural components must be strong, yet lightweight. Many of these forgings,
therefore, are made from titanium and high-alloy steels. The Company believes
that given its expertise in material process technology and its unique
equipment, Ladish is well positioned to meet the increasing demand by air
carriers and corporate users for new aircraft and the U.S. military's demand
for helicopter spare parts. For example, as a result of the Company's strong
relationship with Sikorsky, the Company is manufacturing all of the large
titanium power transmission components for Sikorsky's next generation
helicopter.

The Company also manufactures components for solid and liquid motors for
launch vehicles, as well as forgings for satellite fuel tanks. The Company has
produced the cylinders, skirts and domes for the solid rocket motor cases for
every Titan IV and Space Shuttle launch recorded to date. As programs such as
the EELV have developed, the Company has expanded its processing technology to
alloys other than steel, such as aluminum-lithium, in order to compete for
both solid and liquid cylinders for future launch platforms. The Company also
produces titanium hemisphere fuel tanks that are forged on its largest
counterblow hammer. Satellite fuel systems use two of these hemispheres,
welded together, for storing liquid propellant for the life of each satellite.
The Company expects that the satellite launch industry will grow
significantly, primarily to service the global needs of the telecommunications
industry. Launch vehicles are evolving in an effort to service this demand.

28
<PAGE>

General Industrial Forgings

The Company manufactures a number of key industrial components in which
structural integrity, product strength and toughness drive the need for a
forged product. These components include large crankshafts, axles, gears,
reaction hubs, links and yokes for such customers as Caterpillar, Inc.
("Caterpillar") and Allison. As the components become larger and more complex,
the Company can utilize its full range of equipment, knowledge and technical
expertise to manufacture these products. Using the Company's expertise in
forging engineering and its unique manufacturing equipment, the Company has
recently expanded into manufacturing large crankshafts for land-based and
marine power generation equipment. The Company believes this market will
continue to grow based upon the need to develop the infrastructure of emerging
nations.

MARKETING AND SALES

The forging product sales force (consisting of 14 engineers), based in
Cudahy, Wisconsin, is supported by the Company's metallurgical staff of 97
engineers and technicians. These technically trained sales engineers,
organized along product line and customer groupings, work with customers on an
ongoing basis to monitor competitive trends and technological innovations.
Additionally, sales engineers consult with customers regarding potential
projects and product development opportunities. During the past few years, the
Company has refocused its marketing efforts on the jet engine components
market and the commercial aerospace industry.

The Company is actively involved with key customers in joint cooperative
research and development, engineering, quality control, just-in-time inventory
control and computerized process modeling programs. The Company has entered
into strategic life-of-the-program contracts for a number of sole-sourced
products with each of Allison, Sikorsky and Thyssen for major programs. The
Company believes that these contracts are a reflection of the aerospace and
industrial markets' recognition of the Company's manufacturing and technical
expertise.

The research and development of jet engine components is actively supported
by the Company's Advanced Materials and Process Technology Group. The
Company's long-standing commitment to research and development is evidenced by
its industry-recognized materials and process advancements such as processing
aluminum-lithium, Udimet 720 and titanium aluminides. The experienced staff
and fully equipped research facilities support Ladish sales through customer-
funded projects. Management believes that these research efforts position the
Company to participate in future growth in demand for critical advanced jet
engine components.

CUSTOMERS

The Company's top three customers, Rolls-Royce, United Technologies and
General Electric, accounted for approximately 48% of the Company's revenues in
1995, 54% of the Company's revenues in 1996 and 59% of the Company's revenues
in 1997. No other customer accounted for ten percent or more of the Company's
sales.

Caterpillar, Volvo and Allison are also significant customers of the
Company. Because of the relatively small number of customers for some of the
Company's principal products, the Company's largest customers exercise
significant influence over the Company's prices and other terms of trade. See
"Risk Factors--Reliance on Major Customers".

A substantial portion of the Company's revenues are derived from long-term,
fixed price contracts with major engine and aircraft manufacturers. These
contracts are typically "requirements" contracts under which the purchaser
commits to purchase a given portion of its requirements of a particular
component from the Company. Actual purchase quantities are typically not
determined until shortly before the year in which products are to be
delivered. The Company attempts to minimize its risk by entering into fixed-
price contracts with its raw material suppliers. Additionally, a portion of
the Company's revenue is directly or indirectly related to government
spending, particularly military and space program spending. See "Risk
Factors--Reductions in Government Spending".

BACKLOG

The average amount of time necessary to manufacture the Company's products
is five to six weeks from the receipt of raw material. The timing of the
placement and filling of specific orders may significantly affect the
Company's backlog figures, which are subject to cancellation for a variety of
reasons. As a result, the Company's

29
<PAGE>

backlog may not be indicative of actual results or provide meaningful data for
period-to-period comparisons. The following table provides certain information
with respect to the Company's total firm backlog as of December 31, 1996 and
1997:

<TABLE>
<CAPTION>
AS OF DECEMBER
31,
------------------
1996 1997
-------- --------
(DOLLARS IN
MILLIONS)
<S> <C> <C> <C> <C>
Jet Engine............................................ $166 71% $211 76%
Aerospace............................................. 54 23 53 19
General Industrial.................................... 14 6 14 5
---- --- ---- ---
Total............................................... $234 100% $278 100%
==== === ==== ===
</TABLE>

At December 31, 1997, approximately $208 million of total firm backlog was
scheduled to be shipped within one year and the remainder in subsequent years
in comparison to December 31, 1996 backlog of approximately $189 million which
was scheduled for shipment within one year. Sales during any period may
include sales which were not part of the backlog at the end of the prior
period. Due to the customer-specified nature of the Company's products, the
Company does not accept product returns.

MANUFACTURING PROCESS

Forging

Forging is the process by which desired shapes, metallurgical
characteristics and mechanical properties are imparted to metal by heating and
shaping it through hammering, pressing, extruding or ring rolling. Cold
forming of cylindrical shapes is performed utilizing a proprietary shear
forming process. The Company forges alloys of titanium, aluminum and steel as
well as high-temperature nickel-based superalloys.

The Company forges its products at its facilities in Cudahy, Wisconsin. Much
of the Company's forging business is capital intensive, requiring large and
sophisticated hydraulic and mechanical presses, single-action and counterblow
hammers and extensive facilities for heat treatment, machining inspection and
testing of components after forging. The Company has independently designed
and built much of its unique and specialized equipment. The Company considers
its manufacturing equipment to be in good operating condition and adequate for
the purposes for which it is being used.

The Company employs all major forging methods, including the following:

Open-Die Forging. In this process, the metal is hammered or pressed between
dies that never completely surround the metal, thus allowing the metal to be
observed during the process. Typically, open-die forging is used to create
relatively simple, preliminary shapes to be further processed by closed-die
forging or for simple low-quantity orders.

Closed-Die Forging. Closed-die forging involves hammering or pressing heated
metal into the required shapes and size determined by machined impressions in
specially prepared dies which exert three dimensional control on the metal.
The Company's multiple-ram process featured on the Company's 15,000 ton press
enables the Company to produce extremely large, complex-shaped forgings in a
single heating and pressing cycle. In hot-die forging, a unique type of
closed-die process, the dies are heated to a temperature approaching the
transformation temperature of the materials being forged which allows the
metal to flow more easily within the die cavity, producing forgings with
superior surface conditions, stronger metallurgical structures, tighter
tolerances, enhanced repeatability of the part shapes and greater
metallurgical control. Both titanium and nickel-based superalloys are forged
using this process, in which the dies are heated to a temperature of
approximately 1,300 degrees Fahrenheit.

Isothermal Forging. Isothermal forging is a closed-die pressing process in
which the dies are heated to the same temperature as the metal being forged,
typically in excess of 1,700 degrees Fahrenheit. The forged material typically
consists of nickel-based superalloy and powder metallurgy alloys. Because of
the extreme temperatures necessary for forming these alloys, the dies must be
made of refractory metal (such as molybdenum) so that the

30
<PAGE>

die retains its strength and shape during the forging process. Because the
dies may oxidize at these elevated temperatures, the forging process is
carried on in a vacuum or inert gas atmosphere. The Company's two isothermal
presses allow it to produce near-net shape components (requiring less
machining by the customer) made from nickel-based superalloys. The Company
believes that its 10,000 ton isothermal press is the largest in the industry,
allowing it to press larger, more complex parts than the Company's
competitors.

Ring Rolling. Ring rolling involves rotating heated metal rings through
presses to produce seamless cylindrical and/or contoured products. The Company
believes that it has the largest ring-rolling machine in the industry, with
the capability of producing metal rings that weigh up to 350,000 pounds with
outside diameters as large as 28 feet and face heights up to 10 feet. This
process is also utilized to extrude large, heavy wall preforms used in the
manufacture of roll form cylinders.

Shear Forming. Shear forming is a process whereby metal cylinders are formed
by thinning the cylinder walls while increasing the length of the cylinder
without heating the metal. The process yields uniform metallurgical properties
and maximizes metal usage allowing formation of cylinders much longer than
those capable of being formed by conventional forge methods. The Company
believes that it has the largest shear forming machine in the industry, which
allows the Company to produce larger and more complex thin-walled components
for the missile and rocket industry.

Conversion

The Company converts ingot material, primarily titanium, into a range of
billet sizes through a proprietary forging process. This yields superior
metallurgical properties utilized in the manufacture of jet engine components.
The Company utilizes its conventional press capabilities and subjects the
material to high sensitivity ultrasonic testing performed on an exclusive
multi-zone ultrasonic unit, which management believes is one of only three in
the aerospace industry. This unit provides state-of-the-art material testing
to meet the most stringent customer requirements.

Modeling

For the successful engineering of highly complex forged shapes and demanding
metallurgical specifications, the Company uses computer-based modeling. This
modeling has enabled the Company to improve die design, improve predictability
of metal flow and enhance grain flow characteristics. The Company has embarked
upon a program with the assistance of the United States Air Force and the
cooperation of several major universities to advance its modeling capabilities
to the next generation of modeling with three-dimensional models. A number of
Ladish's major customers rely on the Company's unique expertise in this area
to assist them with processing issues.

Support Operations

The Company manufactures most of its own forging dies out of high-strength
steel and molybdenum. These dies can weigh in excess of 50 tons and can be up
to 20 feet in length. In manufacturing its dies, the Company utilizes its
customers' drawings and engineers the dies using CAD/CAM equipment and
sophisticated metal flow computer models that simulate metal flow during the
forging process. This activity improves die design and process control and
permits the Company to enhance the metallurgical characteristics of the
forging and reduce lead times.

Ladish has machine shops with computer-aided profiling equipment, vertical
turret lathes and other equipment that it employs to rough machine products to
a shape allowing inspection of the products. The Company also operates rotary
and car-bottom heat treating furnaces that enhance the performance
characteristics of the forgings. These furnaces have sufficient capacity to
handle all the Company's forged products.

31
<PAGE>

Testing

Because the Company's products endure high performance end uses, rigorous
testing is necessary and is performed internally by Company engineers.
Throughout the manufacturing process, numerous tests and inspections are
performed to insure the final quality of each product; statistical process
control ("SPC") techniques are also applied throughout the entire
manufacturing process. The Company subjects its products to extensive quality
inspection and contract qualification procedures involving zyglo, chemical
etching, ultrasonic, red dye and electrical conductivity testing facilities.

RAW MATERIALS

Raw materials used by the Company in its forgings include alloys of
titanium, nickel, steel, aluminum, tungsten and other high temperature alloys.
The major portion of metal requirements for forged products are purchased from
major metal suppliers producing forging quality material as needed to fill
customer orders. The Company has two or more sources of supply for all
significant raw materials.

The titanium and nickel-based superalloys used by the Company have a
relatively high dollar value. Accordingly, the Company recovers and recycles
scrap materials such as machine turnings, forging flash, solids and test
pieces.

The Company's most significant raw materials consist of nickel and titanium
alloys. Its principal suppliers of nickel alloys include Special Metals
Corporation and Allvac Corporation. Its principal suppliers of titanium alloys
are Titanium Metals Corporation of America, Oregon Metallurgical Corp. and
Reactive Metals, Inc. Each of these suppliers has experienced increases in the
market prices of the elements (e.g. nickel, titanium, cobalt) that they use in
manufacturing their products. The Company often has fixed-price contracts with
its suppliers. Because aerospace suppliers generally have alternative markets
for their products where they may have greater ability to increase their
prices, suppliers have in some cases diverted materials away from the
aerospace industry in favor of alternative markets. During 1996, the Company's
lead time for deliveries from its suppliers increased from 20 weeks to 45
weeks in the case of titanium alloys and from 22 weeks to 48 weeks in the case
of nickel-based alloys. In the event of cancellation by its customer because
of production delays, the Company may, under certain circumstances, obtain
reimbursement from the customer if the material cannot be diverted to other
uses. Costs of material already on hand, along with any conversion costs
incurred, are usually billed to the customer unless transferable to another
order. As demand for the Company's products grew during fiscal year 1995, and
prices of raw materials rose, the Company experienced certain raw material
shortages and production delays. Although this situation improved during the
first nine months of 1996, it had a negative impact on overall revenues.
Availability of titanium, due to limited mill capacity, has yet to recover to
the level demanded by the jet engine industry. To counter this situation, the
Company has established long-term relationships and technical support with the
mills in an effort to secure its position for raw material. See "Risk
Factors".

The Company has successfully sought price increases and other financial
considerations from its customers which have allowed it to meet the rising
prices demanded by suppliers. In addition, the Company, its customers and
suppliers have undertaken active programs for supply chain management which
are reducing overall lead times and the total cost of raw materials.

ENERGY

Energy is required by the Company primarily for heating metals to be forged,
heat treating materials after forging, operating equipment, die-sinking and
machining. The Company uses natural gas and electricity in varying amounts at
its manufacturing facilities; however, natural gas is traditionally the
largest energy source. Supplies of natural gas and electricity have been
sufficient and there is no anticipated shortage for the future. In the event
of shortages of natural gas, the Company maintains back-up supplies of propane
for heating and processing.

32
<PAGE>

EMPLOYEES

As of December 31, 1997, the Company had approximately 1,075 employees, of
whom 770 were engaged in manufacturing functions, 90 in executive and
administrative functions, another 165 in technical functions, and 45 in sales
and sales support. At such date, approximately 890 employees, principally
those engaged in manufacturing, were represented by labor organizations under
collective bargaining agreements. The following table sets forth certain
information with respect to the Company's collective bargaining agreements
with its employees:

<TABLE>
<CAPTION>
NUMBER OF EMPLOYEES
REPRESENTED BY COLLECTIVE
UNION EXPIRATION DATE BARGAINING AGREEMENT
----- --------------- -------------------------
<S> <C> <C>
International Association of Machinists &
Aerospace Workers, Local 1862 February 20, 2000 378
International Brotherhood of Boilermakers, Iron
Ship Builders, Blacksmiths, Forgers & Helpers,
Subordinate Lodge 1509 September 24, 2000 212
International Federation of Professional &
Technical Engineers, Technical Group, Local 92 August 20, 2000 118
International Association of Machinists &
Aerospace Workers, Die Sinkers, Local 140 March 26, 2000 81
Office & Professional Employees International
Union, Clerical Group, Local 35 July 1, 2001 45
International Federation of Professional &
Technical Engineers, Professional Group, Local 92 March 1, 1998 26
International Brotherhood of Electrical Workers,
Local 662 October 15, 2000 26
Service Employees International, Local 150 April 23, 2000 4
</TABLE>

RESEARCH AND DEVELOPMENT

The Company maintains a research and development department which is engaged
in applied research and development work primarily relating to the Company's
forging operations. The Company works closely with customers, universities and
government technical agencies in developing advanced forgings, materials and
processes. The Company spent approximately $3.8 million, $3.4 million, and
$3.4 million on applied research and development work during 1995, 1996 and
1997, respectively.

Although the Company owns patents covering certain of its processes, the
Company does not consider these patents to be of material importance to the
Company's business as a whole. The Company considers certain other information
that it owns to be trade secrets and the Company takes measures to protect the
confidentiality and control the disclosure and use of such information. The
Company believes that these safeguards adequately protect its proprietary
rights and the Company vigorously defends these rights.

The Company owns or has obtained licenses for various trademarks, trademark
registrations, service marks, service mark registrations, trade names,
copyrights, copyright registrations, patent applications, inventions, know-
how, trade secrets, confidential information and any other intellectual
property that are necessary for the conduct of its businesses (collectively,
"Intellectual Property"). The Company is not aware of any existing or
threatened patent infringement claim (or of any facts that would reasonably be
expected to result in any such claim) or any other existing or threatened
challenge by any third party that would significantly limit the rights of the
Company with respect to any such Intellectual Property or to the validity or
scope of any such Intellectual Property. The Company has no pending claim
against a third party with respect to the infringement by such third party of
any such Intellectual Property that, if determined adversely to the Company,
would individually or in the aggregate have a material adverse effect on the
Company's financial condition or results of operations. While
the Company considers all of its proprietary rights as a whole to be
important, the Company does not consider any single right to be essential to
its operations as a whole.

33
<PAGE>

COMPETITION

The sale of forged metal components is highly competitive. Certain of the
Company's competitors are larger than the Company, and have substantially
greater capital resources. Although the Company is the sole supplier of
several sophisticated components required by prime contractors under a number
of governmental programs, many of the Company's products could be replaced
with other similar products of its competitors. However, the significant
investment in tooling, the time required and the cost of obtaining the status
of a "certified supplier" are barriers to entry. Competition is based on
quality (including advanced engineering and manufacturing capability), price
and the ability to meet delivery requirements. See "Risk Factors--
Competition".

PRODUCT LIABILITY EXPOSURE

The Company produces many critical engine and structural parts for
commercial and military aircraft. As a result, the Company faces an inherent
business risk of exposure to product liability claims. The Company maintains
insurance against product liability claims, but there can be no assurance that
such coverage will be adequate for liabilities actually incurred. The Company
has not experienced any material loss from product liability claims and
believes that its insurance coverage is adequate to protect it against any
claims to which it may be subject.

ENVIRONMENTAL, HEALTH AND SAFETY MATTERS

The Company's operations are subject to many federal, state and local
regulations relating to the protection of the environment and to workplace
health and safety. In particular, the Company's operations are subject to
extensive federal, state and local laws and regulations governing waste
disposal, air and water emissions, the handling of hazardous substances,
environmental protection, remediation, workplace exposure and other matters.
Management believes that the Company is presently in substantial compliance
with all such laws and does not currently anticipate that the Company will be
required to expend any substantial amounts in the foreseeable future in order
to meet current environmental, workplace health or safety requirements.
However, additional costs and liabilities may be incurred to comply with
current and future requirements, which costs and liabilities could have a
material adverse effect on the Company's results of operations or financial
condition.

There are no known pending remedial actions or claims relating to
environmental matters that are expected to have a material effect on the
Company's financial position or results of operations. Both of the properties
owned by the Company, however, are located in industrial areas and have a
history of heavy industrial use. These properties may potentially incur
environmental liabilities in the future that could have a material adverse
effect on the Company's financial condition or results of operations. The
Company has been named a potentially responsible party at three "Superfund"
sites. Although the Company does not believe that the amount for which it may
be held liable will be material and has reserved approximately $300,000 for
such loss, no assurance can be given that the amount for which the Company
will be held responsible will not be significantly greater than expected. In
connection with the sale of IPD, the Company has agreed to indemnify Trinity
Industries, Inc. until May 29, 2001 against certain environmental liabilities
that may arise with respect to the properties and operations of IPD relating
to the period prior to closing.

PROPERTIES

The following table sets forth the location and size of the Company's two
facilities:

<TABLE>
<CAPTION>
LOCATION APPROXIMATE ACREAGE APPROXIMATE SQUARE FOOTAGE
-------- ------------------- --------------------------
<S> <C> <C>
Cudahy, Wisconsin 184.5 1,650,000
Windsor, Connecticut 8.2 20,000
</TABLE>

The above facilities are owned by the Company. The Company also owns
approximately 4 acres of land in Houston, Texas, which is currently vacant and
for sale.

34
<PAGE>

The Company believes that its facilities are well maintained, are suitable
to support the Company's business and are adequate for the Company's present
and anticipated needs. While the rate of utilization of the Company's
manufacturing equipment is not uniform, the Company estimates that its
facilities overall are currently operating at approximately 60% of capacity.
The Company-owned facilities have been pledged as collateral to its senior
lender, with a secondary lien on the Wisconsin facility granted to the holders
of the Subordinated Notes and a third lien on the Wisconsin facility to the
PBGC. The PBGC lien will be released pursuant to the Amended PBGC Agreement.

The principal executive offices of the Company are located at 5481 South
Packard Avenue, Cudahy, Wisconsin 53110. Its telephone number at such address
is (414) 747-2611.

LEGAL PROCEEDINGS

From time to time the Company is involved in legal proceedings relating to
claims arising out of its operations in the normal course of business. The
Company believes that there are no material legal proceedings pending or
threatened against the Company or any of its properties.

YEAR 2000 COMPLIANCE

The Company is in the process of installing and implementing a new computer
operating system which is compliant with Year 2000 demands. This new system
includes hardware, software, fiber-optic wiring and extensive training for
numerous Company personnel. The project was initiated in 1997 and the Company
anticipates it will be fully operational in 1998. The Company has estimated
the cost of this new operating system to be approximately $4 million.

35
<PAGE>

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth certain information concerning the current
directors and executive officers of the Company:

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Kerry L. Woody.......... 46 President and Director
Wayne E. Larsen......... 43 Vice President Law/Finance & Secretary and Director
Gene E. Bunge........... 52 Vice President, Engineering
Robert J. Noel.......... 57 Vice President, Quality & Technology
James K. Sorenson....... 60 Vice President, Materials Management
Gary J. Vroman.......... 38 Vice President, Sales & Marketing
Lawrence C. Hammond..... 50 Vice President, Human Resources
Ronald O. Wiese......... 64 Treasurer
Thomas S. Plichta....... 55 Corporate Controller
Gregory P. Flynn........ 41 Director
Robert W. Sullivan...... 39 Director
Fred W. Whitridge, Jr... 42 Director
</TABLE>

KERRY WOODY has served as President since October 1994. Prior to that time
he was Vice President, Operations; Vice President, Manufacturing Services;
Production Manager; and an industrial engineer. Mr. Woody joined the Company
in 1975 from General Electric. He has a B.S. in Engineering from Milliken
University. He has served as a Director of the Company since August 1997.

WAYNE LARSEN has been Vice President Law/Finance and Secretary of the
Company since September 1995, and a Director since December 1997. He served as
General Counsel and Secretary since May 1989 and as its Corporate Counsel and
Secretary since February 1987. Mr. Larsen has been with the Company since
1981. He has a B.A. from Marquette University and a J.D. from Marquette Law
School.

GENE BUNGE has served as Vice President, Engineering since November 1991.
From 1985 until that time he was General Manager of Engineering. Mr. Bunge has
been with the Company since 1973. He has a B.S.E.E. from the Milwaukee School
of Engineering.

ROBERT NOEL has been Vice President, Quality and Technology since March
1991. He has been Manager of Metallurgy since 1985 and prior to that period
was a Product Metallurgist for jet engine components. Mr. Noel has been with
the Company since 1963. He has a B.S. in Mechanical Engineering from Marquette
University.

JAMES SORENSON has served as Vice President, Materials Management since
March 1991. Prior to that time he had been Purchasing Manager, Production
Manager, and Head Buyer. Mr. Sorenson has been with the Company since 1963. He
has a B.S. in Mechanical Engineering from the University of Wisconsin.

GARY VROMAN has served as Vice President, Sales and Marketing since December
1995. From January 1994 to December 1995 he was General Manager of Sales.
Prior to that period he had been the Product Manager for jet engine
components. Mr. Vroman has been with the Company since 1982. He has a B.S. in
Engineering from the University of Illinois and a M.S. in Engineering
Management from the Milwaukee School of Engineering.

LAWRENCE HAMMOND has served as Vice President, Human Resources since January
1994. Prior to that time he had served as Director of Industrial Relations at
the Company and he had been Labor Counsel at the Company. Mr. Hammond has been
with the Company since 1980. He has a B.A. and a Masters in Industrial
Relations from Michigan State University and a J.D. from the Detroit College
of Law.

36
<PAGE>

RONALD WIESE has served as Treasurer since May 1989. He was Assistant
Treasurer of the Company since 1986 and was its Tax Manager from 1982 to 1986.
Mr. Wiese has been with the Company since 1955. He holds a B.S. in Accounting
from Marquette University.

THOMAS PLICHTA has served as Corporate Controller since May 1989. He served
as Assistant Corporate Controller for more than five years prior to that time.
Mr. Plichta has been with the Company since 1965. He has a B.S. in Accounting
from Marquette University.

GREGORY FLYNN has served as a Director of the Company since May 1993. Mr.
Flynn is a Managing Partner of ING Equity Partners L.P. I, an investment
partnership. Mr. Flynn also serves as a director of The Presley Companies, a
home building firm.

ROBERT SULLIVAN has served as a Director of the Company since May 1993. Mr.
Sullivan is President of The Martec Group, a sales and marketing consulting
group.

FRED WHITRIDGE, JR. has served as a Director of the Company since August
1997. Since 1993, Mr. Whitridge has been President of Archipelago Corporation,
an investment firm. From 1988 to 1993, Mr. Whitridge served as President of
Investor International (U.S.), Inc., an investment firm. He also serves as a
Director of California Microwave Inc., a producer of communications equipment.

In connection with the Offering, the Board of Directors will add one or two
additional independent Director(s) as soon as practicable after completion of
the Offering, which directors will not be officers or employees of the Company
or have a relationship with the Company's principal shareholders or their
affiliates. At this time, such additional Director(s) have not been
identified.

EXECUTIVE COMPENSATION

The following table summarizes all compensation paid to the Company's five
most highly compensated executive officers (the "Named Executive Officers")
for services rendered in all capacities to the Company during the fiscal year
ended December 31, 1997.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION
--------------------------
NAME AND PRINCIPAL POSITION SALARY BONUS OTHER(1)
--------------------------- -------- -------- --------
<S> <C> <C> <C>
Kerry L. Woody................................. $204,799 $136,000 $1,776
President
Robert J. Noel................................. 141,663 35,000 1,800
Vice President, Quality & Technology
Gary J. Vroman................................. 132,460 39,000 1,776
Vice President, Sales & Marketing
Wayne E. Larsen................................ 158,464 54,000 1,776
Vice President Law/Finance & Secretary
Lawrence C. Hammond............................ 128,426 37,500 1,776
Vice President Human Resources
</TABLE>
- --------
(1) This sum represents the imputed value of additional life insurance
benefits provided to certain officers of the Company.

37
<PAGE>

EMPLOYMENT AGREEMENTS

The Company has entered into employment agreements with Messrs. Woody, Noel,
Vroman, Larsen and Hammond which are substantially similar in all respects.
The basic employment agreement provides for a number of benefits, all of which
vest after ten years of employment, including group term life insurance,
health and dental coverage and long-term disability coverage.

The agreements provide that, upon the involuntary termination of the
employee other than for cause, the Company is required to pay the employee up
to 24 months of severance pay, determined by multiplying the employee's years
of service by the employee's base monthly salary at the time of termination.
In the case of Messrs. Woody and Larsen, should they be terminated due to a
change of control or ownership, they are entitled to 24 months of severance
pay. Upon retirement at age 65, the employee will receive his normal
retirement benefits. Such benefits include a monthly payment equal to 52.5% of
the employee's average compensation (i.e., monthly average of compensation for
the five years of highest compensation over the ten years prior to retirement)
multiplied by a fraction, the numerator of which is the length of service of
the employee and the denominator of which is 35. There are also provisions
adjusting this calculation in the event of early retirement. Disabled
employees can also be eligible for certain retirement benefits. All retirement
benefits are tolled during any period of re-employment. Each agreement further
provides that any compensation paid by the Company shall be reduced by any
benefit paid under the Company's salaried employees retirement plan.

PENSION BENEFITS

Defined Benefit Plan. The Ladish Co., Inc. Salaried Pension Plan (the
"Pension Plan") is a "defined benefit" pension plan generally covering
salaried, non-union employees of the Company who are not covered by any other
defined benefit plan to which the Company makes contributions pursuant to a
collective bargaining agreement.

Upon reaching normal retirement at or after age 65, a participant is
generally entitled to receive an annual retirement benefit for life. The
Pension Plan provides alternative actuarially equivalent forms of benefit
payment. Vesting under the Pension Plan occurs after five years of continued
service.

The monthly retirement benefit at the normal retirement age of at least 65
is determined pursuant to a formula as follows: 1.1% of the average monthly
base salary (exclusive of bonuses or other incentive or special compensation)
of the individual during the consecutive five year period of service within
the ten years preceding termination of employment (or after age 45, if longer)
that his/her earnings were highest is multiplied by the number of years of
Benefit Service (as defined). Monthly normal retirement benefits are payable
on a straight life annuity basis and such amounts are not subject to any
deduction for Social Security or other offset amounts.

The following table sets forth the annual benefits payable to a participant
who qualifies for normal retirement in 1997, with the specified highest
average earnings during the consecutive five year period of service within the
ten years prior to retirement and the specified years of Benefit Service:

<TABLE>
<CAPTION>
AVERAGE ANNUAL EARNINGS FOR
HIGHEST 5-YEAR PERIOD WITHIN YEARS OF BENEFIT SERVICE
THE 10-YEARS PRECEDING -----------------------------------------------
RETIREMENT 10 15 20 25 30 35
---------------------------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
$ 50,000.................. $ 5,500 $ 8,250 $11,000 $13,750 $16,500 $19,250
$ 95,000.................. $10,450 $15,675 $20,900 $26,125 $31,350 $36,575
$100,000.................. $11,000 $16,500 $22,000 $27,500 $33,000 $38,500
$150,000.................. $16,500 $24,750 $33,000 $41,250 $49,500 $57,750
$200,000.................. $22,000 $33,000 $44,000 $55,000 $66,000 $77,000
$250,000.................. $27,500 $41,250 $55,000 $68,750 $82,500 $96,250
</TABLE>

The years of Benefit Service for Messrs. Woody, Noel, Vroman, Larsen and
Hammond as of January 1, 1998 were 23, 35, 16, 17 and 18, respectively.

38
<PAGE>

Deferred Compensation Agreements. The Company has entered into deferred
compensation agreements (the "Agreements") with nine current officers of the
Company, including Messrs. Woody, Noel, Vroman, Larsen and Hammond. Each
employee covered by the Agreements (an "Employee"), upon full vesting, is
entitled to receive supplemental disability or retirement benefits; provided
that in no event may a person's total retirement benefits under the Agreements
exceed 52.5% of the monthly average base salary (inclusive of bonuses or other
compensation) during the five calendar years immediately preceding retirement.

The retirement benefit at the normal retirement age of at least 65 is
determined pursuant to a formula as follows: 52.5% of the monthly average of
the Employee's base salary during the five calendar years immediately
preceding retirement multiplied by years of service, up to 35, and divided by
35. If an Employee suffers a disability (as defined), he is entitled to
benefits paid under the same formula as in the preceding sentence (with his
years of service calculated as if he had retired at age 65), reduced by other
disability benefits paid by the Company or through workers' compensation
(unless he is receiving fixed statutory payments for certain bodily injuries).

Any amount to be paid under the Agreement shall be reduced by any benefit
paid to an Employee or his beneficiary pursuant to the Pension Plan.

Defined Contribution Plan. The Ladish Co., Inc. Savings and Deferral
Investment Plan ("SDIP"), which has been qualified under section 401(k) of the
Code, provides that salaried, non-union employees with six months' service may
contribute 1% to 18% of their annual base salary to SDIP and the Company will
provide a matching contribution in an amount to be determined by the Board of
Directors of the Company. Employee's contributions of 1% to 18% can be "before
tax" contributions, "after tax" contributions or a combination of both. The
employees' contributions and the matching Company contribution may be placed
by the employee in a fixed income fund, an equity investment fund or various
combinations of each.

INCENTIVE STOCK OPTION PLAN

The Ladish Co., Inc. 1996 Long-Term Incentive Plan (the "Incentive Plan")
has been established by the Company to promote the long-term financial
interest of the Company by providing for the award of equity-based incentives
to key employees and other persons providing material services to the Company.
The Incentive Plan provides a means whereby such individuals may acquire
shares of Common Stock through the grant of stock options and stock
appreciation rights.

The Incentive Plan is not subject to any provision of ERISA or qualified
under Section 401(a) of the Code.

The number of shares of Common Stock subject to awards under the Incentive
Plan may not exceed 833,333, of which 433,333 have been issued or are subject
to outstanding options and 400,000 have been reserved for issuance under
future grants. The number of shares underlying awards made to any one
individual in any one-year period may not exceed 166,667 shares. The Common
Stock issued under the Incentive Plan may be shares currently authorized but
unissued or currently held or subsequently acquired by the Company as treasury
shares.

The number of shares subject to the Incentive Plan and the terms of any
outstanding award may be adjusted as described in the Incentive Plan to
reflect certain changes in the capitalization of the Company.

The authority to manage and control the operation and administration of the
Incentive Plan is vested in a committee selected by the Board of Directors of
the Company (the "Committee") which shall consist of two or more members of
the Board. The Committee has the authority and discretion to determine the
individuals who will receive awards under the Incentive Plan and to determine
the time of receipt, type of award, the number of shares covered by such award
and the terms, conditions, performance criteria, restrictions and other
provisions applicable to such award. The Committee also has the authority and
discretion to interpret the Incentive Plan and to establish, amend and rescind
any rules and regulations relating to the Incentive Plan. Any interpretation
of the Incentive Plan by the Committee and any decision made by it under the
Incentive Plan is final and binding on all persons.

39
<PAGE>

Subject to the terms and provisions of the Incentive Plan, a participant to
whom a stock option is granted will have the right to purchase the number of
shares of Common Stock covered by the option. Subject to the conditions and
limitations of the Incentive Plan, the Committee shall determine all of the
terms and conditions of such grant, including without limitation, the option
price, any vesting schedule and the period of exercisability.

No option may be exercised after its expiration date. The expiration date
shall be determined by the Committee at the time of grant, but may not be
later than the earliest to occur of: (i) the ten-year anniversary of the grant
date; (ii) if the participant's termination of employment with the Company and
its affiliates occurs by reason of death or disability (as defined in the
Incentive Plan), the one-year anniversary of such termination of employment;
(iii) if the participant's termination of employment with the Company and its
affiliates occurs by reason of retirement, the three-month anniversary of such
termination of employment; or (iv) if the participant's termination with the
Company and its affiliates occurs for any other reason, the date of such
termination.

The full purchase price of each share of Common Stock purchased upon the
exercise of an option shall be paid at the time of such exercise in cash or in
shares of Common Stock (valued at fair market value as of the date of
exercise) that have been held by the participant at least six months, or in
any combination thereof, as determined by the Committee. To the extent
provided by the Committee, a participant may elect to pay the purchase price
upon the exercise of an option through a cashless exercise arrangement.

Options awarded under the Incentive Plan may be nonqualified options or
incentive stock options, as determined in the discretion of the Committee.
Under the terms of the Incentive Plan, the Committee may also issue stock
appreciation rights ("SARs"). Upon exercise, a SAR entitles the holder thereof
to a payment equal to the excess of the fair market value of a share of stock
on the exercise date over the fair market value of a share of stock on the
grant date. If the committee so determines, SARs may be issued in tandem with
stock options.

Generally, options and SARs are not transferable prior to the participant's
death. However, the Committee may provide that an option or SAR award may be
transferred to an immediate family member or to a trust for the benefit of an
immediate family member.

Upon a change in control of the Company (as defined in the Incentive Plan),
all options and SARs shall become immediately exercisable.

The Board of Directors of the Company may amend or terminate the Incentive
Plan at any time, provided that no such amendment or termination may
materially adversely affect the rights of any participant or beneficiary under
any award made under the plan prior to the date such amendment is adopted by
the Board.

No stock options were granted to any of the Named Executive Officers during
1997.

AGGREGATED OPTION EXERCISES IN 1997 AND
FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF SHARES
NUMBER OF UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT FISCAL IN-THE-MONEY OPTIONS
ACQUIRED YEAR-END AT FISCAL YEAR-END
ON VALUE ------------------------- -------------------------
NAME EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- --------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Kerry L. Woody.......... 20,833 $250,000 29,167/50,000 $87,500/$150,000
Wayne E. Larsen......... 12,500 150,000 12,500/25,000 $37,500/$ 75,000
Robert J. Noel.......... 12,500 150,000 12,500/25,000 $37,500/$ 75,000
Gary J. Vroman.......... 12,500 150,000 12,500/25,000 $37,500/$ 75,000
Lawrence C. Hammond..... 8,333 100,000 8,333/16,667 $25,000/$ 50,000
</TABLE>

40
<PAGE>

DIRECTORS' COMPENSATION

Non-employee Directors currently receive an annual retainer of twenty
thousand dollars ($20,000) and a fee of one thousand dollars ($1,000) per
meeting attended in person and two hundred fifty dollars ($250) per telephonic
meeting.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

During 1997, the Board of Directors of the Company established a Compensation
Committee consisting of Messrs. Flynn, Sullivan and Woody. Executive
compensation levels during 1997 were established by the Compensation Committee.

41
<PAGE>

PRINCIPAL AND SELLING SHAREHOLDERS

The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of the date of this Prospectus, and
as adjusted to reflect the sale of Common Stock in the Offering, by (i) each
person who is known by the Company to own beneficially more than 5% of the
Company's Common Stock, (ii) each Named Executive Officer, (iii) each
Director, and (iv) each Selling Shareholder. In the event the Underwriters'
over-allotment option is exercised in full, neither ING Equity Partners L.P.
I. nor ING Barings (U.S.) Capital Corporation will own shares or warrants
after the Offering.

<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
PRIOR TO THE NUMBER BENEFICIAL OWNERSHIP
OFFERING OF AFTER THE OFFERING
----------------------- SHARES --------------------
NAME NUMBER(1) PERCENT(2) OFFERED NUMBER(1) PERCENT(2)
---- --------- ---------- --------- --------- ----------
<S> <C> <C> <C> <C> <C>
Kerry L. Woody.......... 29,167 * -- 29,167 *
Wayne E. Larsen......... 12,500 * -- 12,500 *
Robert J. Noel.......... 16,436 * -- 16,436 *
Gary J. Vroman.......... 14,833 * -- 14,833 *
Lawrence C. Hammond..... 8,791 * -- 8,791 *
Gregory P. Flynn........ 2,259,320(3) 33.39% 2,030,979 228,341 2.17%
Robert W. Sullivan...... 83 * -- 83 *
Fred Whitridge, Jr...... -- * -- -- *
All Directors and
executive officers as a
group (13 persons)..... 2,391,130 34.79 2,030,979 360,151 3.38
ING Equity Partners
L.P. I ("ING")........ 2,259,320(4) 33.39 2,030,979 228,341 2.17
Grace Brothers, Ltd.
("Grace")(5)........... 2,862,573 34.92 -- 2,862,573 21.74
ING Barings (U.S.)
Capital Corporation
("INGB")............... 2,246,820(6) 33.20 2,018,480 228,340 2.22
Franklin Principal
Maturity Trust(7)...... 1,103,429 18.14 -- 1,103,429 9.98
Anchor Industries
International, Inc.
(8).................... 496,188 8.51 -- 496,188 4.59
</TABLE>
- --------
*Less than 1%
(1) Includes, in the case of each Named Executive Officer and Directors and
executive officers as a group, options granted under the Incentive Plan
which are exercisable within 60 days.
(2) In accordance with regulations of the Securities and Exchange Commission,
the percentage of shares beneficially owned by each named shareholder in
the accompanying table assumes the prior exercise of all options,
warrants and similar rights owned by such shareholder which are
exercisable within 60 days but does not assume the exercise of options,
warrants or rights owned by any other shareholder.
(3) Consists of 828,033 shares of Common Stock and 1,431,287 warrants held by
ING, of which Mr. Flynn is a partner. Mr. Flynn disclaims beneficial
ownership of such shares, except to the extent of his financial interest
in such partnership. Mr. Flynn's address is 135 East 57th Street, New
York, New York 10022.
(4) Consists of 828,033 shares of Common Stock and 1,431,287 shares of Common
Stock issuable upon exercise of warrants, but does not include 815,533
shares beneficially owned by INGB nor the 1,431,287 warrants held by
INGB, as discussed in footnote 6, as to all of which beneficial ownership
is disclaimed. ING's address is 135 East 57th Street, New York, New York
10022. Mr. Flynn has shared voting and investment power with respect to
the shares of Common Stock owned by ING, as one of three directors and
shareholders of a corporation directly controlling the General Partner of
ING. The other Directors and shareholders are Tracey Rudd and Olivier
Trouveroy, whose business address is the same as that of ING.
(5) Consists of 2,862,573 shares of Common Stock issuable upon exercise of
warrants. The Company has been advised that Grace Brothers, Ltd. is a
general partnership engaged in the investment of funds for its own
account. The two general partners of Grace Brothers, Ltd. are Bradford T.
Whitmore, managing partner, and Spurgeon Corp., whose principal is Robert
Van Campen. The business address of Grace Brothers, Ltd. and its partners
is 1560 Sherman Avenue, Suite 900, Evanston, Illinois 60201.

42
<PAGE>

(6) Consists of 815,533 shares of Common Stock and 1,431,287 shares of Common
Stock issuable upon exercise of warrants, but does not include 828,033
shares beneficially owned by ING nor the 1,431,287 warrants held by ING,
as discussed in footnote 4, as to all of which beneficial ownership is
disclaimed. (INGB is a limited partner of ING.) INGB's address is 135
East 57th Street, New York, New York 10022. The ultimate parent and
controlling entity of INGB is ING Groep, a multinational corporation
headquartered in Amsterdam.
(7) Includes 746,096 shares of Common Stock issuable upon exercise of
warrants. Franklin Principal Maturity Trust is a registered closed-end
investment company whose investments are managed and controlled by
Franklin Advisers, Inc., a wholly-owned subsidiary of Franklin Resources,
Inc., a New York Stock Exchange listed holding company involved in
investment management. The address of Franklin Resources, Inc. and
Franklin Principal Maturity Trust is 777 Mariner's Island Boulevard, San
Mateo, California 94404.
(8) Consists of Common Stock issuable upon exercise of options. The address
of Anchor Industries International, Inc. is 1511 North Westshore Blvd.,
Tampa, Florida 33607.

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

LETTER OF CREDIT

On June 30, 1994, the Company issued 12,500 shares of Common Stock to ING in
exchange for ING causing INGB to issue a $2 million letter of credit in favor
of the Company. The letter of credit was canceled in June 1995 with the
establishment of the Credit Agreement.

SUBORDINATED NOTE OFFERING

In December 1995, the Company issued $2 million of senior subordinated
secured notes ("Subordinated Notes") to each of the ING entities and Grace. In
February 1996, the Company issued an additional $1.435 million of Subordinated
Notes to each of the ING entities and Grace. The Subordinated Notes purchased
by the ING entities and Grace were each accompanied by warrants to purchase
2,862,573 shares of Common Stock at a price of $1.20 per share. Pursuant to
the terms of the Subordinated Notes, in 1996 and 1997, the ING entities and
Grace were issued an aggregate of $1.602 million principal amount of
additional Notes as interest payments. The Subordinated Notes were offered in
a private placement to all shareholders of the Company that represented that
they were "accredited investors" as defined in Rule 501 under the Securities
Act.

CERTAIN OPTIONS

In April 1993, the Company issued options to purchase 496,188 shares of
Common Stock, at exercise prices ranging from $12.00 to $21.00 per share, to
Anchor Industries International, Inc. ("AII"), in connection with an agreement
to perform certain consulting services. AII was owned by Vincent J. Naimoli,
who, at the time of issuance of the options, was Chairman of the Board of
Directors of Ladish. The Company believes that the fair market value of its
Common Stock on the date of issuance was substantially below the exercise
price of the options. Such options, which are still outstanding and currently
exercisable, expire ten years from the date of grant.

REGISTRATION RIGHTS

In connection with the offering of the Subordinated Notes, the Company
entered into an agreement granting certain registration rights with respect to
(i) all Common Stock held at any time by the ING entities and Grace and (ii)
all Common Stock issuable upon the exercise of the warrants (collectively, the
"Registerable Stock"). At any time beginning six months after the effective
date of a registration statement covering a public offering of securities of
the Company, the holders of Registerable Stock constituting at least 25% of
the shares of Registerable Stock then outstanding may require the Company to
register all or any portion of their shares for

43
<PAGE>

sale. In addition, all holders of Registerable Stock have certain "piggyback"
rights in the event the Company proposes to register any of its securities for
sale to the public. All registration rights are subject to certain conditions
and limitations. The Company is required to bear the expenses of such
registrations, other than underwriting discounts and selling commissions. The
registration rights expire at such time as all Registerable Shares have been
effectively registered and disposed of pursuant to such registration or sold
pursuant to Rule 144. In addition, the 496,188 shares of Common Stock issuable
to AII upon the exercise of its options are subject to similar "piggyback"
registration rights in the event of the filing of a registration statement by
the Company. See "--Certain Options".

DESCRIPTION OF COMMON STOCK

GENERAL

Under the Articles of Incorporation, the authorized capital stock of the
Company consists of 100,000,000 shares of Common Stock, $.01 par value. Except
as provided by Section 180.0662(2)(b) of the Wisconsin Business Corporation
Law ("WBCL"), all outstanding shares of Common Stock are, and all of the
shares of Common Stock offered hereby will be, legally issued, fully paid and
non-assessable. WBCL Section 180.0662(2)(b) provides that shareholders of
every corporation, other than railroad corporations, are personally liable to
an amount equal to the par value of shares owned by them, or to the
consideration for which their shares without par value were issued, for all
debts owing to employees of the corporation for services performed for such
corporation, but not exceeding six months' service in any one case. At
December 31, 1997, there were 5,315,473 shares of Common Stock outstanding and
8,427,620 reserved for issuance upon exercise of outstanding options and
warrants.

COMMON STOCK

Voting Rights. The holders of Common Stock have one vote per share on all
matters submitted to a vote by the shareholders of the Company. Shares of
Common Stock do not have cumulative voting rights.

Dividend Rights. Each share of Common Stock is entitled to dividends if, as
and when dividends are declared by the Board of Directors.

Liquidation Rights. The holders of the Common Stock are entitled to
participate equally on a share for share basis in all distributions to the
holders of Common Stock in any liquidation, distribution or winding up of the
Company.

Preemptive Rights. The holders of Common Stock do not have preemptive rights
to purchase shares of any class of the Company's capital stock.

Subscription or Conversion Rights. The holders of Common Stock have no
statutory subscription or conversion rights.

Redemption and Sinking Fund Privileges. The holders of the Common Stock do
not have any redemption or sinking fund privileges.

Transfer Agent. Firstar Trust Company will be the transfer agent for the
Common Stock.

COMMON STOCK WARRANTS

In 1995 and 1996, the Company issued warrants to purchase an aggregate of
7,775,722 shares of Common Stock, at a purchase price of $1.20 per share. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources". Such warrants expire ten years
after issuance. The holders of unexercised warrants are entitled to receive
all dividends and other distributions made to holders of Common Stock, as if
such warrants had been previously exercised. In addition, the holders of the
warrants have certain rights to require the Company to register the warrant
shares for resale. See "Certain Relationships and Related Party Transactions--
Registration Rights".

44
<PAGE>

ANTI-TAKEOVER EFFECTS OF WISCONSIN LAW AND ARTICLES OF INCORPORATION AND BY-
LAWS

The Articles of Incorporation, the By-Laws and the Wisconsin Business
Corporation Law ("WBCL") contain certain provisions that may make more
difficult the acquisition of control of the Company by means of a tender
offer, open market purchase, a proxy contest or otherwise. These provisions
are designed to encourage persons seeking to acquire control of the Company to
negotiate with the Board of Directors. However, these provisions could have
the effect of discouraging a prospective acquiror from making a tender offer
or otherwise attempting to obtain control of the Company. To the extent that
these provisions discourage takeover attempts, they could deprive shareholders
of opportunities to realize takeover premiums for their shares or could
depress the market price of the shares of the Common Stock.

Control Share Voting Restrictions

Section 180.1150 of the WBCL provides that the voting power of shares of a
"resident domestic corporation" held by any person, including shares issuable
upon conversion of convertible securities or upon exercise of options or
warrants, in excess of 20% of the voting power in the election of directors
shall be limited to 10% of the full voting power of those shares. This statute
is a scaled voting rights or control share acquisition statute, designed to
protect corporations against uninvited take-over bids. This voting restriction
is not applicable to securities acquired prior to April 22, 1986, shares
acquired directly from the Company or shares acquired in other circumstances
described in Section 180.1150(3) of the WBCL. A "resident domestic
corporation" is defined as a domestic corporation (i) whose principal offices
are located in Wisconsin, (ii) which has significant business operations in
Wisconsin, (iii) more than 10% of whose holders of record are residents of
Wisconsin, and (iv) more than 10% of whose shares are held of record by
residents of Wisconsin. Based upon the Company's stock transfer records as of
the date of this Prospectus, management believes that the Company is not a
"resident domestic corporation". The Company may, however, through securities
transfers occurring in the future and beyond the Company's control, become a
"resident domestic corporation".

Business Combination Restrictions

Sections 180.1140 to 180.1144 of the WBCL provide that a "resident domestic
corporation" may not engage in a business combination with an interested
stockholder (a person beneficially owning 10% or more of the aggregate voting
power of the stock of such corporation) for three years after the interested
stockholder's stock acquisition date unless the board of directors of the
corporation has approved such business combination or purchase of stock prior
to the stock acquisition date. After the three-year period, any such business
combination may be consummated only if it is approved by a vote of the
majority of the voting stock not beneficially owned by the interested
stockholder, or made at a certain statutory formula price intended to provide
a fair price for the shares held by disinterested shareholders.

Sections 180.1130 to 180.1134 of the WBCL provide that certain business
combinations of a "resident domestic corporation" not meeting specified
statutory adequacy-of-price standards must be approved by 80% of the votes
entitled to be cast by shareholders, and two-thirds of the votes entitled to
be cast by holders of voting shares other than voting shares beneficially
owned by a "significant shareholder" (generally including a person that is a
beneficial owner of 10% or more of the voting power of the shares of the
corporation) or an affiliate or associate thereof who is a party to the
transaction.

Availability of Shares of Capital Stock for Future Issuance

The availability for issue of shares of authorized but unissued Common Stock
by the Company without further action by shareholders (except as may be
required by applicable stock exchange or Nasdaq National Market regulations)
could be viewed as enabling the Board of Directors to make more difficult a
change in control of the Company. The issuance of warrants or rights to
acquire shares of Common Stock may discourage or defeat unsolicited stock
accumulation programs and acquisition proposals, and the issuance of shares in
a private placement or public offering to dilute or deter stock ownership of
persons seeking to obtain control of the Company may have a similar effect.
The Company has no present plans to issue any shares of Common Stock other
than as contemplated under the Incentive Plan and pursuant to the exercise of
outstanding options or warrants.

45
<PAGE>

SHARES ELIGIBLE FOR FUTURE SALE

Prior to the Offering, there has been only a limited market for the Common
Stock of the Company and no prediction can be made as to the effect, if any,
that market sales of shares or the availability of such shares for sale will
have on the market price of the Common Stock prevailing from time to time.
Future sales of substantial numbers of shares of Common Stock in the public
market, however, could adversely affect prevailing market prices and impair
the Company's future ability to raise capital through the sale of its equity
securities.

Upon completion of the Offering, the Company will have outstanding
10,306,024 shares of Common Stock. Of these shares, the 6,385,459 sold in the
Offering will be freely tradeable without restriction or further registration
under the Securities Act, except for any shares purchased by "affiliates" of
the Company (as defined under the Securities Act). Shares purchased by
affiliates may not be sold unless the sale is registered under the Securities
Act or unless they are sold pursuant to Rule 144 under the Securities Act or
another exemption from registration.

Of the 5,335,791 shares of Common Stock outstanding at the date of this
Prospectus, 3,213,956 are held by persons not deemed by the Company to be
affiliates. The Underwriters have conditioned the Offering on the receipt of
agreements of the holders of substantially all Common Stock purchase warrants,
all persons selling shares in the Offering, all holders of registration rights
with respect to the Company's securities and all executive officers and
directors of the Company, that they will not sell any shares of Common Stock
without the consent of Credit Suisse First Boston Corporation, on behalf of
the Underwriters, for a period of 180 days following the date of this
Prospectus. See "Underwriting" and "Risk Factors--Shares Eligible for Future
Sale; Registration Rights; Possible Adverse Effects on Future Market Prices".
Any such shares will be tradeable without restriction under Rule 144(k) after
the end of the 180 day lock-up period. After the Offering, it is expected that
approximately 1,136,000 shares will be held by persons deemed to be affiliates
of the Company. These shares will be available for sale in the public market
beginning 180 days after the date of this Prospectus (or earlier with the
consent of the Underwriters), subject to the restrictions imposed by Rule 144.
The holders of certain of the foregoing shares have rights to require the
Company to register such shares for resale. See "Certain Relationships and
Related Party Transactions".

In general, under Rule 144 as in effect on the date of this Prospectus, an
affiliate of the Company, or any other person (or persons whose shares are
aggregated) who has beneficially owned restricted securities for at least one
year, will be entitled to sell in any three-month period a number of shares
that does not exceed the greater of (i) 1% of the then outstanding shares of
Common Stock of the Company (approximately 103,000 shares immediately after
the Offering) or (ii) the average weekly trading volume during the four
calendar weeks immediately preceding the date on which notice of the sale is
filed with the Securities and Exchange Commission. Sales pursuant to Rule 144
are subject to certain requirements relating to manner of sale, notice and
availability of current public information about the Company. A person (or
persons whose shares are aggregated) who is not deemed to have been an
affiliate of the Company at any time during the 90 days immediately preceding
the sale and who has beneficially owned restricted shares for at least two
years is entitled to sell shares pursuant to Rule 144(k) without regard to the
limitations above.

In addition to the foregoing, there are outstanding at the date of this
Prospectus (i) options to purchase 322,500 shares of Common Stock held by
persons who are employees of the Company, (ii) options to purchase 496,188
shares of Common Stock beneficially owned by persons who were formerly
employees or executives of the Company, and (iii) warrants to purchase
7,588,614 shares of Common Stock issued in connection with certain financing
provided to the Company by the Company's controlling shareholders. See
"Certain Relationships and Related Transactions". The foregoing options and
warrants were issued in unregistered transactions, and the shares issuable
upon exercise (other than those to be sold in the Offering) will constitute
"restricted securities" within the meaning of Rule 144 and therefore be
subject to a one-year holding period from the date such shares are deemed to
have been acquired. The holders of the warrants have certain rights to require
the Company to register such shares for resale. See "Certain Relationships and
Related Party Transactions". Such demand rights may not be exercised within
120 days after the date of this Prospectus.

46
<PAGE>

UNDERWRITING

Under the terms and subject to the conditions contained in an Underwriting
Agreement dated March 9, 1998 (the "Underwriting Agreement") among the
Company, the Selling Shareholders and the underwriters named below (the
"Underwriters"), for whom Credit Suisse First Boston Corporation ("CSFBC") and
BT Alex. Brown Incorporated are acting as representatives (the
"Representatives"), the Underwriters have severally but not jointly agreed to
purchase from the Company and the Selling Shareholders the following
respective numbers of shares of Common Stock.

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
----------- ---------
<S> <C>
Credit Suisse First Boston Corporation.......................... 2,532,730
BT Alex. Brown Incorporated..................................... 2,532,729
Robert W. Baird & Co. Incorporated.............................. 60,000
Bear, Stearns & Co. Inc......................................... 120,000
CIBC Oppenheimer Corp........................................... 120,000
Cleary Gull & Reiland & McDevitt Inc............................ 60,000
Frederick & Company, Inc........................................ 60,000
Gabelli & Company, Inc.......................................... 60,000
Goldman, Sachs & Co............................................. 120,000
GS/2/ Securities, Inc........................................... 60,000
Invemed Associates, Inc......................................... 120,000
C.L. King & Associates, Inc..................................... 60,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated.............. 120,000
Morgan Stanley & Co. Incorporated............................... 120,000
Schroder & Co. Inc.............................................. 120,000
Charles Schwab & Co., Inc....................................... 120,000
---------
Total....................................................... 6,385,459
=========
</TABLE>

Pursuant to the terms of the Underwriting Agreement, the Underwriters will
purchase Common Stock purchase warrants from the Selling Shareholders, which
warrants will be immediately exercised for shares of Common Stock which will
then be included in the Offering.

The Underwriting Agreement provides that the obligations of the Underwriters
are subject to certain conditions precedent and that the Underwriters will be
obligated to purchase all of the shares of Common Stock offered hereby (other
than those shares covered by the over-allotment option described below) if any
are purchased. The Underwriting Agreement provides that, in the event of a
default by an Underwriter, in certain circumstances the purchase commitments
of non-defaulting Underwriters may be increased or the Underwriting Agreement
may be terminated.

The Company and the Selling Shareholders have granted to the Underwriters an
option, exercisable by CSFBC on behalf of the Underwriters, expiring at the
close of business on the 30th day after the date of this Prospectus, to
purchase up to 957,819 additional shares of the Common Stock at the initial
public offering price less the underwriting discounts and commissions, all as
set forth on the cover page of this Prospectus. Such option may be exercised
only to cover over-allotments, if any, in the sale of the shares of Common
Stock. To the extent such option is exercised, each Underwriter will become
obligated, subject to certain conditions, to purchase approximately the same
percentage of such additional shares of Common Stock as it was obligated to
purchase pursuant to the Underwriting Agreement.

47
<PAGE>

The Company and the Selling Shareholders have been advised by the
Representatives that the Underwriters propose to offer the shares of Common
Stock to the public initially at the public offering price set forth on the
cover page of this Prospectus and, through the Underwriters, to certain
dealers at such price less a concession of $0.52 per share, and the
Underwriters and such dealers may allow a discount of $0.10 per share on sales
to certain other dealers. After the initial public offering, the public
offering price and concession and discount to dealers may be changed by the
Representatives.

The Representatives have informed the Company that they do not expect
discretionary sales by the Underwriters to exceed 5% of the shares being
offered hereby.

The Underwriters have conditioned the Offering on the agreement of the
Company, its executive officers and directors, the holders of substantially
all Common Stock purchase warrants, all persons holding registration rights
with respect to the Company's securities and the Selling Shareholders that
they will not offer, sell, contract to sell, announce their intention to sell,
pledge, hypothecate, grant any option to purchase or otherwise dispose of,
directly or indirectly, or, in the case of the Company, file with the
Securities and Exchange Commission (the "Commission") a registration statement
under the Securities Act relating to any additional shares of the Company's
Common Stock or securities convertible into or exchangeable or exercisable for
any shares of the Company's Common Stock, without the prior written consent of
CSFBC for a period of 180 days after the date of this Prospectus, except, in
the case of the Company, issuances pursuant to the exercise of stock options
granted under the Incentive Plan.

The Company and the Selling Shareholders have agreed to indemnify the
Underwriters against certain liabilities, including civil liabilities under
the Securities Act, and to contribute to payments which the Underwriters may
be required to make in respect thereof.

Prior to the Offering, there has been a limited public market for the Common
Stock. The initial public offering price for the shares of Common Stock has
been negotiated between the Company and the Representatives. Among the factors
considered in determining the initial public offering price of the Common
Stock were the Company's historical performance, estimates of the business
potential and earnings prospects of the Company and its industry in general,
an assessment of the Company's management, the market valuation of companies
in related businesses, the general condition of the equity securities market,
the limited trading history of the Common Stock and other relevant factors.
There can be no assurance that the initial public offering price of the Common
Stock will correspond to the price at which the Common Stock has traded in the
past or will trade in the public market subsequent to the Offering, or that an
active public market for the Common Stock will develop and continue after the
Offering.

CSFBC, on behalf of the Underwriters, may engage in over-allotment,
stabilizing transactions, syndicate covering transactions and penalty bids in
accordance with Regulation M under the Exchange Act. Over-allotment involves
syndicate sales in excess of the offering size, which creates a syndicate
short position. Stabilizing transactions permit bids to purchase shares of
Common Stock so long as the stabilizing bids do not exceed a specified
maximum. Syndicate covering transactions involve purchases of Common Stock in
the open market after the distribution has been completed in order to cover
syndicate short positions. Penalty bids permit CSFBC, on behalf of the
Underwriters, to reclaim a selling concession from a dealer when the shares
originally sold by such dealer are purchased in a syndicate covering
transaction to cover syndicate short positions. Such over-allotment,
stabilizing transactions, syndicate covering transactions and penalty bids may
cause the price of shares of Common Stock to be higher than it would otherwise
be in the absence of such transactions. These transactions may be effected on
the Nasdaq National Market or otherwise and, if commenced, may be discontinued
at any time.

Certain of the Underwriters have provided certain financial, advisory and
investment banking services to the Company and the ING entities in the past.

48
<PAGE>

NOTICE TO CANADIAN RESIDENTS

RESALE RESTRICTIONS

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

REPRESENTATIONS OF PURCHASERS

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

RIGHTS OF ACTION (ONTARIO PURCHASERS)

The securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by
section 32 of the Regulation under the Securities Act (Ontario). As a result,
Ontario purchasers must rely on other remedies that may be available,
including common law rights of action for damages or rescission or rights of
action under the civil liability provisions of the U.S. federal securities
laws.

ENFORCEMENT OF LEGAL RIGHTS

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

NOTICE TO BRITISH COLUMBIA RESIDENTS

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

TAXATION AND ELIGIBILITY FOR INVESTMENT

Certain purchasers of Common Stock should consult their own legal and tax
advisors with respect to the tax consequences of an investment in the Common
Stock in their particular circumstances and with respect to the eligibility of
the Common Stock for investment by the purchaser under relevant Canadian
Legislation.

49
<PAGE>

EXPERTS

The financial statements of Ladish Co., Inc. as of December 31, 1996 and
1997 and for each of the three years ending December 31, 1997 included in this
Prospectus and elsewhere in the registration statement have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving such reports.

The financial statements of Stowe Machine Company Incorporated at December
31, 1995 and 1996, and for the years then ended, appearing in this Prospectus
and Registration Statement have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon appearing elsewhere herein, and
are included in reliance upon such report given upon the authority of such
firm as experts in accounting and auditing.

LEGAL MATTERS

The validity of the issuance of the shares of Common Stock offered hereby
will be passed upon for the Company by Foley & Lardner, Milwaukee, Wisconsin.
Certain legal matters will be passed upon for the Underwriters by Simpson
Thacher & Bartlett, New York, New York.

ADDITIONAL INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-1 (herein, together with all
amendments thereto, called the "Registration Statement") under the Securities
Act with respect to the Common Stock offered hereby. Reference is made to the
Registration Statement, including the exhibits thereto and the financial
statements, notes and schedules filed as a part thereof. This Prospectus,
which is a part of the Registration Statement, does not contain all of the
information set forth in the Registration Statement and the exhibits and
schedules thereto, certain items of which are omitted as permitted by the
rules and regulations of the Commission. For further information with respect
to the Company and the Common Stock offered hereby, reference is made to the
Registration Statement and to the financial statements, schedules, and
exhibits filed as a part thereof. The Registration Statement, including all
schedules and exhibits thereto, may be inspected without charge at the public
reference facilities maintained by the Commission at its principal office at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. and at the
Commission's regional offices at 7 World Trade Center, 13th floor, New York,
New York, and 500 West Madison Street, Suite 1400, Chicago, Illinois. Copies
of such material may be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed
rates or may be accessed electronically by means of the Commission's home page
on the Internet at http:\\www.sec.gov.

Statements contained in this Prospectus concerning the contents of any
contract or other document are not necessarily complete and, in each instance,
reference is made to the copy of such contract or other document filed as an
exhibit to the Registration Statement or otherwise with the Commission, each
such statement being qualified in all respects by such reference.

50
<PAGE>

LADISH CO., INC.

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<S> <C>
LADISH CO., INC.
Report of Independent Public Accountants.................................. F-2
Balance Sheets at December 31, 1996 and 1997.............................. F-3
Statements of Operations for the three years ended December 31, 1995, 1996
and 1997................................................................. F-4
Statements of Stockholders' Equity for the three years ended December 31,
1995, 1996 and 1997...................................................... F-5
Statements of Cash Flows for the three years ended December 31, 1995, 1996
and 1997................................................................. F-6
Notes to Financial Statements............................................. F-7
STOWE MACHINE COMPANY INCORPORATED
Report of Independent Auditors............................................ F-19
Balance Sheets at December 31, 1995 and 1996.............................. F-20
Statements of Operations for the two years ended December 31, 1995 and
1996..................................................................... F-21
Statements of Cash Flows for the two years ended December 31, 1995 and
1996..................................................................... F-22
Notes to Financial Statements............................................. F-23
Statements of Operations (unaudited) for the three months ended March 31,
1996 and 1997............................................................ F-27
Statements of Cash Flows (unaudited) for the three months ended March 31,
1996 and 1997............................................................ F-27
</TABLE>

F-1
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Stockholders
of Ladish Co., Inc.:

We have audited the accompanying balance sheets of Ladish Co., Inc., a
Wisconsin corporation, as of December 31, 1996 and 1997, and the related
statements of operations, stockholders' equity and cash flows for each of the
years in the three year period ended December 31, 1997. 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 Ladish Co., Inc. as of
December 31, 1996 and 1997, and the results of its operations and its cash
flows for each of the years in the three year period ended December 31, 1997,
in conformity with generally accepted accounting principles.

Arthur Andersen LLP

Milwaukee, Wisconsin,
February 16, 1998

F-2
<PAGE>

LADISH CO., INC.

BALANCE SHEETS

(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
DECEMBER 31,
------------------
ASSETS 1996 1997
------ -------- --------
<S> <C> <C>
Current Assets:
Cash..................................................... $ 102 $ 566
Accounts receivable, less allowance of $300.............. 21,757 27,631
Inventories.............................................. 36,006 48,842
Prepaid expenses and other current assets................ 368 2,537
Net assets of IPD (Note 13).............................. 31,640 --
-------- --------
Total current assets................................... 89,873 79,576
-------- --------
Property, Plant and Equipment:
Land and improvements.................................... 4,156 3,855
Building and improvements................................ 12,504 13,756
Machinery and equipment.................................. 90,418 99,766
Construction in progress................................. 5,267 6,666
-------- --------
112,345 124,043
Less--Accumulated depreciation........................... (32,361) (41,206)
-------- --------
Net property, plant and equipment........................ 79,984 82,837
Deferred Financing Costs and Other Assets.................. 413 3,048
-------- --------
Total assets........................................... $170,270 $165,461
======== ========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<S> <C> <C>
Current Liabilities:
Current portion of senior debt............................. $ 22,498 $ 2,000
Notes payable.............................................. -- 250
Accounts payable........................................... 17,719 15,863
Accrued liabilities--
Pensions................................................. 15,300 8,293
Postretirement benefits.................................. 5,790 5,567
Wages and salaries....................................... 5,174 5,501
Taxes, other than income taxes........................... 295 239
Interest................................................. 153 96
Profit sharing........................................... 2,780 2,629
Other.................................................... 4,689 6,846
-------- --------
Total current liabilities.............................. 74,398 47,284
-------- --------
Long-Term Liabilities:
Senior debt-less current portion........................... 19,197 25,391
Subordinated debt.......................................... 10,153 11,325
Notes payable.............................................. -- 750
Pensions................................................... 33,295 28,409
Postretirement benefits.................................... 45,315 43,857
Officers' deferred compensation............................ 2,224 2,201
Other noncurrent liabilities............................... 1,975 1,227
-------- --------
Total long term liabilities............................ 112,159 113,160
-------- --------
Total liabilities...................................... 186,557 160,444
-------- --------
Stockholders' Equity:
Common stock-authorized 100,000,000, issued and outstanding
5,139,993 and 5,315,473 shares in each period of $.01 par. 51 53
Additional paid-in capital................................. 35,398 37,798
Accumulated deficit........................................ (51,736) (32,834)
-------- --------
Total stockholders' equity............................. (16,287) 5,017
-------- --------
Total liabilities and stockholders' equity............. $170,270 $165,461
======== ========
</TABLE>

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

F-3
<PAGE>

LADISH CO., INC.

STATEMENTS OF OPERATIONS

(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------
1995 1996 1997
-------- -------- --------
<S> <C> <C> <C>
Net Sales......................................... $115,738 $162,002 $209,816
Cost of Sales..................................... 128,351 149,637 178,051
-------- -------- --------
Gross profit (loss)............................. (12,613) 12,365 31,765
Selling, General and Administrative Expenses...... 6,139 6,556 7,378
-------- -------- --------
Income (loss) from operations................... (18,752) 5,809 24,387
Other (Income) Expense:
Interest expense.................................. 3,339 3,703 3,334
Other, net........................................ 55 (29) 549
-------- -------- --------
Income (loss) from continuing operations before
provision for income taxes..................... (22,146) 2,135 20,504
Provision for Income Taxes........................ -- -- 1,602
-------- -------- --------
Income (loss) from continuing operations........ (22,146) 2,135 18,902
Discontinued Operations (Note 13):
Income (loss) from operations of IPD (net of tax
effect of $-- for all periods)................... 1,214 (262) --
Loss on disposal of IPD (net of tax effect of $--
)................................................ -- (8,594) --
-------- -------- --------
Net income (loss)............................... $(20,932) $ (6,721) $ 18,902
======== ======== ========
Earnings (Loss) Per Share from Continuing
Operations (Note 14):
Basic............................................. $ (4.40) $ 0.42 $ 3.63
======== ======== ========
Diluted........................................... $ (4.40) $ 0.20 $ 1.52
======== ======== ========
Net Income (Loss) Per Share:
Basic............................................. $ (4.16) $ (1.32) $ 3.63
======== ======== ========
Diluted........................................... $ (4.16) $ (0.62) $ 1.52
======== ======== ========
</TABLE>

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

F-4
<PAGE>

LADISH CO., INC.

STATEMENTS OF STOCKHOLDERS' EQUITY

(DOLLARS IN THOUSANDS EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
------------------ PAID-IN ACCUMULATED
SHARES AMOUNT CAPITAL DEFICIT TOTAL
--------- -------- ---------- ----------- --------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1994 5,029,517 $ 5,030 $ 30,194 $(24,083) $ 11,141
Net loss -- -- -- (20,932) (20,932)
Change in par value of
common stock from $1 to
no par -- 30,194 (30,194) -- --
Issuance of warrants on
senior subordinated
notes -- -- 40 -- 40
--------- -------- -------- -------- --------
Balance, December 31, 1995 5,029,517 35,224 40 (45,015) (9,751)
Net loss -- -- -- (6,721) (6,721)
Change in par value of
common stock from no
par to $.01 -- (35,174) 35,174 -- --
Issuance of warrants on
senior subordinated
notes -- -- 53 -- 53
Exercise of warrants 110,476 1 131 -- 132
--------- -------- -------- -------- --------
Balance, December 31, 1996 5,139,993 51 35,398 (51,736) (16,287)
Net income -- -- -- 18,902 18,902
Issuance of common stock 119,166 1 814 815
Reduction in valuation
allowance related to
pre-fresh start NOLs -- -- 1,519 -- 1,519
Exercise of warrants 56,314 1 67 -- 68
--------- -------- -------- -------- --------
Balance, December 31, 1997 5,315,473 $ 53 $ 37,798 $(32,834) $ 5,017
========= ======== ======== ======== ========
</TABLE>

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

F-5
<PAGE>

LADISH CO., INC.

STATEMENTS OF CASH FLOWS

(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------
1995 1996 1997
-------- ------- -------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net income (loss).................................. $(20,932) $(6,721) $18,902
Adjustments to reconcile net income (loss) to net
cash provided by (used for) operating activities--
Depreciation..................................... 8,908 9,136 9,773
Amortization..................................... 121 151 159
Payment-in-kind interest on subordinated debt.... 12 1,035 1,240
Reduction in valuation allowance................. -- -- 1,519
Loss on disposal of IPD.......................... -- 8,594 --
Loss on disposal of property, plant and
equipment....................................... -- -- 750
Changes in assets and liabilities--
Accounts receivable.............................. (3,166) (5,691) (5,382)
Inventories...................................... (2,925) (8,211) (9,219)
Net assets of IPD................................ (1,091) (5,768) --
Other assets..................................... (650) 96 (437)
Accounts payable and accrued liabilities......... 7,494 17,707 (12,325)
Other liabilities................................ 1,480 (12,702) (7,115)
-------- ------- -------
Net cash provided by (used for) operating
activities.................................... (10,749) (2,374) (2,135)
-------- ------- -------
Cash Flows from Investing Activities:
Additions to property, plant and equipment......... (2,865) (4,997) (9,217)
Proceeds from sale of property, plant and
equipment......................................... 1,018 70 984
Acquisition of business............................ -- -- (8,529)
Proceeds from sale of IPD.......................... -- -- 36,500
IPD disposition funds placed in escrow............. -- -- (3,650)
-------- ------- -------
Net cash provided by (used for) investing
activities.................................... (1,847) (4,927) 16,088
-------- ------- -------
Cash Flows from Financing Activities:
Repayment of senior debt........................... (31,665) -- --
Net proceeds from (repayments of) senior debt...... 39,960 1,735 (14,304)
Proceeds from issuance of subordinated debt and
warrants.......................................... 4,000 5,199 --
Issuance of common stock........................... -- 132 815
-------- ------- -------
Net cash provided by (used in) financing
activities.................................... 12,295 7,066 (13,489)
-------- ------- -------
Increase (Decrease) in Cash: (301) (235) 464
Cash, beginning of period.......................... 638 337 102
-------- ------- -------
Cash, end of period................................ $ 337 $ 102 $ 566
======== ======= =======
Supplemental Cash Flow Information:
Income taxes paid.................................. $ 20 $ 14 $ 326
Interest paid...................................... $ 4,560 $ 4,087 $ 2,595
</TABLE>

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

F-6
<PAGE>

LADISH CO., INC.

NOTES TO FINANCIAL STATEMENTS

(DOLLARS IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)

(1) BUSINESS INFORMATION--

Ladish Co., Inc. (the "Company") engineers, produces and markets high-
strength, high-technology forged and formed metal components for a wide
variety of load-bearing and fatigue-resisting applications in the aerospace,
defense and industrial markets, for both domestic and international customers.
Net sales to the aerospace, defense and industrial markets were approximately
78%, 12% and 10%, respectively, of total Company net sales in 1997 from
continuing operations.

Through May 30, 1997, Ladish Co., Inc. (the "Company") operated facilities
located in Cudahy, Wisconsin; Russellville, Arkansas; and Cynthiana, Kentucky.
On May 30, 1997, the Company disposed of its Industrial Products Division
("IPD") which included the facilities located in Arkansas and Kentucky. (See
Note 13.)

In June 1997, the Company acquired Stowe Machine Co., Inc., a finished
machining operation located in Windsor, Connecticut. (See Note 15.)

For the years ended December 31, 1995, 1996 and 1997, the Company had one
customer that accounted for 23%, 18% and 15% and another customer that
accounted for 18%, 17% and 24%, respectively, of net sales from continuing
operations. For the years ended December 31, 1996 and 1997, the Company had an
additional customer that accounted for 19% and 20%, respectively, of net sales
from continuing operations.

Exports accounted for approximately 31%, 40%, and 42% of the Company's net
sales for the years ended December 31, 1995, 1996 and 1997, respectively. Net
sales to Europe constituted approximately 19%, 31% and 32% for the periods
ended December 31, 1995, 1996 and 1997, respectively.

As of December 31, 1997, approximately 84% of the Company's employees are
represented by one of eight collective bargaining units. The collective
bargaining agreements with most of these units will expire during the year
2000. The Company does not anticipate that work stoppages will arise in
connection with the renewal of these agreements in the future.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--

(a) Outstanding checks--

Outstanding payroll and accounts payable checks related to certain bank
accounts are recorded as accounts payable in the accompanying balance sheets.
These checks amounted to $2,171 and $622 as of December 31, 1996 and 1997,
respectively.

(b) Inventories--

Inventories are stated at the lower of cost or market using the first-in,
first-out (FIFO) valuation method. Inventory costs include material, labor and
overhead.

Inventories consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1996 1997
------- -------
<S> <C> <C>
Raw materials........................................... $10,867 $19,104
Work-in-process and finished............................ 28,723 34,049
----------------
39,590 53,153
Less progress payments.................................. (3,584) (4,311)
----------------
Total inventories..................................... $36,006 $48,842
================
</TABLE>

F-7
<PAGE>

LADISH CO., INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Additions to property, plant, and equipment are recorded at cost. Tooling
costs are expensed as incurred. Depreciation is provided using the straight-
line method over the estimated useful lives of the assets, as follows:

<TABLE>
<S> <C>
Land improvements......... 30 or 39 years
Buildings and
improvements............. 30 or 39 years
Machinery and equipment... 5 to 12 years
</TABLE>

(d) Goodwill--

Goodwill represents the excess of the purchase price over the fair value of
identifiable net assets relating to the 1997 acquisition of Stowe Machine Co.,
Inc. (See Note 15.) Goodwill is being amortized on a straight-line basis over
20 years. As of December 31, 1997, unamortized goodwill amounted to $846 and
is included in other assets. Amortization expense was $24 for the year ended
December 31, 1997.

(e) Revenue recognition--

Sales revenue is recognized when products are shipped. Net sales include
reductions for returns and allowances, sales discounts and freight out.
Progress payments on contracts are generally recognized as a reduction of the
related inventory costs.

(f) Contract settlement adjustments--

Settlement adjustments applicable to long-term contracts are recognized as
an adjustment to sales revenue in the year agreement is reached on the amounts
to be received or paid. Losses on individual contracts are recorded as soon as
they are identified. Settlement amounts for the years ended December 31, 1995,
1996 and 1997, were not significant.

(g) Income taxes--

Deferred income taxes are provided at the enacted marginal rates on the
difference between the financial statement and income tax basis of assets and
liabilities. Deferred income tax provisions or benefits are based on the
change in the deferred tax assets and liabilities from period to period. (See
Note 7.)

(h) Use of estimates--

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

(i) Fair value of financial instruments--

Based on the borrowing rates currently available to the Company for loans
with similar terms and maturities, the fair value of long-term debt of the
Company approximates book value as of December 31, 1997.

(3) DEBT--

Senior debt

On July 7, 1995, the Company entered into a credit agreement with its lender
which provided for a $45,000 total credit facility which included an $8,000
term loan. On November 12, 1996, the total credit facility was increased to
$53,000. All personal and real property of the Company has been pledged as
collateral under the new credit agreement. An affiliated party of this lender
is also a significant customer of the Company.

As of December 31, 1997, the $45,000 revolving credit facility carried an
interest rate of commercial paper plus 2%. As of December 31, 1997, the
interest rate was approximately 7.6%. The credit facility expires on

F-8
<PAGE>

LADISH CO., INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

June 30, 2000. To the extent the Company meets certain cash flow provisions of
the credit agreement in the future, the interest rate on the revolving credit
facility will be reduced by 0.5% effective the month following achievement of
the cash flow provisions. The credit line availability is subject to a
borrowing base limitation which is calculated based on eligible accounts
receivable and inventories reduced by any letters of credit. Letters of credit
outstanding total $884 and $91 as of December 31, 1996 and 1997, respectively.
As of December 31, 1997, the amount available for future borrowing under the
revolving credit facility was approximately $23,000.

The $8,000 term loan is payable in sixteen quarterly installments and
commenced on September 30, 1996. The first four quarterly installments were
$375 each, the next eight installments are $500 each and the last four
installments beginning September 30, 1999 will be $625 each with the last
installment due on June 30, 2000. The Company may, at any time, prepay the
outstanding balance, but will be subject to a prepayment fee of 1% if the
prepayment is prior to July 1, 1999. The term loan carries an interest rate of
commercial paper plus 2%. As of December 31, 1997, the interest rate was
approximately 7.6%.

The annual maturities of the Company's term loan are as follows:

The revolving credit facility and term loan contain covenants including but
not limited to restrictions on indebtedness, operations, change in control and
the requirement that interest coverage and fixed charge coverage ratios, as
defined, be maintained. As of December 31, 1997, the Company was in compliance
with all covenants under the credit facility and term loan. Transaction fees
incurred in connection with this refinancing were approximately $1,115. The
credit agreement provided for a refund of up to $645 of the transaction fees
if the Company received an acceptable infusion of capital prior to June 30,
1996. The Company obtained refunds of transaction fees of $344 in December,
1995 and the remaining $301 in February, 1996 as a result of the issuance of
senior subordinated notes described below. In addition, the revolving credit
facility requires that the Company pay an unused facility fee of 0.25% per
annum on the average daily unused balance.

Senior subordinated secured notes and warrants--

In December 1995, the Company issued a total of $4,000 of senior
subordinated notes ("Notes") to two of the Company's largest stockholders. In
February 1996, in a second offering of these Notes, additional proceeds of
$5,331 ($132 of these proceeds related to the purchase of common stock under
the rights attached to warrants as discussed later in this note) were received
by the Company. This offering was extended to all shareholders who were
accredited investors. These Notes carry interest at 12%, are due in December
2000, and include detachable warrants to purchase shares of common stock.
Interest is payable quarterly in the form of additional notes also carrying
interest at 12%.

The Notes are secured by a second security interest in substantially all of
the Company's assets, and are subordinated to the $53,000 Credit Agreement.
The Company has undertaken a number of affirmative and negative covenants
including but not limited to restrictions on indebtedness, operations and
change in control. The Subordinated Notes include a number of affirmative and
negative covenants, including, but not limited to, restrictions on the
incurrence of indebtedness junior to obligations under the Credit Agreement
and senior to the Subordinated Notes. Upon a change in control of the Company,
the Company is required to redeem the outstanding Subordinated Notes at a
price equal to the outstanding principal amount plus accrued and unpaid
interest. At December 31, 1997 the Company was in compliance with all
covenants under the Subordinated Notes.

F-9
<PAGE>

LADISH CO., INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

As stated above, the noteholders also received warrants with each Note
purchased. Each warrant entitles the holder to purchase common stock for $1.20
per share. The exercise price may be paid in cash, or by the surrender of
already outstanding Ladish common stock, Notes or other warrants having a fair
value equal to the exercise price. Based on the total proceeds of $9,331 from
the private placement, warrants were issued, which, when exercised, would
entitle the holders to purchase 7,775,722 shares of common stock. As of
December 31, 1997, 166,790 warrants have been exercised. The warrants expire
ten years from the date of issuance. The warrants were recorded as an increase
to additional paid-in capital at their stated value, which the Company
believes is not materially different from their fair value for financial
reporting purposes at the date of issuance. The Company believes that any
extraordinary charge which might result from the retirement of the
subordinated debt would not be material to the financial statements.

(4) STOCKHOLDERS' EQUITY--

In November 1995, the Company's stockholders approved an amendment to the
articles of incorporation which increased the number of authorized shares to
100,000,000 and changed the par value of a share of common stock from $1 to
"no par". This amendment increased common stock by $30,194 and reduced
additional paid-in capital by $30,194.

In June 1996, the Company's stockholders approved an amendment to the
articles of incorporation which changed the par value of a share of common
stock from "no par" to $.01 par. This amendment decreased common stock by
$35,174 and increased additional paid-in-capital by $35,174.

In December 1997, the Company's articles of incorporation were amended to
provide for a 1 for 6 reverse split of the common stock. All common stock
amounts have been retroactively adjusted for the reverse split.

In addition to the common stock outstanding, the Board of Directors entered
into an agreement in 1993 to issue to a former executive 496,188 options to
purchase common stock at an average exercise price of $16.00 per share. All of
these options are exercisable but remain outstanding.

In 1996, the Company adopted the Ladish Co., Inc. 1996 Long-Term Incentive
Plan (the "Plan"). Under the Plan, incentive stock options may be granted to
employees of the Company, which expire ten years from the grant date. The
options vest over four years. In September 1996, the Company issued 433,333
options under the Plan. As of December 31, 1997, 110,833 of these options have
been exercised. The Company has reserved 400,000 shares for future issuance
under the Plan.

The Company accounts for its option grants using the intrinsic value based
method pursuant to APB Opinion No. 25 and Statement of Financial Accounting
Standards No. 123 ("SFAS 123") under which no compensation expense was
recognized in 1995 and 1996. Had compensation cost for these options been
determined pursuant to the fair value method under SFAS 123, the Company's net
loss and earnings per share from continuing operations would have been reduced
by the following pro forma amounts:

<TABLE>
<CAPTION>
1995 1996 1997
------------------ --------------- ----------------
AS PRO AS PRO AS PRO
REPORTED FORMA REPORTED FORMA REPORTED FORMA
-------- -------- -------- ------ -------- -------
<S> <C> <C> <C> <C> <C> <C>
Net income (loss)......... $(22,146) $(22,146) $2,135 $1,523 $18,902 $17,315
Diluted earnings (loss)
per share................ $ (4.40) $ (4.40) $ 0.20 $ 0.14 $ 1.52 $ 1.39
</TABLE>

Because the SFAS 123 method of accounting has not been applied to options
granted prior to January 1, 1995, and additional awards in future years are
anticipated, the effect of applying SFAS 123 in the above pro forma disclosure
is not indicative of future amounts.

F-10
<PAGE>

LADISH CO., INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

The fair value of the 1995 and 1996 option grants used to compute the pro
forma amounts above was estimated on the date of the grant using the Minimum
Value option pricing model with the following assumptions used for grants in
1995 and 1996 respectively: risk free interest rate of 6%, expected remaining
lives of 10 years, and market value of $6.00. The weighted average minimum
value of options granted in 1995, 1996 and 1997 was $0.00, $5.65 and $14.65,
respectively.

<TABLE>
<CAPTION>
1995 1996 1997
---------------- ---------------- ----------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
OPTIONS PRICE OPTIONS PRICE OPTIONS PRICE
------- -------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of
period..................... 220,528 $12.00 385,924 $14.57 929,521 $11.34
Granted................... 165,396 18.00 543,597 9.04 -- --
Exercised................. -- -- -- -- 110,833 6.00
Canceled.................. -- -- -- -- -- --
Outstanding at end of
period..................... 385,924 $14.57 929,521 $11.34 818,688 $12.06
Exercisable at end of
period..................... 385,924 $14.57 604,521 $14.21 602,021 $14.24
</TABLE>

The options outstanding at December 31, 1997 consist of the following:

<TABLE>
<CAPTION>
WEIGHTED
WEIGHTED AVERAGE
RANGE OF AVERAGE REMAINING
EXERCISE NUMBER EXERCISE CONTRACTUAL
PRICES OUTSTANDING/EXERCISABLE PRICE LIFE
-------- ----------------------- -------- -----------
<S> <C> <C> <C>
$5 to $10 322,500/105,833 6.00/6.00 9.0
$10 to $15 220,528/220,528 12.00/12.00 7.0
$15 to $20 165,396/165,396 18.00/18.00 8.0
$20 to $25 110,264/110,264 21.00/21.00 9.0
--------------- ----------- ---
818,688/602,021 12.06/14.24 8.3
=============== =========== ===
</TABLE>

(5) RESEARCH AND DEVELOPMENT--

Research and Development costs are expensed as incurred. These costs of
continuing operations were $3,783, $3,384 and $3,427 in 1995, 1996 and 1997,
respectively.

(6) LEASES--

Certain office and warehouse facilities and equipment are leased under
noncancelable operating leases expiring on various dates through 2002. Rental
expense from continuing operations was $266, $284 and $304 in 1995, 1996 and
1997, respectively.

Minimum lease obligations under noncancelable operating leases are as
follows:

<TABLE>
<S> <C>
1998................................ $327
1999................................ 275
2000................................ 82
2001................................ 51
2002 and thereafter................. 45
----
Total............................. $780
====
</TABLE>

F-11
<PAGE>

LADISH CO., INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

(7) INCOME TAXES--

As a result of a financial restructuring completed on April 30, 1993, tax
net operating loss ("NOL") carryforwards generated prior to the financial
restructuring are limited under the Internal Revenue Code by a formula based
upon the Company's stockholders' equity of $35,180 as of April 30, 1993, which
was calculated in conjunction with fresh start reporting and approximated fair
market value at that date. The annual use of this NOL carryforward is limited
to the lesser of the Company's taxable income or the NOL allowed to be used
under the formula. Each year under the formula, approximately $2,100 of the
NOL generated prior to the financial restructuring is available for use. Any
amount not used in the current or previous years is allowed to be used in
subsequent years. These NOL carryforwards may be used to offset taxable income
through the year 2007. Based on these limitations and certain other factors, a
valuation allowance has been recorded against the entire amount of the
Company's net deferred tax assets. Any tax benefit that is realized in
subsequent years from the reduction of the valuation allowance established at
or prior to the financial restructuring will be recorded as an addition to
paid-in capital.

In addition, NOL carryforwards generated subsequent to the financial
restructuring of approximately $14,000, $20,000 and $15,000 for the eight
months ended December 31, 1993, and for the years ended December 31, 1994 and
1995, respectively, are available to offset future taxable income through the
years 2008, 2009 and 2010, respectively. The Company has also recorded a
valuation allowance against the entire amount of these net deferred tax
assets. Any tax benefit that is realized in subsequent years from the
utilization of these NOL carryforwards will be recorded as a reduction of
future income tax provisions.

Components of the deferred income taxes are as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1996 1997
-------- --------
<S> <C> <C>
Current deferred tax assets:
Inventory adjustments.............................. $ 1,048 $ 1,166
Accrued employee costs............................. 1,606 1,391
Pension benefits................................... 2,777 3,031
Postretirement health care benefits................ 2,316 2,227
Other.............................................. 416 1,069
-------- --------
Total current deferred tax assets................ 8,163 8,884
Current valuation allowance.......................... (8,163) (8,884)
-------- --------
Net current deferred taxes....................... $ -- $ --
======== ========
Noncurrent deferred tax assets and liabilities:
Property, plant and equipment...................... $(21,700) $(19,522)
Operating loss carryforwards....................... 32,984 22,815
Pension benefits................................... 14,191 12,244
Postretirement health care benefits................ 18,126 17,543
Other.............................................. 2,038 1,402
-------- --------
Total net noncurrent deferred tax assets......... 45,639 34,482
Noncurrent valuation allowance....................... (45,639) (34,482)
-------- --------
Net noncurrent deferred taxes.................... $ -- $ --
======== ========
</TABLE>

A summary of the Company's effective tax rates is as follows:

<TABLE>
<CAPTION>
1995 1996 1997
-------- ------ -------
<S> <C> <C> <C>
Pretax book income........................ $(22,146) $2,135 $20,504
======== ====== =======
Federal tax at statutory rate............. $ (7,751) $ 747 $ 7,176
State tax at statutory rate............... (1,107) 107 1,158
Post fresh start net operating losses
created (used) by operations............. 8,858 (854) (6,732)
-------- ------ -------
Total provision......................... $ -- $ -- $ 1,602
======== ====== =======
Effective tax rate........................ -- -- 7.8%
======== ====== =======
</TABLE>

F-12
<PAGE>

LADISH CO., INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

(8) PENSION PLANS--

The Company has noncontributory defined benefit pension plans ("Plans")
covering substantially all employees. Plans covering salaried and management
employees provide pension benefits that are based on the highest five
consecutive years of an employee's compensation during the last ten years
prior to retirement. Plans covering hourly employees and union members
generally provide benefits of stated amounts for each year of service. The
Company's funding policy is to contribute annually the minimum amount required
under the Employee Retirement Income Security Act of 1974. The Plans' assets
are primarily invested in U.S. Government securities, corporate bonds and
common stocks.

A Summary of the Plans' funded status and amounts reflected in the balance
sheets is as follows:

<TABLE>
<CAPTION>
DECEMBER 31, 1996
-----------------------
ASSETS ACCUMULATED
EXCEED BENEFITS
ACCUMULATED EXCEED
BENEFITS ASSETS
----------- -----------
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligations..................... $ (71,985) $(86,073)
========= ========
Accumulated benefit obligations................ $ (75,053) $(93,508)
========= ========
Projected benefit obligations.................. $ (76,480) $(93,508)
Plan assets at fair value...................... 94,998 56,263
--------- --------
Plan assets in excess of (less than)
projected benefit obligations............... 18,518 (37,245)
Unrecognized net gain.......................... (19,043) (13,188)
Unrecognized prior service cost................ 242 2,163
Adjustment to recognize minimum liability...... -- (42)
--------- --------
Accrued pension cost......................... $ (283) $(48,312)
========= ========
<CAPTION>
DECEMBER 31, 1997
-----------------------
ASSETS ACCUMULATED
EXCEED BENEFITS
ACCUMULATED EXCEED
BENEFITS ASSETS
----------- -----------
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligations..................... $(108,793) $(55,625)
========= ========
Accumulated benefit obligations................ $(115,391) $(59,788)
========= ========
Projected benefit obligations.................. $(118,032) $(59,788)
Plan assets at fair value...................... 144,209 39,109
--------- --------
Plan assets in excess of (less than)
projected benefit obligations............... 26,177 (20,679)
Unrecognized net gain.......................... (36,419) (7,919)
Unrecognized prior service cost................ 1,079 1,059
--------- --------
Accrued pension cost......................... $ (9,163) $(27,539)
========= ========
</TABLE>

Net periodic pension cost includes the following components:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1995 1996 1997
-------- -------- --------
<S> <C> <C> <C>
Service cost-benefits earned during the
period................................... $ 1,624 $ 1,595 $ 1,426
Interest cost on projected benefit
obligation............................... 14,469 14,013 14,070
Actual return on plan assets.............. (28,029) (17,303) (35,145)
Net amortization and deferral............. 16,164 5,501 21,660
Curtailment gain.......................... -- (445) --
-------- -------- --------
Net periodic pension cost............... $ 4,228 $ 3,361 $ 2,011
======== ======== ========
</TABLE>

F-13
<PAGE>

LADISH CO., INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Assumptions used in the determination of net periodic pension cost for these
periods are:

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1995 1996 1997
----- ----- -----
<S> <C> <C> <C>
Discount rate........................................... 8.25% 7.75% 8.25%
Rate of increase in compensation levels................. 4.50% 2.00% 2.00%
Expected long-term rate of return on assets............. 8.00% 8.00% 9.25%
</TABLE>

The actuarial present value of the projected benefit obligation was
determined utilizing a discount rate of 8.25% and 7.75% as of December 31,
1996 and 1997, respectively. The decrease in the discount rate resulted in an
increase in the accumulated benefit obligation of approximately $6,794 as of
December 31, 1997.

Certain employees are covered by union-sponsored, collectively-bargained,
multi-employer pension plans.

The actuarial calculation of the Company's minimum funding pension payment
due in 1998 for 1997 and 1998 is $8,293. This amount is shown as a current
liability on the balance sheet as of December 31, 1997.

Due to the sale of IPD, the Company experienced a gain of $445 in 1996
related to the pension benefit plans that are being placed in curtailment. The
Company will remain liable for the plans and will continue to administer the
plans. This gain is reflected as a component of the loss on the sale of IPD.

In October 1997, the Company reached an agreement with the Pension Benefit
Guaranty Corporation whereby the Company will increase funding of the plans.

(9) POSTRETIREMENT HEALTH CARE AND LIFE INSURANCE BENEFITS--

In addition to pension benefits, employees are provided certain
postretirement health care and life insurance benefits. Substantially all of
the employees may become eligible for these benefits when they retire. The
Company accrues, as current costs, the future lifetime retirement benefits for
both active and retired employees and their dependents. Steps have been taken
by the Company to reduce the amount of the future obligation for
postretirement benefits of future retirees by capping the amount of funds
payable on behalf of the retirees.

Amounts reflected in the balance sheets for postretirement benefit
obligations are as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1996 1997
------- -------
<S> <C> <C>
Retirees................................................ $37,838 $43,879
Fully eligible active plan participants................. 2,984 3,535
Other active plan participants.......................... 6,034 7,485
------- -------
Accumulated postretirement benefit obligation......... 46,856 54,899
Unrecognized net gain (loss)............................ 4,615 (5,475)
Curtailment gain........................................ (366) --
------- -------
Postretirement liability.............................. $51,105 $49,424
======= =======
</TABLE>

F-14
<PAGE>

LADISH CO., INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Net periodic postretirement benefit cost includes the following components:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1995 1996 1997
------ ------ ------
<S> <C> <C> <C>
Service cost benefits earned during the period.... $ 369 $ 380 $ 343
Interest cost on accumulated postretirement
benefit obligation............................... 4,015 3,890 3,619
Net amortization and deferral..................... (38) (56) (77)
Curtailment gain.................................. -- (366) --
------ ------ ------
Net periodic postretirement benefit cost........ $4,346 $3,848 $3,885
====== ====== ======
</TABLE>

Assumptions used in the determination of net periodic postretirement
benefit cost for these periods are:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1995 1996 1997
------ ------ ------
<S> <C> <C> <C>
Discount rate 8.25% 7.75% 8.25%
Inflation--
Retirees as of 1991
Pre-65 Medical trending rate
--initial 13.00% 12.00% 11.00%
--ultimate 7.00% 7.00% 7.00%
Post-65 Medical trending rate
--initial 8.00% 7.50% 7.00%
--ultimate 5.00% 5.00% 5.00%
Retirees Subsequent to 1991
--initial and ultimate medical trending rate 3.00% 3.00% 3.00%
</TABLE>

The initial rates used for the retirees as of 1991, are estimated to
decrease at a rate of 1% and .5% for the pre-65 and post-65 retiree
populations, respectively, until they reach the ultimate medical trending
rate.

An increase of 1% in the assumed medical trending rate for each future year
would increase the accumulated postretirement benefit obligation as of
December 31, 1996 and 1997, by approximately $2,342 and $2,817, respectively,
and the aggregate of the service and interest cost components of net periodic
postretirement benefit cost by approximately $223 for the year ended December
31, 1997.

The accumulated postretirement benefit obligation was determined utilizing a
discount rate of 8.25% and 7.75% as of December 31, 1996 and 1997,
respectively. The decrease in the discount rate resulted in an increase of the
accumulated postretirement benefit obligation of approximately $1,922 as of
December 31, 1997.

Due to the sale of IPD, the Company experienced a gain of $366 in 1996
related to the postretirement benefits that are being placed in curtailment.
This gain is reflected as a component of the loss on the sale of IPD.

(10) OFFICERS' DEFERRED COMPENSATION PLAN--

Certain officers have deferred compensation agreements which, upon
retirement, provide them with, among other things, supplemental pension and
other postretirement benefits. An accumulated liability of $2,224 and $2,201
as of December 31, 1996 and 1997, respectively, has been recorded under these
agreements as actuarially determined. The expense was $208, $169 and $165 in
1995, 1996 and 1997, respectively.

F-15
<PAGE>

LADISH CO., INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

(11) PROFIT SHARING--

Effective January 1, 1996, the Company initiated a profit sharing program in
which substantially all of the employees are eligible to participate. The
profit sharing payout is derived from a formula based on pretax income and is
payable no later than February 15th of the subsequent year. The expense was
$2,780 and $2,629 for the years ended December 31, 1996 and 1997.

(12) COMMITMENTS AND CONTINGENCIES--

The Company is involved in various stages of investigation relative to
environmental protection matters relating to various waste disposal sites. The
potential costs related to such matters and the possible impact thereof on
future operations are uncertain due in part to uncertainty as to the extent of
the pollution, the complexity of government laws and regulations and their
interpretations, the varying costs and effectiveness of alternative cleanup
technologies and methods, and the questionable level of the Company's
involvement. The Company has made provisions in the financial statements for
potential losses related to these matters. The Company does not anticipate
such losses will have a material impact on the financial statements beyond the
aforementioned provisions.

Various other lawsuits and claims arising in the normal course of business
are pending against the Company and such losses are not expected to be
material to the financial statements.

In 1995, the Company resolved a dispute with a previous owner of the
Company. The resolution of this dispute resulted in the Company recovering
$1,650 of costs incurred in prior years associated with the indemnification of
another lawsuit. This recovery was recorded as discontinued operations in the
1995 statement of operations.

(13) DISCONTINUED OPERATIONS--

In February 1997, the Board of Directors approved of the disposition of the
Company's Industrial Products Division ("IPD") which included facilities
located in Arkansas and Kentucky. The disposal date was May 30, 1997 and
substantially all IPD assets were sold to a third party buyer for
approximately $36,500 in cash subject to a working capital adjustment. Ten
percent of the cash proceeds ($3,650) was placed in an escrow account to
secure certain representations made by the Company in connection with the
sale. $1,825 of the total escrow is reflected on the balance sheet as other
current assets and $1,825 as other noncurrent assets. The proceeds from the
sale of IPD will be used for minimum pension funding requirements and to
reduce the outstanding senior debt.

The net results of these operations prior to December 31, 1996 are included
in the consolidated statements of operations under "discontinued operations."
Sales for IPD were $44,348 and $46,034 for the years ended December 31, 1995
and 1996, respectively.

The operating results of IPD include an interest allocation based upon net
assets of IPD. Interest expense allocated to the discontinued operation was
$1,178 and $1,422 for the years ended December 31, 1995 and 1996,
respectively.

Basic earnings (loss) per share from discontinued operations was $0.24 and
$(1.74) in 1995 and 1996, respectively. Diluted earnings in 1995 and 1996 were
$0.24 and $(0.82) per share, respectively.

The loss on disposal of IPD reflected in the consolidated statements of
operations includes the write-down of the assets of IPD to estimated net
realizable value, estimated operating losses incurred by IPD during the period
of January 1, 1997 through May 30, 1997 and the estimated disposal costs of
these operations. In February 1997, the Kentucky facility of IPD sustained
significant flood damage which, in management's opinion, is covered by
insurance, less a $1,300 deductible. The deductible related to the flood
damage is included in the loss on disposal of IPD.

F-16
<PAGE>

LADISH CO., INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

The net assets of IPD as shown on the balance sheet as of December 31, 1996
consist of the following:

<TABLE>
<S> <C>
Current assets (primarily receivables and inventory)............. $23,838
Property and equipment, net...................................... 19,933
Current liabilities.............................................. (2,726)
Writedown of IPD net assets to net realizable value.............. (4,545)
-------
36,500
Provision for operating losses and disposal costs of IPD......... (4,860)
-------
Total IPD net assets........................................... $31,640
=======
</TABLE>

(14) EARNINGS PER SHARE--

In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS 128").
The standard requires the disclosure of two earnings per share amounts--"basic
earnings per share of common stock" and "diluted earnings per share of common
stock." The computation of diluted earnings per share is similar to the
Company's previous computation of "earnings per share of common stock."

Basic earnings per share of common stock is computed by dividing net
earnings from operations by the weighted average number of common shares
outstanding during the period. Diluted earnings per share of common stock is
computed by dividing net earnings from operations by the average number of
common shares and common share equivalents related to the assumed exercise of
stock options and warrants.

The following shares were used to calculate basic and diluted earnings per
share:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------
1995 1996 1997
--------- ---------- ----------
<S> <C> <C> <C>
Average shares of common stock
outstanding............................. 5,029,517 5,091,957 5,208,251
Incremental shares applicable to common
stock options and warrants.............. -- 5,765,953 7,261,567
--------- ---------- ----------
Average common shares adjusted........... 5,029,517 10,857,910 12,469,818
========= ========== ==========
</TABLE>

The shares outstanding used to compute diluted earnings per share for 1995,
1996 and 1997 excluded outstanding options to purchase 385,924, 275,660 and
275,660 shares of common stock, respectively, at weighted average exercise
price of $14.57, $19.20 and $19.20, respectively. The options were excluded
because their exercise prices were greater than the average market price of
the common shares during each respective year and their inclusion in the
computation would have been antidilutive.

The Company adopted SFAS 128 effective for the year ended December 31, 1997.
All earnings per share amounts for prior years have been retroactively
restated.

(15) ACQUISITION--

On June 16, 1997, the Company completed the purchase of certain assets and
assumption of certain liabilities of Stowe Machine Co., Inc. (Stowe). The
purchase price was composed of approximately $8,500 in cash and a note payable
for $1,000. The Company borrowed an additional $5,200 on its senior bank debt
to finance a portion of the cash paid.

F-17
<PAGE>

LADISH CO., INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

The acquisition has been accounted for using the purchase method of
accounting. Accordingly, the net assets are included in the Company's
Consolidated Balance Sheets as of December 31, 1997 based upon their estimated
fair values at the acquisition's effective date of June 16, 1997. The
Company's Consolidated Statements of Operations do not include the revenues
and expenses of Stowe prior to this date. The excess of the purchase price
over the estimated fair value of the net assets acquired (goodwill) of
approximately $870 will be amortized on a straight-line basis over 20 years.
The purchase price allocation is based on the fair value of the net assets
acquired. There are no remaining contingencies that will impact the overall
purchase price.

Supplemental pro forma results of operations (Unaudited)--

The following unaudited pro forma summary presents the consolidated results
of operations as if the acquisition had occurred at the beginning of the
periods presented and does not purport to be indicative of what would have
occurred had the acquisition actually been made as of such date or of results
which may occur in the future.

<TABLE>
<CAPTION>
1996 1997
-------- --------
<S> <C> <C>
Net sales............................................... $169,890 $213,519
Net income from continuing operations................... 2,176 18,714
Diluted earnings per share from continuing operations... 0.20 1.50
</TABLE>

(16) VALUATION AND QUALIFYING ACCOUNTS--

<TABLE>
<CAPTION>
PROVISION
BALANCE AT CHARGED TO PAYMENTS
BEGINNING OF PROFIT AND AND ACCOUNTS BALANCE AT
YEAR LOSS WRITTEN OFF END OF YEAR
------------ ---------- ------------ -----------
<S> <C> <C> <C> <C>
Year ended December 31, 1995
Allowance for doubtful
accounts................... $450 $ 44 $44 $450
==== ===== === ====
Year ended December 31, 1996
Allowance for doubtful
accounts................... $450 $(121) $29 $300
==== ===== === ====
Year ended December 31, 1997
Allowance for doubtful
accounts................... $300 $ 9 $ 9 $300
==== ===== === ====
</TABLE>

F-18
<PAGE>

REPORT OF INDEPENDENT AUDITORS

Stockholders and Board of Directors
Stowe Machine Company Incorporated

We have audited the accompanying balance sheets of Stowe Machine Company
Incorporated as of December 31, 1995 and 1996, and the related statements of
operations and cash flows for the years then ended. 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.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Stowe Machine Company
Incorporated at December 31, 1995 and 1996, and the results of its operations
and its cash flows for the years then ended in conformity with generally
accepted accounting principles.

Ernst & Young LLP

Hartford, Connecticut
March 24, 1997

F-19
<PAGE>

STOWE MACHINE COMPANY INCORPORATED

BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1995 1996
---------- ----------
<S> <C> <C>
ASSETS
Current assets:
Cash................................................... $ 102,405 $ 59,987
Accounts receivable.................................... 569,109 651,519
Inventories............................................ 3,278,411 3,463,044
Deferred state income taxes............................ 5,210 10,587
Prepaid expense........................................ 12,658 13,356
---------- ----------
Total current assets................................. 3,967,793 4,198,493
Property, plant and equipment:
Land and land improvements............................. 255,881 279,924
Buildings.............................................. 731,595 731,595
Machinery and equipment................................ 5,266,146 5,354,874
Furniture, fixtures and automobiles.................... 72,573 72,573
---------- ----------
6,326,195 6,438,966
Less accumulated depreciation.......................... 4,186,713 4,373,767
---------- ----------
2,139,482 2,065,199
Intangible assets, net of accumulated amortization of
$93,301 in 1995 and $106,349 in 1996.................... 65,964 52,916
---------- ----------
Total assets......................................... $6,173,239 $6,316,608
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Demand notes payable to officers....................... $ 80,000 $ 80,000
Accounts payable....................................... 406,818 748,312
Accrued expenses....................................... 495,416 552,146
Interest payable....................................... 27,609 20,282
State income taxes payable............................. -- 27,496
Current portion of long-term debt...................... 963,938 620,947
---------- ----------
Total current liabilities............................ 1,973,781 2,049,183
Long-term debt:
Notes payable, less current portion.................... 2,877,490 2,656,543
Notes payable to officers.............................. 383,333 283,334
---------- ----------
3,260,823 2,939,877
Deferred state income taxes.............................. 104,949 111,420
Stockholders' equity:
Common stock, $100 par value:
Authorized--10,000 shares
Issued and outstanding--577 shares................... 57,700 57,700
Additional paid-in capital............................. 242,300 242,300
Retained earnings...................................... 533,686 916,128
---------- ----------
Total stockholders' equity........................... 833,686 1,216,128
---------- ----------
Total liabilities and stockholders' equity......... $6,173,239 $6,316,608
========== ==========
</TABLE>

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

F-20
<PAGE>

STOWE MACHINE COMPANY INCORPORATED

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31,
----------------------
1995 1996
---------- ----------
<S> <C> <C>
Net sales.............................................. $6,854,037 $7,887,583
Cost of sales.......................................... 5,592,343 6,470,349
Selling, general and administrative expenses......... 477,217 473,583
---------- ----------
6,069,560 6,943,932
---------- ----------
Income from operations................................. 784,477 943,651
Interest expense....................................... 494,536 444,183
---------- ----------
Income before provision for income taxes and
extraordinary charge.................................. 289,941 499,468
State income taxes..................................... 18,209 31,992
---------- ----------
Income before extraordinary charge..................... 271,732 467,476
Extraordinary charge................................. (75,702) (85,034)
---------- ----------
Net income............................................. $ 196,030 $ 382,442
========== ==========
</TABLE>

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

F-21
<PAGE>

STOWE MACHINE COMPANY INCORPORATED

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31,
--------------------
1995 1996
--------- ---------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income.............................................. $ 196,030 $ 382,442
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization......................... 181,812 200,102
Changes in assets and liabilities:
Accounts receivable................................. 58,505 (82,410)
Inventories and prepaid expenses.................... 267,728 (185,331)
Accounts payable, accrued expenses, interest payable
and state income
taxes payable...................................... (179,369) 418,393
Deferred state income taxes......................... 12,109 1,094
--------- ---------
Net cash provided by operating activities......... 536,815 734,290
Cash Flows Used by Investing Activities:
Additions for property, plant and equipment............. (589,692) (112,771)
--------- ---------
Net cash used by investing activities................... (589,692) (112,771)
Cash Flows Used by Financing Activities:
Principal borrowings on long-term debt.................. 575,865 --
Principal payments on notes payable to officers......... (100,000) (99,999)
Principal payments on long-term debt.................... (503,156) (563,938)
--------- ---------
Net cash used by financing activities................... (27,291) (663,937)
--------- ---------
Net (decrease) increase in cash................... (80,168) (42,418)
Cash, beginning of period............................... 182,573 102,405
--------- ---------
Cash, end of period..................................... $ 102,405 $ 59,987
========= =========
</TABLE>

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

F-22
<PAGE>

STOWE MACHINE COMPANY INCORPORATED

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1996

1. BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

Description of Business

Stowe Machine Company Incorporated (the Company) is a manufacturer of
machined components for the jet engine industry. It has special machining
capabilities which are applied to cylindrical forgings of titanium or nickel
alloy. The Company had three customers that accounted for 45%, 30% and 10% of
net sales for the year ended December 31, 1995, and 55%, 25% and 5% of net
sales for the year ended December 31, 1996. The Company's three primary
customers, one of which is the U.S. Government, account for approximately
eighty-five percent of sales, and the Company has not experienced losses
related to accounts receivable in the past.

Inventories

Inventories are stated at the lower cost or market. Cost is determined by
the last-in, first-out (LIFO) method.

On orders where the Company is either the prime contractor or a
subcontractor for the U.S. Government, the Company is entitled to receive
progress payments prior to shipment. Inventories are reduced for payments
received on orders which have not been shipped at year-end.

Property, Plant and Equipment

Property, plant and equipment is stated on the basis of cost. Depreciation
is calculated using the straight-line method over the estimated useful lives
of the assets.

Income Taxes

The Company operates under Subchapter S of the Internal Revenue Code, and
consequently, it is not subject to federal income tax; the stockholders
include the Company's income in their own income for federal income tax
purposes.

Deferred state income taxes are provided on the temporary differences
between financial statement and tax bases of assets and liabilities using
enacted tax rates in effect in the years in which such differences are
expected to reverse.

Intangible Assets

Intangible assets consist of deferred financing costs which are being
amortized on a straight-line basis over the terms of the related agreements
(seven years).

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
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.

F-23
<PAGE>

STOWE MACHINE COMPANY INCORPORATED

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

2. LONG-TERM DEBT AND EXTRAORDINARY CHARGE

Long-term debt consisted of the following:

<TABLE>
<CAPTION>
1995 1996
---------- ----------
<S> <C> <C>
People's term note A, prime plus 1.25%, payable
October 1, 2001................................... $1,333,334 $1,104,762
People's term note B, prime plus 1.25%, payable
October 1, 2001................................... 368,850 342,150
People's term note C, prime plus 1.25%, payable
October 1, 2001................................... 832,565 689,705
People's revolving credit note, prime plus 1.25%,
payable July 31, 1998............................. 360,000 300,000
Mortgage note payable, 15% interest, maturing March
1, 2001. Secured by the mortgage on property and
is subordinate to the above People's debt......... 796,679 690,873
Promissory notes payable to officers, prime plus
1.25%, payable October 1, 1999.................... 383,333 283,334
Promissory note payable, 12% interest, payable
April 1, 1999..................................... 150,000 150,000
---------- ----------
4,224,761 3,560,824
Less current portion............................... 963,938 620,947
---------- ----------
$3,260,823 $2,939,877
========== ==========
</TABLE>

The Company has three term promissory notes and a revolving line of credit
with People's Bank (People's). Term note A is to be repaid commencing November
1, 1994 in eighty-four consecutive monthly principal payments of $19,048. Term
note B is to be repaid commencing on November 1, 1994 in eighty-three
consecutive monthly principal payments of $2,225, followed by a single payment
of $215,325. Term note C is to be repaid commencing on November 1, 1994 in
eighty-four consecutive monthly principal payments of $11,905. Interest on the
unpaid principal balance of all the loans is due monthly at People's base rate
plus 1.75% (10.25% at December 31, 1995). The People's notes are secured by
accounts receivable, inventory and property, plant and equipment.
Additionally, repayment of up to 75% of the total amount borrowed on term note
C has been guaranteed by the Small Business Administration.

In July 1996, the term promissory notes and revolving credit note agreement
with People's Bank was amended, changing the interest rate to the People's
base rate plus 1.25% (9.5% at December 31, 1996) and increasing the borrowing
capacity and expiration date under the revolving credit note to $800,000 and
July 1998, respectively.

Aggregate scheduled annual maturities of long-term debt during each of the
five years subsequent to 1996 are as follows:

In 1989, the Company retired outstanding senior secured notes early. The
related agreement required the Company, among other things, to pay an amount
equal to 6% of the gross profit each year, up to and including

F-24
<PAGE>

STOWE MACHINE COMPANY INCORPORATED

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

fiscal 1998, or until the total paid equals $550,545, whichever comes first.
As of December 31, 1996 the total amount paid or accrued was $520,537, of
which $397,537 is included in accrued expenses. The early extinguishment of
the debt resulted in extraordinary charges of $85,034 in 1996 and $75,702 in
1995; there were no state income tax effects.

Interest paid on the above obligations in 1996 and 1995 was $429,130 and
$477,670, respectively.

3. INVENTORIES

The components of inventories were as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1995 1996
---------- ----------
<S> <C> <C>
Raw materials..................................... $ 241,185 $ 490,196
Work in process................................... 1,260,901 1,263,738
Finished goods.................................... 1,973,077 1,977,482
Inventory owned by U.S. Government................ (25,303) --
---------- ----------
3,449,860 3,731,416
Less LIFO reserve................................. 171,449 268,372
---------- ----------
$3,278,411 $3,463,044
========== ==========
</TABLE>

4. DEMAND NOTES PAYABLE TO OFFICERS

F. Robert and William R. Petricone, executive officers, have loaned the
Company $80,000 for working capital purposes. The notes are payable on demand
and bear interest at Shawmut Bank Connecticut, N.A. prime rate plus 1 1/2%
(9.75% at December 31, 1996 and 10% at December 31, 1995).

Interest paid on the above obligations amounted to $8,149 in 1996 and $8,548
in 1995.

5. STATE INCOME TAXES

State income taxes for the years ended December 31 consisted of the
following:

<TABLE>
<CAPTION>
1995 1996
------- -------
<S> <C> <C>
Current................................................... $ 6,100 $30,898
Deferred.................................................. 12,109 1,094
------- -------
$18,209 $31,992
======= =======
</TABLE>

Significant components of the net deferred state income tax liability
follow:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1995 1996
--------- ---------
<S> <C> <C>
Current asset:
Inventory........................................ $ 5,210 $ 10,587
--------- ---------
5,210 10,587
Noncurrent liability:
Property, plant and equipment.................... (105,400) (109,744)
Intangible assets................................ 451 (1,676)
--------- ---------
(104,949) (111,420)
--------- ---------
Net deferred liability............................. $ (99,739) $(100,833)
========= =========
</TABLE>

Income taxes paid in 1996 and 1995 were $12,500 and $21,250, respectively.

F-25
<PAGE>

STOWE MACHINE COMPANY INCORPORATED

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

6. EMPLOYEE 401(K) PLAN

Under the Company's 401(k) plan, all employees may contribute up to 15% of
their salary to a retirement account up to the maximum amount allowed by law.
The Company contributes an amount equal to 30% of the amount contributed by
each participant. The Company's contribution to the plan was $27,308 in 1996
and $21,373 in 1995.

F-26
<PAGE>

STOWE MACHINE COMPANY INCORPORATED

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------------
1996 1997
----------- -----------
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<S> <C> <C>
Net Sales............................................ $ 1,490 $ 1,738
Cost of Sales........................................ 1,157 1,402
----------- -----------
Selling, General and Administrative Expenses......... 67 85
----------- -----------
1,224 1,487
----------- -----------
Income from operations............................. 266 251
Interest Expense..................................... 116 94
----------- -----------
Income before provision for income taxes and
extraordinary charge.............................. 150 157
State Income Taxes................................... 8 --
----------- -----------
Income before extraordinary charge................. 142 157
Extraordinary Charge................................. (20) (8)
----------- -----------
Net income......................................... $ 122 $ 149
=========== ===========
</TABLE>

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
THREE
MONTHS
ENDED
MARCH 31,
------------
1996 1997
----- -----
(DOLLARS IN
THOUSANDS)
(UNAUDITED)
<S> <C> <C>
Cash Flows from Operating Activities:
Net income..................................................... $ 122 $ 149
Adjustments to reconcile net income to net cash provided by
(used for) operating activities
Depreciation and amortization................................ 50 51
Changes in assets and liabilities:
Accounts receivable........................................ (84) 73
Inventories and prepaid expenses........................... (316) 76
Accounts payable and accrued expenses...................... 231 (290)
----- -----
Net Cash Provided by Operating Activities................ 3 59
Cash Flows from Investing Activities:
Purchase of property, plant and equipment...................... (15) (12)
----- -----
Net Cash Used by Investing Activities............................ (15) (12)
Cash Flows from Financing Activities
Principal payments on notes payable to officers................ (25) (25)
Principal payments on long-term debt obligations............... (34) (28)
----- -----
Net Cash Used by Financing Activities.................... (59) (53)
----- -----
Net Increase (Decrease) In Cash.......................... (71) (6)
Cash, beginning of period...................................... 102 60
----- -----
Cash, End of Period.............................................. $ 31 $ 54
===== =====
</TABLE>

F-27
<PAGE>

NOTES TO INTERIM FINANCIAL STATEMENTS
(UNAUDITED)

NOTE A--BASIS OF PRESENTATION

The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information. Accordingly, they do not include all of the information and
footnotes required for complete financial statements. In the opinion of
management, all adjustments considered necessary for a fair presentation have
been included. Adjustments consisted of only normal recurring accruals.
Operating results and cash flows for the three-month periods ended March 31,
1996 and March 31, 1997 are not necessarily indicative of the results that may
be expected for the entire year.

F-28
<PAGE>

[inside back cover: photos of space shuttle and Company-manufactured components
labeled "Forged Domes", "Seamless Rolled Rings" and "Seamless Cases", with
caption: "Critical Supplier of Space Components"]

<PAGE>

- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFOR-
MATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY, ANY SELLING SHAREHOLDER OR ANY UNDER-
WRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO
ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEI-
THER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS COR-
RECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE SUCH DATE.

-----------

TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary........................................................ 3
Risk Factors.............................................................. 9
Forward-Looking Statements................................................ 13
Dividend Policy........................................................... 13
Use of Proceeds........................................................... 14
Market for Common Stock................................................... 15
Dilution.................................................................. 16
Capitalization............................................................ 17
Pro Forma Consolidated Statements of Income............................... 18
Selected Financial Data................................................... 19
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 20
Business.................................................................. 25
Management................................................................ 36
Principal and Selling Shareholders........................................ 42
Certain Relationships and Related Party Transactions...................... 43
Description of Common Stock............................................... 44
Shares Eligible for Future Sale........................................... 46
Underwriting.............................................................. 47
Notice to Canadian Residents.............................................. 49
Experts................................................................... 50
Legal Matters............................................................. 50
Additional Information.................................................... 50
Index to Financial Statements............................................. F-1
</TABLE>

UNTIL APRIL 3, 1998 (25 DAYS AFTER THE COMMENCEMENT OF THE OFFERING), ALL
DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.

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

LOGO

6,385,459 Shares

Common Stock
($0.01 par value)

PROSPECTUS

CREDIT SUISSE FIRST BOSTON

BT ALEX. BROWN

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