TOASTMASTER INC, 10-K405, 1997-03-27

TOASTMASTER INC
10-K405, 1997-03-27
ELECTRIC HOUSEWARES & FANS

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to _________.

Commission file number: 1-11007

TOASTMASTER INC.
(Exact name of registrant as specified in its charter)

MISSOURI 43-1204566
(State or other jurisdiction I.R.S. Employer Identification No.)
of incorporation or organization)

1801 NORTH STADIUM BOULEVARD, COLUMBIA, MISSOURI 65202
(Address of principal executive offices) (Zip Code)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (573) 445-8666

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

Name of Each Exchange
Title of Each Class on Which Registered

Common Stock, $.10 par value New York Stock Exchange

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

None.

INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED
ALL REPORTS REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 DURING THE PRECEDING 12 MONTHS
(OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS REQUIRED TO
FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS. YES [X] NO [ ]

INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS
PURSUANT TO ITEM 405 OF REGULATION S-K IS NOT CONTAINED HEREIN,
AND WILL NOT BE CONTAINED, TO THE BEST OF REGISTRANT'S KNOWLEDGE,
IN DEFINITIVE PROXY OR INFORMATION STATEMENTS INCORPORATED BY
REFERENCE IN PART III OF THIS FORM 10-K OR ANY AMENDMENT TO THIS
FORM 10-K. [X]

THE AGGREGATE MARKET VALUE OF THE 3,466,814 SHARES OF COMMON
STOCK OF THE REGISTRANT HELD BY NON-AFFILIATES OF THE REGISTRANT
ON JANUARY 31, 1997 WAS $13,433,904. AT JANUARY 31, 1997, THERE
WERE 7,538,250 SHARES OF THE REGISTRANT'S COMMON STOCK
OUTSTANDING.

DOCUMENTS INCORPORATED BY REFERENCE

PORTIONS OF THE FOLLOWING DOCUMENTS ARE INCORPORATED BY REFERENCE
INTO THE INDICATED PARTS OF THIS REPORT: (1) 1996 ANNUAL REPORT
TO SHAREHOLDERS - PART II AND (2) DEFINITIVE PROXY STATEMENT FOR
THE 1997 ANNUAL MEETING OF SHAREHOLDERS TO BE FILED WITH THE
COMMISSION PURSUANT TO REGULATION 14A - PART III.

<PAGE>

PART I

ITEM 1. BUSINESS.

BUSINESS

GENERAL

Toastmaster Inc. ("Toastmaster" or the "Company") designs,
manufactures, markets and services a wide array of electrical
consumer appliances and time pieces under the brand names of
Toastmaster [Registered Trademark] and Ingraham [Registered
Trademark]. These products may be classified into three separate
categories: kitchen countertop appliances, time products and
environmental products. Kitchen countertop appliances account
for most of Toastmaster's revenues. See "BUSINESS--Products."
Although the Company historically has been best known for its
complete line of toasters, including its Bagel Perfect
[Trademark] toasters, its kitchen countertop appliances include a
wide variety of other popular electric products, such as the
Corner Bakery [Trademark] breadmaker with dessert function, the
Bread Box [Registered Trademark] automatic breadmaker, the Cool
Edge Grill [Trademark], the Speed Grill [Trademark] indoor
contact grill, Snackster [Registered Trademark] snack and
sandwich makers, countertop ovens, dessert and waffle bakers,
griddles, buffet ranges, Handi-Pan [Registered Trademark] mini-
fry pans, carving knives, hand mixers, can openers, blenders,
food slicers , coffee makers and grinders and tea kettles. The
Company's time products consist of an extensive line of clocks
and timers, including battery wall clocks, electric analog alarm
clocks, decorator wall clocks and mechanical and electronic
household timers. The Company's environmental products include
electric fans, forced-air, radiant and ceramic heaters and
console and table-top humidifiers. The Toastmaster [Registered
Trademark] brand name has been in continuous use since the
invention of the automatic pop-up toaster by a predecessor of the
Company in 1926, and the Ingraham [Registered Trademark] brand
name has been used on time products manufactured by the Company
or its predecessors since 1831.

BACKGROUND AND FORMATION OF THE COMPANY

Although the Company was incorporated on January 24, 1980,
its predecessors trace their origin to the E. Ingraham Company
founded in 1831. The Company's senior executive officers, Robert
H. Deming, Daniel J. Stubler and John E. Thompson, operated the
consumer products group (including its predecessor division) of
the McGraw-Edison Company beginning in 1976. Toastmaster Inc., a
privately-held corporation formed by management of that group,
including these same key executives, acquired the kitchen
countertop appliance, environmental and time products businesses
of this group from the McGraw-Edison Company in 1980. In October
1983, Toastmaster Inc. was acquired by Magic Chef, Inc. and was
operated as a wholly-owned subsidiary by these executives. The
management team, led by the Company's current senior executive
officers, purchased Toastmaster Inc., effective January 1, 1987,
following the acquisition of Magic Chef, Inc. by the Maytag
Company. On June 23, 1994, the Company changed its state of
incorporation from Delaware to Missouri through a merger with a
wholly-owned subsidiary corporation.

The Company's principal executive offices are located at
1801 North Stadium Boulevard, Columbia, Missouri 65202, and its
telephone number is (573) 445-8666. Unless the context otherwise
requires, the terms "Toastmaster" or the "Company," as used in
this report, refer to Toastmaster Inc., a Missouri corporation,
and its predecessors.

BUSINESS STRATEGY

The Company's business strategy is to capitalize on its
established brand names by offering a superior combination of
product quality, value and customer service at the appropriate
price points for its various channels of distribution. The
Company manufactures products in categories in which the Company
already has or believes it can achieve a significant market
share. Toastmaster believes it currently holds the first or
second market position for toasters, countertop ovens, waffle
bakers, buffet ranges and griddles. This market position
assessment is based primarily on a comparison of the Company's
unit sales with nonpublic information as to aggregate unit sales
by product category compiled by an independent organization based
on data submitted by industry participants.

<PAGE>

The Company continues to expand its core of established
products through new product development. These innovations
frequently involve technological advances in product design and
functionality and capitalize on emerging trends in consumer needs
and shifts in tastes and preferences. See "BUSINESS--New
Products." The Company also regularly enhances existing product
features and modernizes product designs. In addition, the
Company uses a combination of promotional and direct selling
efforts to maintain and expand upon its strength in all major
channels of distribution and to access new channels of
distribution.

The trend toward "just-in-time" purchasing by the Company's
customers and the related need to ship promptly have been
evolving for several years based on the desire by retailers to
more closely manage inventory levels. The Company has responded
to this trend by seeking to shorten the lead time for production,
working with its suppliers to obtain delivery of raw materials
and components more promptly, and improving its forecasts of
future demand. As a result, the Company has been able, in many
cases, to produce and ship more rapidly while reducing its
inventory in relation to net sales. The Company also believes
that certain products can be acquired more cost effectively by
purchasing these products from outside vendors.

PRODUCTS

The Company's product line currently consists of 196 models
of the Company's kitchen countertop appliances, 632 models of
the Company's time products and 17 models of the Company's
environmental products. As used herein, the term "models" means
stock-keeping units, which term includes different products as
well as similar products with different features.

The following table sets forth the approximate amounts and
percentages of the Company's revenues by each of its principal
product categories during the periods shown.

Year Ended December 31,
1996 1995 1994
(Dollars in thousands)
Revenues Percent Revenues Percent Revenues Percent

Kitchen countertop
appliances $130,712 76.6% $158,080 79.5% $150,407 73.9%
Time products 34,918 20.5% 33,221 16.7% 35,339 17.4%
Environmental
products* 5,009 2.9% 7,663 3.8% 17,722 8.7%

$170,639 100.0% $198,964 100.0% $203,468 100.0%

_______________
* The Company plans to dispose of its environmental products line in 1997.
See "BUSINESS--Restructuring."

Kitchen Countertop Appliances. Toastmaster has historically
been best known for its complete line of two-slice and four-slice
toasters. Based on the number of units sold, the Company
believes that it currently has the second highest market share in
the total toaster product category. In order to maintain its
market position, the Company periodically augments its toaster
line with additional product and design features, such as cool-
touch exteriors, three slots with one wide slot capable of
handling larger items such as bagels and pastries, extra wide
slots, and an under-the-cabinet model. The Company expects to
introduce several new toasters in 1997, including a classic style
chrome toaster.

New additions planned for the Company's other lines of
kitchen countertop appliances in 1997 include the Breadmaker's
Hearth [Trademark], a revolutionary breadmaker/countertop oven, a
line of clothes irons, European styled deep fat fryers, a line of
Chromatics [Trademark] appliances, with all chrome exterior
finish, the Corner Bakery [Trademark] breadmaker with dessert
function, food steamers, two new Wafflemaster [Trademark] waffle
bakers, a Cool Edge Grill [Trademark] with searing section and
several high-end Swiss design coffee makers.

<PAGE>

New additions to the Company's line of kitchen countertop
appliances in 1996 included the Bagel Perfect [Trademark]
toasters, the Waffle Express [Trademark] waffle baker, a line of
electric tea kettles, a compact "deli" food slicer, a combination
coffee maker/grinder, an under-cabinet can opener, a hand held
electric can opener and a new line of Comfort Zone [Trademark]
ergonomic hand mixers.

The Company believes it has a significant market share of
the countertop oven product category, which includes toaster-
oven-broilers, oven broilers and convection ovens. Historically,
the Company has been a leader in product and engineering
innovation in this product category, including the introduction
of the continuous cleaning countertop oven, the under-the-cabinet
toaster-oven-broiler and the first cool-touch toaster-oven-broiler.
In 1997, the Company plans to introduce the first
combination breadmaker/countertop oven.

Based on the number of units sold, the Company believes it
continues to be the market leader in waffle bakers and to be one
of the top two sellers of buffet ranges. The Company's
leadership in waffle bakers has been maintained through new
product introductions such as the Waffle Express [Trademark]
waffle baker, Belgian waffler and cool-touch waffle bakers.

Based on the number of units sold, the Company believes it
has the second largest share of the griddle market. In addition
to offering cool edge perimeter griddles and variations in size,
the Company introduced a "keep warm" feature to differentiate its
products in this product category. The Company also offers a
number of other popular electric kitchen countertop products
under the Toastmaster brand name, including Handi-Pan [Registered
Trademark] mini-fry pans, carving knives, mixers, can openers,
Chopster [Registered Trademark] mini food processor, blenders,
food slicers, tea kettles, and coffee makers and grinders, which,
with the exception of the Handi-Pan [Registered Trademark], are
manufactured for the Company by other manufacturers.

Time Products. The Company offers an extensive line of
clocks and timers, generally sold under the Ingraham [Registered
Trademark] brand name, most of which are manufactured at the
Company-owned plant in Laurinburg, North Carolina. The Company's
time products are comprised of electric analog alarm clocks,
electric and quartz wall clocks, imported key-wound clocks,
L.E.D. digital clocks and decorator wall clocks with wooden
cases. The time products market is highly fragmented. While
overall "SKU" counts have remained relatively flat during the
past several years many new models have replaced previously
existing models, reflecting current trends in home decorating.

The Company also manufactures household (electromechanical)
timers, which are used for, among other purposes, switching
electric lights and other appliances on and off at predetermined
times. Toastmaster is one of two principal manufacturers of
household timers.

In addition to the normal line changes in 1996, late in the
year, the Company introduced a new line of analog electric clocks
bearing the Timex [Registered Trademark] brand name under a
license agreement with that company. The Company expects this
line to expand in 1997. Several new models also are expected to
be introduced to replace existing models. See
"BUSINESS--Marketing and Customers."

Environmental Products. The Company's environmental
products, all of which are electric-powered, include fans,
forced-air, radiant and ceramic heaters and console and table-top
humidifiers. Most of these products were manufactured in the
United States, either at the Company-owned facility in Boonville,
Missouri or at outside contract manufacturers. After extensive
review, as part of the Company's overall restructuring, the
Company plans to dispose of its environmental products line in
1997. After several years of disappointing sales and profit
margins, despite numerous new product introductions during the
past several years, the Company believes that it should
concentrate its efforts on the more profitable areas of the
Company's business, kitchen appliances and time products. See
"BUSINESS--Restructuring."

NEW PRODUCTS

The Company has a product planning and development staff
which is devoted to the creation of new products and the
enhancement of existing products. This staff is also responsible
for feasibility analysis of new product ideas and oversees the
process of developing each new product through the initial
production run. This staff regularly collaborates with
marketing, sales and engineering personnel to anticipate
opportunities and generate ideas for new products and product

<PAGE>

enhancements. A combination of market research, competitive
product tracking, and feedback from key retail buyers is used to
obtain information on market and consumer trends and to identify
shifts in consumer tastes and preferences.

The development of new products and the enhancement of
existing products are important to the Company's business. The
Company's tradition of product innovation dates back to the
invention of the automatic pop-up toaster in 1926 by a
predecessor of the Company and has frequently involved
technological advances in product design and function.
Illustrations of these innovations include the Breadmaker's
Hearth [Trademark], a revolutionary breadmaker/countertop oven,
Bread Box [Registered Trademark] breadmakers with exclusive bread
stick and butter making features, the Corner Bakery [Trademark]
breadmaker, with special dessert function, Bagel Perfect
[Trademark] toasters with a special adjustment to toast bagels on
one side while only warming the other side, the Cool Edge Grill
[Trademark] , with searing section, the Speed Grill [Trademark]
indoor contact grill, the Handi-Pan [Registered Trademark] mini-
fry pan with a removable control handle to make it dishwasher
safe, cool-touch steel toasters, continuous-cleaning and cool-
touch toaster-oven-broilers, under-cabinet four-slice toasters,
and three-slice toasters having a wide slot capable of handling
larger items such as bagels and pastries. The Company also
regularly enhances existing products by adding new features and
modernizing their designs in order to maintain their visual
appeal and competitiveness.

Toastmaster introduced a number of new products during 1996,
including a fresh assortment of Bread Box [Registered Trademark]
bread machines, including one model with an exclusive bread stick
pan and bake cycle, a line of Bagel Perfect [Trademark] two-slice
toasters that feature an automatic wattage reduction switch for
toasting bagels and English muffins, a line of electric tea
kettles, a compact "deli" food slicer, a combination coffee
maker/grinder, an under-cabinet can opener, a hand held electric
can opener and a new line of Comfort Zone [Trademark] ergonomic
hand mixers.

Toastmaster plans to introduce additional new products
during 1997, including several four-slice Bagel Perfect
[Trademark] toasters, a classic style chrome finish toaster, the
Breadmaker's Hearth [Trademark], a revolutionary
breadmaker/countertop oven, a line of clothes irons, European
styled deep fat fryers, a line of Chromatics [Trademark]
appliances, with all chrome exterior finish, the Corner Bakery
[Trademark] breadmaker with dessert function, food steamers, two
new Wafflemaster [Trademark] waffle bakers, a Cool Edge Grill
[Trademark] with searing section and several high-end Swiss
design coffee makers.

RESTRUCTURING

The Company has announced a restructuring plan designed to
strengthen future financial performance by improving the
Company's cost structure as well as its competitive posture. The
plan includes the outsourcing of production of certain kitchen
countertop appliances and the disposal of the Company's
environmental products line.

Based on an evaluation of relative manufacturing and
shipping costs, the Company has determined that certain of its
kitchen countertop appliances can be made more price competitive
by terminating their production at the Company-owned plant in
Boonville, Missouri and sourcing them from lower cost vendors.
The new cost per unit of these products, including shipping, is
expected to result in savings ranging from 10% to 30% as compared
to their 1996 cost of production.

Due to low margins, lack of retail shelf space and low
growth potential, the Company announced the planned disposition
of its environmental products line which consists of electric
fans, forced air, radiant and ceramic heaters, and console and
table-top humidifiers. The disposal of that product line is the
culmination of the Company's decision nearly two years ago to de-
emphasize environmental comfort products which collectively
accounted for only 3.8% of total revenues for the year ended
December 31, 1995 and less than 3% of total revenues for the year
ended December 31, 1996. While the Company has received several
inquiries regarding the sale of the environmental products
business, no substantive discussions regarding this possible sale
are currently ongoing.

As a result of these actions the Company recorded during the
fourth quarter of 1996 a one-time pre-tax special charge of
approximately $7.6 million ($4.9 million after taxes, or $.65
per share). Only approximately $250,000 of this special charge
will impact cash through the payment of expenses related to the
restructuring. The remaining portion of the special charge was
non-cash in nature consisting primarily of tooling and inventory
write-downs and increases in inventory reserves.

<PAGE>

The Company plans to reduce its total work force from 1996
fourth quarter levels by approximately 10%, effective April 15,
1997, due to the above initiatives. The Company-owned plant in
Macon, Missouri, together with scaled-down operations at the
Company-owned facilities in Boonville, Missouri, will continue to
manufacture the kitchen countertop appliances sold by the Company
that are not sourced from other vendors. This restructuring is
not expected to have any significant impact on the Company's time
products operations in Laurinburg, North Carolina.

MARKETING AND CUSTOMERS

The Company's products are sold in all major channels of
distribution through approximately 900 active accounts, including
mass merchandisers, department stores, catalog showrooms,
hardware cooperatives, wholesale clubs, military exchanges and
other retailers, as well as through private-label arrangements.
The Company's major retail customers include Wal-Mart (including
Sam's Clubs), Service Merchandise, Kmart, Target Stores (a
division of Dayton Hudson), Sears Roebuck, Army-Air Force
Exchange Service, Caldor Inc., Ace Hardware, Cotter & Company
(True Value), J.C. Penney, Price/Costco, Montgomery Ward,
Federated and Macy's Department Stores, and May Department
Stores. The Company also sells to two-step distributors who sell
to department and other stores that prefer to utilize the
services of a distributor.

The Company distributes its products in each of the
geographic regions in the United States. Export sales in 1996
increased approximately 30% over export sales in the prior year
and have continued to account for less than 10% of the Company's
revenues.

During 1994, 1995 and 1996, Wal-Mart (including Sam's Clubs)
accounted for approximately 30%, 29% and 27%, respectively, of
the Company's revenues. Wal-Mart is the only customer of the
Company that accounted for more than 10% of the Company's
revenues during such periods. During 1994, 1995 and 1996, the
Company's revenues in the aggregate with respect to its five
largest customers were approximately 47.7%, 45.7% and 42.8%,
respectively, of its total revenues. Although the Company has
long-established relationships with many of its customers, the
Company does not have long-term supply contracts with them. See
"Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations."

Certain large customers are treated as national accounts and
are serviced directly by approximately 15 members of the
Company's internal sales staff. The Company also sells its
products through approximately 120 independent commissioned
salespersons affiliated with manufacturers' representatives
organizations. Sales representatives are located nationwide and
are paid an agreed commission based on a percentage of sales in
their respective territories. The Company's sales representative
agreements are generally terminable by either party on 30 days
notice.

The Company strengthens its brand name recognition and
product awareness at the consumer level through various
advertising and promotional strategies, including cooperative
advertising with retailers, national magazine ads and other print
media, television ads and trade publications . The Company also
makes use of in-store displays and product demonstrations. Cross
promotions of the Company's products with nationally recognized
food brands recently have been utilized at the point of sale
including the promotion of the Bread Box [Registered Trademark]
with ConAgra bread mixes and Red Star [Registered Trademark]
yeast. The Company also offers manufacturer's rebates on selected
products. Television advertising is used primarily for the
introduction of new products. No significant television
advertising was conducted in 1996 and no significant television
is currently planned for 1997.

Beginning in 1996 and expanding for 1997, the Company
entered into and is pursuing additional alliances with companies
owning highly recognizable brand names that will license the use
of those names on new products introduced by the Company. Recent
examples of this strategy include several new models of clothes
irons bearing the Faultless Starch [Registered Trademark] brand
name, time pieces bearing the Timex [Registered Trademark] brand
name, and a selection of kitchen appliances bearing the Gear
[Registered Trademark] brand name. Certain of these products may
jointly bear the Toastmaster brand name in order to combine the
strength of household names with instant favorable recognition.

<PAGE>

SERVICE

The Company seeks to deliver superior service by managing
its business to satisfy the needs and preferences of its
customers as well as consumers. Management seeks to accomplish
this by manufacturing high quality products in volume to provide
value pricing, ready availability and design features and by
providing marketing support and operational assistance. In
addition, the Company provides after-sale service to address or
repair problems associated with the products by furnishing
information on product use and obtaining feedback on satisfaction
with the product.

By operating Company-owned production facilities,
Toastmaster is usually able to provide on-time shipments of its
products. The ability to control production at its own
manufacturing facilities and produce products in large quantities
gives the Company an advantage in satisfying the varying volume
requirements of its retail customers.

Toastmaster responds to a variety of its customers'
operational needs by assisting customers with in-store stocking
and monitoring of inventory levels, as well as promptly
processing cooperative advertising and promotional discount
requests. In addition, the Company provides promotional support
for its products in the form of in-store displays and product
demonstrations. In response to the growing preference among
retailers for paperless order systems, the Company has utilized
the EDI (Electronic Data Interchange) capability of its computer
system for several years. Toastmaster's EDI capabilities enable
the Company to more efficiently receive electronic transmission
of customer orders and transmit shipping and invoice information
electronically. A significant enhancement to the order
processing and EDI processing systems was implemented during 1995
and early 1996. Additional enhancements are planned for 1997.

The Company maintains a consumer relations department and a
national service center to respond to requests for information,
to handle product repairs, to coordinate the Company's nationwide
network of authorized service centers and to assure prompt
responses to consumer requests and concerns. Each of the
Company's products includes an instruction manual and the address
and telephone number of Toastmaster's national service center
from which consumers may obtain further information.

Products sold after January 1, 1996 generally have a limited
three-year warranty from the date of purchase. Prior to this
date, the Company's products generally were sold with a limited
one-year warranty from the date of purchase, although limited
warranties with respect to certain of the Company's toasters,
toaster-ovens and griddles are provided for two years from the
date of purchase. In addition, the Company's wide slot three-
slice toaster has a limited warranty that extends for the
lifetime of the original purchaser. In the case of defects in
material or workmanship, the Company agrees to repair or replace
the defective product without charge.

PRODUCTION AND PRODUCT SERVICES

Products accounting for more than 75% of the Company's net
sales are manufactured at its own domestic facilities. The
Company manufactures toasters, toaster-oven-broilers and electric
heating elements at its Company-owned plant in Macon, Missouri.
All other kitchen countertop appliances are manufactured at the
Company-owned plant in Boonville, Missouri. Time products
manufactured by the Company are produced at the Company-owned
plant in Laurinburg, North Carolina. The Company believes that
its ownership of manufacturing plants facilitates cost savings
through vertical integration, incorporation of manufacturing
technology and other improvements in productivity and cost
control in certain products. The Company also believes, however,
that certain products can be acquired more cost effectively from
outside vendors. The mix of products manufactured in the
Company's facilities versus those purchased from contract
suppliers is likely to change in the future, but the Company
currently intends to continue to manufacture over 60% of its
products in the near future. See "BUSINESS--Restructuring."

By manufacturing the majority of its products in Company-
owned plants, the Company believes it is better able to assure
product quality and reliability than many of its competitors that
make more extensive use of product imports. This approach also
improves the Company's ability to provide on time and
uninterrupted product shipments as well as minimizing certain
risks associated with reliance on foreign vendors, such as
foreign currency fluctuations, import duties, trade restrictions,
work stoppages and political instability. In certain categories,
however, products are imported which are <PAGE> manufactured in
accordance with the Company's design and engineering
specifications and are inspected by the Company to assure that
quality control is maintained.

The Company's engineering department is responsible
primarily for the design and testing of its products. The
Company has acquired a computer design system to assist its
engineers in developing new products and modifying existing
products.

Most of the component parts and raw materials purchased by
the Company for its manufacturing operations, such as finished
and aluminized steel, phenolic resins and molded parts are
available from numerous suppliers. The Company does not believe
that it is dependent on any single source for any significant
portion of its component purchases or raw materials, the loss of
which may have a material adverse effect on the Company. The
Company has not experienced any significant raw material or
component shortages.

SEASONALITY

COMPETITION

The product categories in which the Company competes are
mature and highly competitive. Competition is based upon price
and quality, as well as innovation in the design of new products
and replacement models and in marketing and distribution
approaches. The Company believes that new product introductions,
such as Bagel Perfect [Trademark] toasters, breadmakers with
unique functions like dessert cycles, bread stick pans, and
butter cycles, the Cool Edge Grill [Trademark] with searing
section, and enhancements of existing products, as well as their
continued market acceptance, are of particular importance to the
Company's growth and profitability. The Company competes with
established companies, several of which have substantially
greater facilities, personnel, financial and other resources than
those of the Company. The Company's competitors in its major
product categories (some of which effectively compete only in
certain subcategories) include, among others: (i) kitchen
countertop appliances -- NACCO Industries (Proctor-Silex and
Hamilton Beach), Black & Decker, Sunbeam Corp. (Sunbeam-Oster),
Rival Co., Health-o-meter Products Inc. (Mr. Coffee), Salton-
Maxim and National Presto; and (ii) time products -- General
Time, Spartus and Intermatic.

The Company believes its most important competitive
strengths are favorable consumer recognition of the Company's
well established brand names, its core of established products,
the quality, design and competitive pricing of those products,
innovation in the development of new products and the enhancement
of existing products, its access to all major channels of
distribution, its ability to provide quality and on-time shipment
through Company-owned plants and warehouses, attention to
customer needs and service and the continuity and ability of its
management team.

EMPLOYEES

As of December 31, 1996, the Company employed approximately
1,560 persons. The Company plans, however, to reduce its total
work force from 1996 fourth quarter levels by approximately 10%,
effective April 15, 1997, due to the Company's restructuring
initiatives. See "BUSINESS -- Restructuring." The Company's
employees are not represented by any labor union. The Company
generally considers its relationship with employees to be good.

<PAGE>

REGULATION

The Company is subject to federal, state and local
regulations concerning the environment, occupational safety and
health, and consumer products safety. The Company has not
experienced significant difficulty in complying with such
regulations and compliance generally has not had an adverse
effect on the Company's business. All of the Company's electric-
powered products (other than certain battery operated products
for which listing is not available) are listed by Underwriters
Laboratories, Inc. ("UL"), or the Canadian Standards Association
(CSA), or have a cross listing (CUL), recognized by both
organizations. These organizations are independent, not-for-
profit corporations engaged in the testing of products for
compliance with certain public safety standards.

TRADEMARKS AND PATENTS

The Company holds a number of patents and trademarks
registered in the United States and foreign countries for various
products and processes, including the Toastmaster [Registered
Trademark] and Ingraham [Registered Trademark] trademarks
registered with the United States Patent and Trademark Office.
The Company considers these two trademarks to be of considerable
value and of material importance to its business.

The Company holds numerous domestic and international
patents, including design patents. The Company believes that
none of the Company's product lines is dependent upon any single
patent or group of patents.

ITEM 2. PROPERTIES.

The Company owns all of the facilities listed below. These
facilities have been pledged as collateral to secure payment of
the Company's debt obligations. See Note 3 of Notes to
Consolidated Financial Statements under "Item 8. FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA." The following table sets
forth the location, approximate square footage and principal use
of each of the Company's significant facilities.

Location Square Feet Use

Boonville, Missouri. . . . . . . . 169,000 Manufacturing facility
Macon, Missouri. . . . . . . . . . 171,000 Manufacturing facility
Laurinburg, NC . . . . . . . . . . 223,000 Mfg. and Whse. facility
Columbia, Missouri . . . . . . . . 107,000 Warehouse
Columbia, Missouri . . . . . . . . 65,000 Warehouse
Moberly, Missouri . . . . . . . . 134,000 Warehouse
Columbia, Missouri . . . . . . . . 62,000 Executive offices
Boonville, Missouri. . . . . . . . 58,000 Service center
Kirksville, Missouri . . . . . . . 114,000 Warehouse

The Company believes that its facilities generally are
suitable and adequate for its current level of operations and
provide sufficient productive capacity for its foreseeable needs
without the need for material capital expenditures. The Company
completed construction of a warehouse addition of approximately
48,000 square feet on the Laurinburg, North Carolina facility in
late 1996, and occupied the new space in January 1997. The
Company believes that certain roof and other repairs will be
necessary in 1997 for both the Macon, Missouri facility and the
larger of the two Columbia, Missouri warehouses.

<PAGE>

ITEM 3. LEGAL PROCEEDINGS.

GENERAL

The Company is a party to various actions and proceedings
incident to its normal business operations. The Company believes
that the outcome of such litigation will not have a material
adverse effect on its business, financial condition or results of
operations. The Company has product liability and general
liability insurance policies in amounts it believes to be
reasonable given its current level of business. It is
conceivable, however, that the Company could incur claims for
which it is not insured or that exceed the amount of its
insurance coverage.

CERTAIN ENVIRONMENTAL MATTERS

The Company is a party to environmental proceedings at two
sites which are described below and is investigating the need for
remediation at two additional facilities of the Company. The
Company has accrued approximately $200,000 for the anticipated
future costs of investigation and remediation. Although such
costs could exceed that amount, the Company believes that any
such excess will not be material to the Company.

On May 30, 1991, the Missouri Department of Natural
Resources ("MDNR") submitted a letter to Toastmaster proposing to
place the Company's Kirksville, Missouri facility on the Missouri
Registry of Confirmed Abandoned or Uncontrolled Hazardous Waste
Disposal Sites in Missouri. Toastmaster appealed the listing. A
Consent Agreement resolving the matter was executed in February
1997 and, as a result, the site will not be listed. A remedial
action plan is currently being developed. Toastmaster is
committed to an appropriate remediation of the site.

Toastmaster is one of over 300 potentially responsible
parties ("PRPs") at the Missouri Electric Work site in Cape
Girardeau, Missouri (the "Site"), which has been identified for
cleanup under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA"). Under CERCLA,
a PRP's liability for cleanup costs is strict, joint and several.
A Consent Decree has been entered into by PRPs which includes a
commitment to pay for soil remediation and groundwater
investigation at the Site. This Decree has been approved. Under
the Consent Decree's allocation formula, Toastmaster's fractional
share of the cost of soil remediation and groundwater
investigation is approximately 0.479% of the total cost, which
percentage and therefore the portion of the remediation and
investigation costs borne by the Company may vary depending upon
the government's or participating PRP's ability to collect from
non-signing PRPs or the failure of signing PRPs to pay the
amounts for which they are responsible under the Consent Decree.
The total cost for soil remediation and groundwater investigation
is currently estimated at $17 million. Based on this estimate,
and taking into account the portion agreed to be borne by de
minimis settlors, settling federal defendants and the
Environmental Protection Agency ("EPA"), Toastmaster's allocated
share of costs under this Consent Decree is estimated to be
approximately $50,000.

The provisions of the Consent Decree to which the Company is
a party do not address groundwater remediation, the cost of which
has not been determined. Primarily because of the small volume
of waste Toastmaster allegedly contributed to the Site, as well
as the large number of other PRPs and the EPA's commitment to pay
20% of the total cost of groundwater remediation, Toastmaster
does not anticipate that its share of groundwater remediation
costs will be material.

Contamination was detected at the Laurinburg, North Carolina
facility of the same types of materials as those detected at the
Kirksville site described above. The Company notified the North
Carolina Department of Health and Environment of this
contamination. Toastmaster was notified by letter dated February
5, 1990 that the Laurinburg facility has been included on the
Inactive Hazardous Waste Sites Priority List. Once placed on
this list, responsible parties are encouraged to cleanup the site
or, if the site endangers public health or the environment, a
remedial action can be ordered by the State. After conducting
the necessary investigative work and acquiring the approval of
the State, a remedial plan was implemented at this site
consisting of a groundwater recovery system. In addition, a
former waste water treatment facility has been closed in
accordance with applicable environmental requirements.

<PAGE>

Contamination was detected at the Macon, Missouri facility
of the same type of materials as those detected at the Kirksville
site previously described. The Company has entered into a
contract with a consultant to provide further investigative and
remedial work. An agreement to enter the Voluntary Cleanup
Program with the MDNR to remediate the Macon, Missouri facility
contamination was signed in March 1996.

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

Not applicable.

ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT.

Executive officers of Toastmaster are elected annually and
serve until their successors are duly elected and qualified or
until their earlier resignation or removal. The current
executive officers of the Company, their ages and present
positions with the Company are as follows:

Name Age Position and Offices Held

Robert H. Deming 62 Chairman, Chief Executive
Officer and Director

Daniel J. Stubler 53 President, Chief Operating
Officer and Director

John E. Thompson 49 Executive Vice President --
Chief Financial Officer,
Treasurer and Director

Scott R. Thrasher 41 Senior Vice President -- Sales
and Marketing

Ralph J. Ronalter, Jr. 41 Vice President/General
Manager -- Time Products

Linda G. Arnold 49 Vice President -- Human
Resources and Secretary

The business experience of each of the executive officers of
the Company during the last five years is as follows:

Robert H. Deming has served as Chairman of the Board of
Directors, Chief Executive Officer and Director of the Company
since January 1987. Since joining the Company in 1976, he has
served as President from 1976 through January 1987 and as
Chairman of the Board of Directors and Chief Executive Officer
from 1980 through 1983. Mr. Deming holds a Bachelor of Science
degree in Accounting and a Master of Science degree in Business
Administration from the University of Colorado, as well as a
Doctorate in Business Administration from The Harvard University
Graduate School of Business Administration. Mr. Deming is not
engaged in the day-to-day operations of the Company, but rather
spends his business-related time on monitoring the performance of
the Company, strategic and long-range planning, and identifying
and evaluating acquisition opportunities. In addition, he spends
a portion of his business-related time in the furtherance of the
interests of the Company, which interests include activities
intended either to fulfill the Company's social responsibility or
to keep Mr. Deming abreast of developments or opportunities in
the Company's industry or related fields of knowledge or
management.

Daniel J. Stubler has served as President, Chief Operating
Officer, and Director since January 1987. Between 1976 and
January 1987, he served the Company in several capacities, the
last of which was as Senior Vice President with responsibility
for marketing and administration and Secretary of the Company.
He currently serves as a director of First Missouri
Bancorporation. Mr. Stubler holds a Bachelor of Science degree
in Accounting from Gannon University and a Masters of Science
degree in Industrial Relations from the University of
Massachusetts at Amherst.

<PAGE>

John E. Thompson has served as Executive Vice President --
Chief Financial Officer, Treasurer and Director of the Company
since January 1987. Between 1970 and January 1987, he has served
in several capacities, the last of which was as Senior Vice
President of the Company. He currently serves as a director of
First National Bank & Trust Company, Columbia, Missouri. Mr.
Thompson holds a Bachelor of Science degree in Accounting from
Northern Illinois University.

Scott R. Thrasher joined the Company in 1977 and has served
as Senior Vice President -- Sales and Marketing since April 1995.
Previously, he served as Senior Vice President -- Sales from
January 1994 to April 1995, and as Vice President -- Sales from
January 1991 to January 1994. Mr. Thrasher holds a Bachelor of
Science degree in Marketing from the University of Missouri.

Ralph J. Ronalter, Jr. joined the Company in 1982 and has
served as Vice President and General Manager -- Time Products
since October 1989. Previously, he served as Vice President with
responsibility for sales and marketing in the Time Products
division from 1984 to October 1989. Mr. Ronalter holds a
Bachelor of Science degree in Geology from the University of
North Carolina-Chapel Hill.

Linda G. Arnold joined the Company in 1978 and has served as
Vice President -- Human Resources since January 1987 and as
Secretary of the Company since November 1991. Previously, she
served as Director of Personnel of the Company from 1984 to
January 1987. Ms. Arnold attended the University of Missouri,
Kansas City.

There is no arrangement or understanding between any
executive officer and any other person pursuant to which such
executive officer was selected as an officer except as
contemplated by the Stockholders' Agreement described below. Mr.
Deming, Mr. Stubler, Mr. Thompson and Ralph J. Ronalter, Jr.,
together with certain other shareholders of the Company, have
agreed to vote those of their shares subject to the Stockholders'
Agreement (representing 3,756,479 shares of Toastmaster common
stock as of January 31, 1997 and constituting approximately 49.8%
of the shares outstanding) in favor of the election of directors
approved by Mr. Deming, including Messrs. Deming, Stubler and
Thompson, and have given their irrevocable proxy to Mr. Deming to
effect that vote. This voting agreement and related proxy
automatically terminate upon the earlier of May 16, 1999 or Mr.
Deming's death, mental incapacity or voluntary termination of
employment with the Company, at such time as Mr. Deming, together
with his family, ceases to own at least 500,000 shares of Common
Stock (as adjusted for any stock dividend, stock split,
combination or reclassification of shares, recapitalization or
similar transaction) and upon the occurrence of certain other
events specified in the Stockholders' Agreement and proxy (and,
in the case of Mr. Stubler and Mr. Thompson, their voting
agreement and related proxy also terminate if they are
involuntarily terminated from their respective offices or removed
as a director).

PART II

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

Pursuant to General Instruction G(2) to Form 10-K, the
information required by this Item is incorporated herein by
reference to the information under the caption "Market for the
Company's Common Stock and Related Stockholder Matters" in the
Registrant's 1996 Annual Report to Shareholders.

ITEM 6. SELECTED FINANCIAL DATA.

Pursuant to General Instruction G(2) to Form 10-K, the
information required by this Item is incorporated herein by
reference to the information under the caption "Selected
Financial Information" in the Registrant's 1996 Annual Report to
Shareholders.

<PAGE>

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

Pursuant to General Instruction G(2) to Form 10-K, the
information required by this Item is incorporated herein by
reference to the information under the caption "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" in the Registrant's 1996 Annual Report to
Shareholders.

EXCEPT FOR THE HISTORICAL INFORMATION CONTAINED HEREIN, THE
STATEMENTS MADE IN THIS REPORT ON FORM 10-K ARE FORWARD-LOOKING
STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. THE COMPANY'S
ACTUAL RESULTS, FINANCIAL CONDITION OR BUSINESS COULD DIFFER
MATERIALLY FROM ITS HISTORICAL RESULTS, FINANCIAL CONDITION OR
BUSINESS, OR THE RESULTS OF OPERATIONS, FINANCIAL CONDITION OR
BUSINESS CONTEMPLATED BY SUCH FORWARD-LOOKING STATEMENTS.
FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES
INCLUDE, BUT ARE NOT LIMITED TO, THOSE DISCUSSED BELOW UNDER THE
CAPTION "FACTORS THAT MAY AFFECT FUTURE RESULTS OF OPERATIONS,
FINANCIAL CONDITION OR BUSINESS," AS WELL AS THOSE DISCUSSED
ELSEWHERE IN THE COMPANY'S REPORTS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION.

FACTORS THAT MAY AFFECT FUTURE RESULTS OF OPERATIONS, FINANCIAL
CONDITION OR BUSINESS

In order to take advantage of the safe harbor provisions for
forward-looking statements contained in Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, added to those Acts
by the Private Securities Litigation Reform Act of 1995, the
Company is hereby identifying important risks and uncertainties
that could affect the Company's actual results of operations,
financial condition or business and that could cause the
Company's actual results of operations, financial condition or
business to differ materially from its historical results of
operations, financial condition or business, or the results of
operations, financial condition or business contemplated by
forward-looking statements made herein or elsewhere, orally or in
writing, by, or on behalf of, the Company. Factors that could
cause or contribute to such differences include, but are not
limited to, those factors described below.

COMPETITION AND IMPORTANCE OF NEW PRODUCT INTRODUCTIONS

RELIANCE ON CERTAIN CUSTOMERS

The Company's revenues in the aggregate with respect to its
five largest customers during 1994, 1995 and 1996 were
approximately 47.7%, 45.7% and 42.8%, respectively, of its total
revenues. During 1994, 1995 and 1996, Wal-Mart (including Sam's
Clubs) accounted for approximately 30%, 29% and 27%,
respectively, of the Company's revenues. Although the Company
has long-established relationships with many of its customers,
the Company does not have long-term supply contracts with them.
A decrease in business from any of its major customers could have
a material adverse effect on the Company's results of operations
and financial condition, as has been true in the past.

RETAIL INDUSTRY

The Company sells its products to retailers, including mass
merchandisers, department stores, catalog showrooms, hardware
cooperatives, wholesale clubs, military exchanges and other
retailers. Certain of such retailers have engaged in leveraged
buyouts or transactions in which they incurred a significant
amount of debt, and some are currently operating under the
protection of bankruptcy laws. Retail sales depend, in part, on
general economic conditions and a significant further decline in
such conditions could have a negative impact on sales by
retailers of the type of products offered by the Company.

<PAGE>

A significant deterioration in the financial condition of the
Company's major customers, or in the retail environment in
general, could have a material adverse effect on the Company's
sales and profitability. In addition, as a result of the desire
of retailers to more closely manage inventory levels, there is a
growing trend among retailers to make purchases on a "just-in-
time" basis, which requires the Company to shorten its lead time
for production in certain cases and more closely anticipate
demand and could in the future require the carrying of additional
inventories by the Company.

SEASONALITY AND VARIABILITY OF QUARTERLY RESULTS AND STOCK PRICE

The Company believes that sales of many of its products are
seasonal, in that a significant percentage of certain of its
products are given as gifts, and therefore sell in larger volumes
during the Christmas shopping season. Gross profits are usually
lower in the first quarter than in the fourth quarter due to
lower sales volume, and correspondingly lower production volumes.
In addition, the Company's quarterly results of operations could
be adversely affected by the timing of new product introductions,
competitive pricing pressures, fluctuations in product returns,
increases in selling, general and administrative expenses,
changes in interest rates, overall market conditions and other
factors. Operating results also can vary between quarters of the
same or different years due to, among other things, changes in
product mix, limitations on the timing of price increases and
variances in the cost of raw materials, and the timing of high
volume retail periods or special promotions. As a result, the
Company experiences variability in its operating results on a
quarterly basis, which may make quarterly year-to-year
comparisons less meaningful. In addition, the Company's stock
price may experience significant price and volume fluctuations in
response to internal and external factors which cause variations
in its quarterly results of operations and the stock markets.

DEPENDENCE UPON EXECUTIVE OFFICERS

The development of the Company's business has been largely
dependent on the efforts of Robert H. Deming, Daniel J. Stubler
and John E. Thompson. The loss of the services of one or more of
these officers could have a material adverse effect on the
Company. The Company has entered into an employment agreement
with each of these officers.

FLUCTUATIONS IN PRICES OF RAW MATERIALS

The Company purchases its raw materials from various outside
sources. The price and availability of raw materials can
fluctuate and periods of shortage are possible. The principal
raw materials used by the Company in producing its products are
aluminum, steel and plastic, together with paperboard packaging,
and are purchased at prevailing market prices. The price and
availability of raw materials are determined by constantly
changing market forces over which the Company has limited
control. Moreover, there can be no assurance that the Company
would be able to recover increases in raw materials prices
through price increases of its products. A significant increase
in the price of raw materials and/or a significant shortage of
raw materials could have a material adverse effect on the
Company's results of operations and financial condition.

CREDIT AGREEMENT RESTRICTIONS

The Company's revolving credit and term loan agreement with
its existing lender contains certain restrictions on the Company,
including requirements as to the maintenance of net worth and
certain financial ratios, minimum levels of income and working
capital, payment of cash dividends or purchases of treasury
stock, additions to property, plant and equipment and incurrence
of additional indebtedness. There can be no assurance that the
Company will be able to achieve and maintain compliance with the
prescribed financial ratio tests or other requirements of the
revolving credit and term loan agreement. The Company has
successfully sought and received waivers and amendments to its
revolving credit and term loan agreement on various occasions.
If further waivers or amendments are requested by the Company,
there can be no assurance that the Company's lender will again
grant such requests. The failure to obtain any such waivers or
amendments would reduce the Company's flexibility to respond to
adverse industry conditions and could have a material adverse
effect on the Company's results of operations, financial
condition and business.

<PAGE>

EXPOSURE TO CURRENCY EXCHANGE RATES

Although the Company is not primarily dependent upon
unaffiliated foreign companies for the manufacture of most of its
products (with the notable exception of the breadmakers, among
others), the Company's operations nevertheless are subject to
fluctuations in foreign currency exchange rates relative to the
United States dollar. The operations of the Company's wholly-
owned subsidiary, Toastmaster de Mexico S.A. de C.V.,
particularly could be adversely affected by the devaluation of
the peso relative to the dollar. In addition, a strengthening of
the United States dollar relative to local currencies abroad will
reduce the cost of imported products and benefit the Company
relatively less than those of its competitors who rely more
heavily on imported products.

RESTRUCTURING UNCERTAINTIES

The Company's proposed restructuring involves risks and
uncertainties concerning, among other things, the costs, savings
and other effects resulting from foreign sourcing of products and
disposition of the environmental product line and the nature,
scope and effectiveness of any other restructuring that may
emerge from the Company's evaluation process. There can be no
assurance that the Company will be able to accurately predict the
consequences of the restructuring, and any material deviation in
the results of such restructuring from those anticipated by the
Company could have a material adverse effect on the Company's
results of operations, financial condition and business.

INCREASED RELIANCE ON FOREIGN SUPPLIERS

Although the Company is not primarily dependent upon
unaffiliated foreign companies for the manufacture of most of its
products (with the notable exception of the breadmakers, among
others), the Company's operations nevertheless are subject to
increased reliance on foreign suppliers for certain of its
products. The risks associated with reliance on foreign vendors,
such as foreign currency fluctuations, import duties, trade
restrictions, work stoppages and political instability are
increased as more product is obtained from these suppliers. While
the Company believes it has chosen reliable and dependable
suppliers, they are nevertheless, unaffiliated independent
companies, subject to the risks mentioned above. Products which
are imported are manufactured in accordance with the Company's
design and engineering specifications and are inspected by the
Company to assure that quality control is maintained.

ADDITIONAL FACTORS

Additional risks and uncertainties that may affect future
results of operations, financial condition or business of the
Company include, but are not limited to: (i) demand for the
Company's products; (ii) the effect of economic and industry
conditions on prices for the Company's products and its cost
structure; (iii) the ability to keep pace with technological
change including developing and implementing technological
advances timely and cost-effectively in order to lower its cost
structure, to provide better service and remain competitive; (iv)
adverse publicity, news coverage by the media, or negative
reports by brokerage firms, industry and financial analysts
regarding the Company or its products which may have the effect
of reducing the reputation, goodwill or customer demand for, or
confidence in, the Company's products; (v) the ability to attract
and retain capital for growth and operations on competitive
terms; and (vi) changes in accounting policies and practices.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

Pursuant to General Instruction G(2) to Form 10-K, the
information required by this Item is incorporated herein by
reference to the information under the captions "Consolidated
Balance Sheets," "Consolidated Statements of Operations,"
"Consolidated Statements of Shareholders' Equity," "Consolidated
Statements of Cash Flows," "Notes to Consolidated Financial
Statements" and "Independent Auditors' Report" in the
Registrant's 1996 Annual Report to Shareholders.

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

None.

<PAGE>

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

Pursuant to General Instruction G(3) to Form 10-K, the
information required by this Item (except for the information set
forth in Item 4A of Part I hereof with respect to the
Registrant's executive officers) is incorporated herein by
reference to (i) the information under the caption "Election of
Directors" (except that the information set forth under the
following subcaptions thereunder is expressly excluded from such
incorporation: "Compensation of Directors" and "Meetings of the
Board and Committees") and (ii) the information under the caption
"Section 16(a) Beneficial Ownership Reporting Compliance," in
each case, in the Registrant's definitive Proxy Statement for its
1997 Annual Meeting of Shareholders to be filed pursuant to
Regulation 14A.

ITEM 11. EXECUTIVE COMPENSATION.

Pursuant to General Instruction G(3) to Form 10-K, the
information required by this Item is incorporated herein by
reference to the information under the caption "Executive
Compensation and Other Information" (except that the information
set forth under the following subcaptions thereunder is expressly
excluded from such incorporation: "Compensation Committee
Report" and "Company Performance") in the Registrant's definitive
Proxy Statement for its 1997 Annual Meeting of Shareholders to be
filed pursuant to Regulation 14A.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.

Pursuant to General Instruction G(3) to Form 10-K, the
information required by this Item is incorporated herein by
reference to the information under the caption "Ownership of
Toastmaster Common Stock" in the Registrant's definitive Proxy
Statement for its 1997 Annual Meeting of Shareholders to be filed
pursuant to Regulation 14A.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

None.

<PAGE>

PART IV

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

(a) Exhibits, Financial Statements and Financial
Statement Schedules:

1. Financial Statements:

The following financial statements of the Registrant
and report of the Registrant's independent auditors, included in
the Registrant's Annual Report to Shareholders for the year ended
December 31, 1996, are incorporated by reference in Item 8 to
this report:

Independent Auditors' Report.

Consolidated Balance Sheets as of December 31, 1996 and
1995.

Consolidated Statements of Operations for the years
ended December 31, 1996, 1995 and 1994.

Consolidated Statements of Shareholders' Equity for the
years ended December 31, 1996, 1995 and 1994.

Consolidated Statements of Cash Flows for the years
ended December 31, 1996, 1995 and 1994.

Notes to Consolidated Financial Statements.

2. Financial Statement Schedules:

Independent Auditors' Report

Schedule I -- Valuation and Qualifying Accounts

All other schedules have been omitted because they are
not applicable or the required information is shown in
the Consolidated Financial Statements or the Notes
thereto.

3. Exhibits:

Exhibit
No. Description

3.1 Articles of Incorporation (filed with the Registrant's
Registration Statement on Form 8-B (File No. 1-11007) as
Exhibit 3.1 and incorporated herein by reference)

3.1.1 Articles of Merger (in which the Registrant's Articles of
Incorporation were amended to change the name of the
Registrant) (filed with the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1994 as Exhibit
3.1.1 and incorporated herein by reference)

3.2 Bylaws (filed with the Registrant's Registration Statement
on Form 8-B (File No. 1-11007) as Exhibit 3.2 and
incorporated herein by reference)

4.1 Specimen Definitive Common Stock Certificate (filed with
the Registrant's Registration Statement on Form 8-B (File
No. 1-11007) as Exhibit 3.3 and incorporated herein by
reference)

<PAGE>

4.2 Promissory Note, dated November 21, 1989 (filed with the
Registrant's Registration Statement on Form S-1 (File
No. 33-43932) as Exhibit 4.4 and incorporated herein by
reference)

4.3 Loan and Security Agreement, dated as of November 19,
1993, between Barclays Business Credit, Inc. and the
Registrant (filed with the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1993 as Exhibit
10.1 and incorporated herein by reference)

4.3.1 First Amendment to Loan and Security Agreement, dated as
of March 7, 1994, between Barclays Business Credit, Inc.
and the Registrant (filed with the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1993
as Exhibit 10.1.1 and incorporated herein by reference)

4.3.2 Second Amendment to Loan and Security Agreement, dated as
of April 20, 1994, between the Registrant and Barclays
Business Credit, Inc. (filed with the Registrant's
Registration Statement on Form S-8 (File No. 33-80208) as
Exhibit 4.3.2 and incorporated herein by reference)

4.3.3 Assignment, Assumption and Third Amendment to Loan
Agreement, dated as of June 23, 1994, among the
Registrant's predecessor, the Registrant and Barclays
Business Credit, Inc. (filed with the Registrant's
Registration Statement on Form 8-B (File No. 1-11007) as
Exhibit 3.5.3 and incorporated herein by reference)

4.3.4 Fourth Amendment to Loan and Security Agreement, dated as
of October 24, 1994, between the Registrant and Barclays
Business Credit, Inc. (filed with the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1994
as Exhibit 10.1.4 and incorporated herein by reference)

4.3.5 Fifth Amendment to Loan and Security Agreement, dated as
of November 17, 1994, between the Registrant and Barclays
Business Credit, Inc. (filed with the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1994
as Exhibit 10.1.5 and incorporated herein by reference)

4.3.6 Sixth Amendment to Loan and Security Agreement, dated as
of December 31, 1994, between the Registrant and Shawmut
Capital Corporation (filed with the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1994
as Exhibit 10.1.6 and incorporated herein by reference)

4.3.7 Seventh Amendment to Loan and Security Agreement, dated as
of April 24, 1995, between the Registrant and Shawmut
Capital Corporation (filed with the Registrant's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1995 as
Exhibit 10 and incorporated herein by reference)

4.3.8 Eighth Amendment to Loan and Security Agreement, dated as
of July 18, 1995, between the Registrant and Shawmut
Capital Corporation (filed with the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1995
as Exhibit 10.1.8 and incorporated herein by reference)

4.3.9 Ninth Amendment to Loan and Security Agreement, dated as
of March 28, 1996, between the Registrant and Fleet
Capital Corporation (filed with the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1995
as Exhibit 10.1.9 and incorporated herein by reference)

4.3.10 Tenth Amendment to Loan and Security Agreement, dated as
of July 12, 1996, between the Registrant and Fleet
Capital Corporation (filed with the Registrant's
Quarterly Report on Form 10-Q for the quarter ended
June 30, 1996 as Exhibit 10.1.10 and incorporated herein
by reference)

4.3.11 Eleventh Amendment to Loan and Security Agreement, dated
as of October 22, 1996, between the Registrant and Fleet
Capital Corporation (filed with the Registrant's
Quarterly Report on Form 10-Q for the quarter ended
September 30, 1996 as Exhibit 10.1.11 and incorporated
herein by reference)

<PAGE>

4.3.12 Waiver and Twelfth Amendment to Loan and Security
Agreement, dated as of February 21, 1997, between the
Registrant and Fleet Capital Corporation (filed as
Exhibit 10.1.12)

10.1 Loan and Security Agreement, dated as of November 19,
1993, between Barclays Business Credit, Inc. and the
Registrant (filed with the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1993 as Exhibit
10.1 and incorporated herein by reference)

10.1.1 First Amendment to Loan and Security Agreement, dated as
of March 7, 1994, between Barclays Business Credit, Inc.
and the Registrant (filed with the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1993
as Exhibit 10.1.1 and incorporated herein by reference)

10.1.2 Second Amendment to Loan and Security Agreement, dated as
of April 20, 1994, between the Registrant and Barclays
Business Credit, Inc. (filed with the Registrant's
Registration Statement on Form S-8 (File No. 33-80208) as
Exhibit 4.3.2 and incorporated herein by reference)

10.1.3 Assignment, Assumption and Third Amendment to Loan
Agreement, dated as of June 23, 1994, among the
Registrant's predecessor, the Registrant and Barclays
Business Credit, Inc. (filed with the Registrant's
Registration Statement on Form 8-B (File No. 1-11007) as
Exhibit 3.5.3 and incorporated herein by reference)

10.1.4 Fourth Amendment to Loan and Security Agreement, dated as
of October 24, 1994, between the Registrant and Barclays
Business Credit, Inc. (filed with the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1994
as Exhibit 10.1.4 and incorporated herein by reference)

10.1.5 Fifth Amendment to Loan and Security Agreement, dated as
of November 17, 1994, between the Registrant and Barclays
Business Credit, Inc. (filed with the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1994
as Exhibit 10.1.5 and incorporated herein by reference)

10.1.6 Sixth Amendment to Loan and Security Agreement, dated as
of December 31, 1994, between the Registrant and Shawmut
Capital Corporation (filed with the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1994
as Exhibit 10.1.6 and incorporated herein by reference)

10.1.7 Seventh Amendment to Loan and Security Agreement, dated
as of April 24, 1995, between the Registrant and Shawmut
Capital Corporation (filed with the Registrant's
Quarterly Report on Form 10-Q for the quarter ended June
30, 1995 as Exhibit 10 and incorporated herein by
reference)

10.1.8 Eighth Amendment to Loan and Security Agreement, dated as
of July 18, 1995, between the Registrant and Shawmut
Capital Corporation (filed with the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1995
as Exhibit 10.1.8 and incorporated herein by reference)

10.1.9 Ninth Amendment to Loan and Security Agreement, dated as
of March 28, 1996, between the Registrant and Fleet
Capital Corporation (filed with the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1995
as Exhibit 10.1.9 and incorporated herein by reference)

10.1.10 Tenth Amendment to Loan and Security Agreement, dated as
of July 12, 1996, between the Registrant and Fleet
Capital Corporation (filed with the Registrant's
Quarterly Report on Form 10-Q for the quarter ended
June 30, 1996 as Exhibit 10.1.10 and incorporated herein
by reference)

10.1.11 Eleventh Amendment to Loan and Security Agreement, dated
as of October 22, 1996, between the Registrant and Fleet
Capital Corporation (filed with the Registrant's
Quarterly Report on Form 10-Q for the quarter ended
September 30, 1996 as Exhibit 10.1.11 and incorporated
herein by reference)

<PAGE>

10.1.12 Waiver and Twelfth Amendment to Loan and Security
Agreement, dated as of February 21, 1997, between the
Registrant and Fleet Capital Corporation

10.2 Master Agreement of Lease, dated October 1, 1991,
between St. Louis Leasing Corporation and the Registrant
(filed with Amendment No. 1 to the Registrant's
Registration Statement on Form S-1 (File No. 33-43932)
as Exhibit 10.2 and incorporated herein by reference)

10.3 Stockholders' Agreement, dated November 13, 1991, among
the Registrant and the shareholders of the Registrant
identified therein (filed with the Registrant's
Registration Statement on Form S-1 (File No. 33-43932)
as Exhibit 10.3 and incorporated herein by reference)

10.3.1 Amendment to Stockholders' Agreement, dated December 30,
1993, among the Registrant and the shareholders of the
Registrant identified therein (filed with the
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1993 as Exhibit 10.3.1 and
incorporated herein by reference)

10.4 Form of Employment Agreement between the Registrant and
Robert H. Deming (filed with the Registrant's
Registration Statement on Form S-1 (File No. 33-43932)
as Exhibit 10.4 and incorporated herein by reference)*

10.5 Form of Employment Agreement between the Registrant and
Daniel J. Stubler (filed with the Registrant's
Registration Statement on Form S-1 (File No. 33-43932)
as Exhibit 10.5 and incorporated herein by reference)*

10.6 Form of Employment Agreement between the Registrant and
John E. Thompson (filed with the Registrant's
Registration Statement on Form S-1 (File No. 33-43932)
as Exhibit 10.6 and incorporated herein by reference)*

10.7 Form of Indemnification Agreement and Schedule of
Parties Thereto (filed with the Registrant's
Registration Statement on Form S-1 (File No. 33-43932)
as Exhibit 10.7 and incorporated herein by reference)*

10.7.1 Revised Schedule of Parties to Indemnification
Agreements (filed with Amendment No. 1 to the
Registrant's Registration Statement on Form S-1 (File
No. 33-43932) as Exhibit 10.7.1 and incorporated herein
by reference)*

10.8 Toastmaster Inc. Incentive Stock Option Plan (filed with
the Registrant's Registration Statement on Form S-1
(File No. 33-43932) as Exhibit 10.8 and incorporated
herein by reference)

10.9 Toastmaster Inc. Non-Statutory Stock Option Plan (filed
with the Registrant's Registration Statement on Form S-1
(File No. 33-43932) as Exhibit 10.9 and incorporated
herein by reference)

10.10 Toastmaster Inc. Incentive Program - 1994 (filed with
the Registrant's Annual Report on Form 10-K for the year
ended December 31, 1993 as Exhibit 10.13 and
incorporated herein by reference)*

10.11 Toastmaster Inc. Savings and Investment Plan (filed with
Registrant's Registration Statement on Form S-1 (File
No. 33-43932) as Exhibit 10.11 and incorporated herein
by reference)*

10.12 Toastmaster Inc. Pension Plan for Salaried Employees
(filed with the Registrant's Registration Statement on
Form S-1 (File No. 33-43932) as Exhibit 10.12 and
incorporated herein by reference)*

10.13 Toastmaster Inc. Supplemental Insurance Plan (filed with
the Registrant's Registration Statement on Form S-1
(File No. 33-43932) as Exhibit 10.13 and incorporated
herein by reference)*

<PAGE>

10.14 Directors and Officers Insurance and Company
Reimbursement Policy (filed with Amendment No. 1 to the
Registrant's Registration Statement on Form S-1 (File
No. 33-43932) as Exhibit 10.14 and incorporated herein
by reference)

10.15 Toastmaster Inc. Non-Employee Directors Stock Option
Plan (filed with the Registrant's Annual Report on Form
10-K for the year ended December 31, 1992 as Exhibit
10.16 and incorporated herein by reference)

10.16 Toastmaster Inc. Supplemental Executive Retirement Plan
(filed with the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1995 as Exhibit 10.19
and incorporated herein by reference)*

10.17 Toastmaster Inc. Incentive Program - 1995 (filed with
the Registrant's Annual Report on Form 10-K for the year
ended December 31, 1994 as Exhibit 10.20 and
incorporated herein by reference)*

10.18 Toastmaster Inc. Incentive Program - 1996 (filed with
the Registrant's Annual Report on Form 10-K for the year
ended December 31, 1995 as Exhibit 10.21 and
incorporated herein by reference)*

10.19 Toastmaster Inc. Incentive Program - 1997*

10.20 Master Equipment Lease, dated June 14, 1995, between
Fleet Credit Corporation and the Registrant (filed with
the Registrant's Annual Report on Form 10-K for the year
ended December 31, 1995 as Exhibit 10.22 and
incorporated herein by reference)

10.21 Master Lease Agreement, dated July 11, 1995, between
Bankers Leasing Association, Inc. and the Registrant
(filed with the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1995 as Exhibit 10.23
and incorporated herein by reference)

10.22 Toastmaster Inc. Supplemental Executive Retirement Plan
II (filed with the Registrant's Annual Report on Form
10-K for the year ended December 31, 1995 as Exhibit
10.24 and incorporated herein by reference)*

10.23 Master Equipment Lease Agreement, dated August 12, 1996,
between AT&T Systems Leasing Corporation and the
Registrant

10.24 Toastmaster Inc. 1997 Non-Employee Directors Stock
Option Plan

13 The Registrant's 1996 Annual Report to Shareholders
(only those portions of such Annual Report to
Shareholders which are specifically incorporated by
reference into this Annual Report on Form 10-K shall be
deemed to be filed with the Commission)

21 List of Subsidiaries (filed with the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1994
as Exhibit 21 and incorporated herein by reference)

23 Consent of KPMG Peat Marwick LLP with regard to the
Registrant's Registration Statements on Form S-8 (File
Nos. 33-78516 and 33-80208)

27 Financial Data Schedule

____________________
* Management contracts or compensatory plans or arrangements
required to be identified by Item 14(a)(3).

<PAGE>

(b) Reports on Form 8-K:

None.

See Exhibits identified above under Item 14(a)3.

(d) Financial Statement Schedules:

See Financial Statement Schedules identified above
under Item 14(a)2.

<PAGE>

SIGNATURES

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

TOASTMASTER INC.

By /s/ Robert H. Deming
Robert H. Deming
Chairman of the Board and
Chief Executive Officer
Dated: March 20, 1997

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

SIGNATURE AND TITLE DATE

/s/ Robert H. Deming March 20, 1997
Robert H. Deming
Chairman of the Board,
Chief Executive Officer and Director
(Principal Executive Officer)

/s/ Daniel J. Stubler March 25, 1997
Daniel J. Stubler
President,
Chief Operating Officer and Director

/s/ John E. Thompson March 25, 1997
John E. Thompson
Executive Vice President --
Chief Financial Officer,
Treasurer and Director (Principal
Financial and Accounting Officer)

/s/ Edward J. Williams March 18, 1997
Edward J. Williams
Director

/s/ S B. Rymer, Jr. March 18, 1997
S B. Rymer, Jr.
Director

/s/ James L. Hesburg March 18, 1997
James L. Hesburgh
Director

<PAGE>

INDEPENDENT AUDITORS' REPORT

The Board of Directors
Toastmaster Inc.:

Under date of February 21, 1997, we reported on the consolidated
balance sheets of Toastmaster Inc. as of December 31, 1996 and
1995, and the related consolidated statements of operations,
stockholders' equity and cash flows for each of the years in the
three-year period ended December 31, 1996 as contained in the
1996 annual report to stockholders. These consolidated financial
statements and our report thereon are incorporated by reference
in the annual report on Form 10-K for the year 1996. In
connection with our audits of the aforementioned financial
statements, we also have audited the related financial statement
schedule as listed under Item 14 of Form 10-K. This financial
statement schedule is the responsibility of the Company's
management. Our responsibility is to express an opinion on this
financial statement schedule based on our audits.

In our opinion, this financial statement schedule, when
considered in relation to the basic financial statements taken as
a whole, presents fairly, in all material respects, the
information set forth therein.

KPMG Peat Marwick LLP

Kansas City, Missouri
February 21, 1997

<PAGE>

<TABLE>

Schedule I

TOASTMASTER INC.

Valuation and Qualifying Accounts
<CAPTION>

<S> <C> <C> <C> <C> <C>
Column A Column B Column C Column D Column E Column F

Balance at Charged to Balance
beginning of costs and Charged to at end
Classification period expenses other accounts Deductions of period

Year ended
December 31, 1994:
Allowance for sales
discounts, returns
and doubtful
accounts $ 2,060,000 1,812,214 - (1,438,214)/1/ 2,434,000

Accrued warranty
expense $ 1,500,000 8,281,000 - (7,581,000) 2,200,000

Year ended
December 31, 1995:
Allowance for sales
discounts, returns
and doubtful
accounts $ 2,434,000 3,036,000 - (2,798,000)/1/ 2,672,000

Accrued warranty
expense $ 2,200,000 9,734,000 - (9,534,000) 2,400,000

Year ended
December 31, 1996:
Allowance for sales
discounts, returns
and doubtful
accounts $ 2,672,000 1,902,000 - (1,900,000)/1/ 2,674,000

Accrued warranty
expense $ 2,400,000 2,825,000 - (2,825,000) 2,400,000

/1/ Sales discounts and accounts considered uncollectible

See accompanying independent auditors' report

</TABLE>

<PAGE>

EXHIBIT INDEX

Exhibit
No. Description Page

3.1 Articles of Incorporation (filed with the *
Registrant's Registration Statement on Form 8-B
(File No. 1-11007) as Exhibit 3.1 and incorporated
herein by reference)

3.1.1 Articles of Merger (in which the Registrant's *
Articles of Incorporation were amended to change
the name of the Registrant) (filed with the
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1994 as Exhibit 3.1.1 and
incorporated herein by reference)

3.2 Bylaws (filed with the Registrant's Registration *
Statement on Form 8-B (File No. 1-11007) as
Exhibit 3.2 and incorporated herein by reference)

4.1 Specimen Definitive Common Stock Certificate *
(filed with the Registrant's Registration
Statement on Form 8-B (File No. 1-11007) as
Exhibit 3.3 and incorporated herein by reference)

4.2 Promissory Note, dated November 21, 1989 (filed *
with the Registrant's Registration Statement on
Form S-1 (File No. 33-43932) as Exhibit 4.4 and
incorporated herein by reference)

4.3 Loan and Security Agreement, dated as of *
November 19, 1993, between Barclays Business
Credit, Inc. and the Registrant (filed with the
Registrant's Annual Report on Form 10-K for the
year ended December 31, 1993 as Exhibit 10.1 and
incorporated herein by reference)

4.3.1 First Amendment to Loan and Security Agreement, *
dated as of March 7, 1994, between Barclays
Business Credit, Inc. and the Registrant (filed
with the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1993 as Exhibit
10.1.1 and incorporated herein by reference)

4.3.2 Second Amendment to Loan and Security Agreement, *
dated as of April 20, 1994, between the Registrant
and Barclays Business Credit, Inc. (filed with the
Registrant's Registration Statement on Form S-8
(File No. 33-80208) as Exhibit 4.3.2 and incorporated
herein by reference)

4.3.3 Assignment, Assumption and Third Amendment to *
Loan Agreement, dated as of June 23, 1994, among
the Registrant's predecessor, the Registrant and
Barclays Business Credit, Inc. (filed with the
Registrant's Registration Statement on Form 8-B
(File No. 1-11007) as Exhibit 3.5.3 and incorporated
herein by reference)

4.3.4 Fourth Amendment to Loan and Security Agreement, *
dated as of October 24, 1994, between the
Registrant and Barclays Business Credit, Inc.
(filed with the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1994 as
Exhibit 10.1.4 and incorporated herein by reference)

4.3.5 Fifth Amendment to Loan and Security Agreement, *
dated as of November 17, 1994, between the
Registrant and Barclays Business Credit, Inc.
(filed with the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1994 as
Exhibit 10.1.5 and incorporated herein by reference)

4.3.6 Sixth Amendment to Loan and Security Agreement, *
dated as of December 31, 1994, between the
Registrant and Shawmut Capital Corporation (filed
with the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1994 as Exhibit
10.1.6 and incorporated herein by reference)

4.3.7 Seventh Amendment to Loan and Security Agreement, *
dated as of April 24, 1995, between the Registrant
and Shawmut Capital Corporation (filed with the
Registrant's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1995 as Exhibit 10 and
incorporated herein by reference)

4.3.8 Eighth Amendment to Loan and Security Agreement, *
dated as of July 18, 1995, between the Registrant
and Shawmut Capital Corporation (filed with the
Registrant's Annual Report on Form 10-K for the
year ended December 31, 1995 as Exhibit 10.1.8 and
incorporated herein by reference)

<PAGE>

4.3.9 Ninth Amendment to Loan and Security Agreement, *
dated as of March 28, 1996, between the Registrant
and Fleet Capital Corporation (filed with the
Registrant's Annual Report on Form 10-K for the
year ended December 31, 1995 as Exhibit 10.1.9 and
incorporated herein by reference)

4.3.10 Tenth Amendment to Loan and Security Agreement, *
dated as of July 12, 1996, between the Registrant
and Fleet Capital Corporation (filed with the
Registrant's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1996 as Exhibit 10.1.10
and incorporated herein by reference)

4.3.11 Eleventh Amendment to Loan and Security Agreement, *
dated as of October 22, 1996, between the
Registrant and Fleet Capital Corporation (filed
with the Registrant's Quarterly Report on Form 10-Q
for the quarter ended September 30, 1996 as
Exhibit 10.1.11 and incorporated herein by reference)

4.3.12 Waiver and Twelfth Amendment to Loan and Security __
Agreement, dated as of February 21, 1997, between
the Registrant and Fleet Capital Corporation (filed
as Exhibit 10.1.12)

10.1 Loan and Security Agreement, dated as of *
November 19, 1993, between Barclays Business
Credit, Inc. and the Registrant (filed with the
Registrant's Annual Report on Form 10-K for the
year ended December 31, 1993 as Exhibit 10.1 and
incorporated herein by reference)

10.1.1 First Amendment to Loan and Security Agreement, *
dated as of March 7, 1994, between Barclays
Business Credit, Inc. and the Registrant (filed
with the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1993 as Exhibit
10.1.1 and incorporated herein by reference)

10.1.2 Second Amendment to Loan and Security Agreement, *
dated as of April 20, 1994, between the Registrant
and Barclays Business Credit, Inc. (filed with the
Registrant's Registration Statement on Form S-8
(File No. 33-80208) as Exhibit 4.3.2 and
incorporated herein by reference)

10.1.3 Assignment, Assumption and Third Amendment to *
Loan Agreement, dated as of June 23, 1994, among
the Registrant's predecessor, the Registrant and
Barclays Business Credit, Inc. (filed with the
Registrant's Registration Statement on Form 8-B
(File No. 1-11007) as Exhibit 3.5.3 and incorporated
herein by reference)

10.1.4 Fourth Amendment to Loan and Security Agreement, *
dated as of October 24, 1994, between the
Registrant and Barclays Business Credit, Inc.
(filed with the Registrant's Annual Report on Form
10-K for the year ended December 31, 1994 as
Exhibit 10.1.4 and incorporated herein by reference)

10.1.5 Fifth Amendment to Loan and Security Agreement, *
dated as of November 17, 1994, between the
Registrant and Barclays Business Credit, Inc.
(filed with the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1994
as Exhibit 10.1.5 and incorporated herein by
reference)

10.1.6 Sixth Amendment to Loan and Security Agreement, *
dated as of December 31, 1994, between the
Registrant and Shawmut Capital Corporation (filed
with the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1994 as Exhibit
10.1.6 and incorporated herein by reference)

10.1.7 Seventh Amendment to Loan and Security Agreement, *
dated as of April 24, 1995, between the Registrant
and Shawmut Capital Corporation (filed with the
Registrant's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1995 as Exhibit 10 and
incorporated herein by reference)

10.1.8 Eighth Amendment to Loan and Security Agreement, *
dated as of July 18, 1995, between the Registrant
and Shawmut Capital Corporation (filed with the
Registrant's Annual Report on Form 10-K for the
year ended December 31, 1995 as Exhibit 10.1.8 and
incorporated herein by reference)

<PAGE>

10.1.9 Ninth Amendment to Loan and Security Agreement, *
dated as of March 28, 1996, between the Registrant
and Fleet Capital Corporation (filed with the
Registrant's Annual Report on Form 10-K for the
year ended December 31, 1995 as Exhibit 10.1.9 and
incorporated herein by reference)

10.1.10 Tenth Amendment to Loan and Security Agreement, *
dated as of July 12, 1996, between the Registrant
and Fleet Capital Corporation (filed with the
Registrant's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1996 as Exhibit 10.1.10
and incorporated herein by reference)

10.1.11 Eleventh Amendment to Loan and Security Agreement, *
dated as of October 22, 1996, between the Registrant
and Fleet Capital Corporation (filed with the
Registrant's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1996 as Exhibit 10.1.11
and incorporated herein by reference)

10.1.12 Waiver and Twelfth Amendment to Loan and Security __
Agreement, dated as of February 21, 1997, between
the Registrant and Fleet Capital Corporation

10.2 Master Agreement of Lease, dated October 1, 1991, *
between St. Louis Leasing Corporation and the
Registrant (filed with Amendment No. 1 to the
Registrant's Registration Statement on Form S-1
(File No. 33-43932) as Exhibit 10.2 and
incorporated herein by reference)

10.3 Stockholders' Agreement, dated November 13, 1991, *
among the Registrant and the shareholders of the
Registrant identified therein (filed with the
Registrant's Registration Statement on Form S-1
(File No. 33-43932) as Exhibit 10.3 and
incorporated herein by reference)

10.3.1 Amendment to Stockholders' Agreement, dated *
December 30, 1993, among the Registrant and the
shareholders of the Registrant identified therein
(filed with the Registrant's Annual Report on Form
10-K for the year ended December 31, 1993 as Exhibit
10.3.1 and incorporated herein by reference)

10.4 Form of Employment Agreement between the Registrant *
and Robert H. Deming (filed with the Registrant's
Registration Statement on Form S-1 (File No.
33-43932) as Exhibit 10.4 and incorporated herein by
reference)

10.5 Form of Employment Agreement between the Registrant *
and Daniel J. Stubler (filed with the Registrant's
Registration Statement on Form S-1 (File No.
33-43932) as Exhibit 10.5 and incorporated herein by
reference)

10.6 Form of Employment Agreement between the Registrant *
and John E. Thompson (filed with the Registrant's
Registration Statement on Form S-1 (File No.
33-43932) as Exhibit 10.6 and incorporated herein by
reference)

10.7 Form of Indemnification Agreement and Schedule of *
Parties Thereto (filed with the Registrant's
Registration Statement on Form S-1 (File No.
33-43932) as Exhibit 10.7 and incorporated herein
by reference)

10.7.1 Revised Schedule of Parties to Indemnification *
Agreements (filed with Amendment No. 1 to the
Registrant's Registration Statement on Form S-1
(File No. 33-43932) as Exhibit 10.7.1 and
incorporated herein by reference)

10.8 Toastmaster Inc. Incentive Stock Option Plan *
(filed with the Registrant's Registration
Statement on Form S-1 (File No. 33-43932) as
Exhibit 10.8 and incorporated herein by reference)

10.9 Toastmaster Inc. Non-Statutory Stock Option Plan *
(filed with the Registrant's Registration Statement
on Form S-1 (File No. 33-43932) as Exhibit 10.9 and
incorporated herein by reference)

10.10 Toastmaster Inc. Incentive Program - 1994 (filed *
with the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1993 as Exhibit
10.13 and incorporated herein by reference)

<PAGE>

10.11 Toastmaster Inc. Savings and Investment Plan *
(filed with Registrant's Registration Statement
on Form S-1 (File No. 33-43932) as Exhibit 10.11
and incorporated herein by reference)

10.12 Toastmaster Inc. Pension Plan for Salaried *
Employees (filed with the Registrant's
Registration Statement on Form S-1 (File No.
33-43932) as Exhibit 10.12 and incorporated herein
by reference)

10.13 Toastmaster Inc. Supplemental Insurance Plan *
(filed with the Registrant's Registration
Statement on Form S-1 (File No. 33-43932) as
Exhibit 10.13 and incorporated herein by reference)

10.14 Directors and Officers Insurance and Company *
Reimbursement Policy (filed with Amendment No. 1
to the Registrant's Registration Statement on Form
S-1 (File No. 33-43932) as Exhibit 10.14 and
incorporated herein by reference)

10.15 Toastmaster Inc. Non-Employee Directors Stock *
Option Plan (filed with the Registrant's Annual
Report on Form 10-K for the year ended December 31,
1992 as Exhibit 10.16 and incorporated herein
by reference)

10.16 Toastmaster Inc. Supplemental Executive Retirement *
Plan (filed with the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1995 as
Exhibit 10.19 and incorporated herein by reference)

10.17 Toastmaster Inc. Incentive Program - 1995 (filed *
with the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1994 as Exhibit
10.20 and incorporated herein by reference)

10.18 Toastmaster Inc. Incentive Program - 1996 (filed *
with the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1995 as Exhibit
10.21 and incorporated herein by reference)

10.19 Toastmaster Inc. Incentive Program - 1997 __

10.20 Master Equipment Lease, dated June 14, 1995, *
between Fleet Credit Corporation and the
Registrant (filed with the Registrant's Annual
Report on Form 10-K for the year ended December 31,
1995 as Exhibit 10.22 and incorporated herein by
reference)

10.21 Master Lease Agreement, dated July 11, 1995, *
between Bankers Leasing Association, Inc. and
the Registrant (filed with the Registrant's Annual
Report on Form 10-K for the year ended December 31,
1995 as Exhibit 10.23 and incorporated herein by
reference)

10.22 Toastmaster Inc. Supplemental Executive Retirement *
Plan II (filed with the Registrant's Annual Report
on Form 10-K for the year ended December 31, 1995 as
Exhibit 10.24 and incorporated herein by reference)

10.23 Master Equipment Lease Agreement, dated August 12, __
1996, between AT&T Systems Leasing Corporation and
the Registrant

10.24 Toastmaster Inc. 1997 Non-Employee Directors Stock __
Option Plan

13 The Registrant's 1996 Annual Report to Shareholders
(only those portions of such Annual Report to
Shareholders which are specifically incorporated
by reference into this Annual Report on Form 10-K
shall be deemed to be filed with the Commission)

21 List of Subsidiaries (filed with the Registrant's *
Annual Report on Form 10-K for the year ended
December 31, 1994 as Exhibit 21 and incorporated
herein by reference)

23 Consent of KPMG Peat Marwick LLP with regard to __
the Registrant's Registration Statements on Form
S-8 (File Nos. 33-78516 and 33-80208)

<PAGE>

27 Financial Data Schedule

* Incorporated herein by reference.
** Management contracts or compensatory plans or
arrangements required to be identified by Item
14(a)(3).

WAIVER AND TWELFTH AMENDMENT TO LOAN AND SECURITY AGREEMENT

THIS WAIVER AND TWELFTH AMENDMENT TO LOAN AND SECURITY
AGREEMENT (this "Amendment") is made as of February 21, 1997, by
and between TOASTMASTER INC., a Missouri corporation ("Borrower")
and FLEET CAPITAL CORPORATION, a Rhode Island corporation
("Lender").

PRELIMINARY STATEMENTS:

A. Borrower and Lender are parties to that certain Loan
and Security Agreement dated as of November_19, 1993, (as amended
from time to time, the "Loan Agreement"). Capitalized terms used
but not defined herein shall have the meanings given them in the
Loan Agreement.

B. Borrower and Lender now desire to amend certain
provisions of the Loan Agreement on and subject to the terms
hereof.

TERMS OF AGREEMENT

NOW, THEREFORE, in consideration of the premises and the
mutual promises and agreements hereinafter set forth, the parties
hereto agree as follows:

1. Waiver. The Lender hereby waives the provisions of
Section 9.3(A) of the Loan Agreement [RELATING TO MINIMUM
ADJUSTED TANGIBLE NET WORTH] for the Borrower's calendar year
ending December 31, 1996 to the extent the Borrower achieved an
Adjusted Tangible Net Worth of $35,350,000 for such period, and
the Loan Agreement requires the Adjusted Tangible Net Worth to be
no less than $37,000,000 for such period.

2. Amendment to Loan Agreement. The Loan Agreement is
hereby amended by deleting Section 9.3 thereof [RELATING TO
FINANCIAL COVENANTS] in its entirety and replacing it with the
following:

9.3. Specific Financial Covenants. During the term of
this Agreement, and thereafter for so long as there are any
Obligations to Lender, Borrower covenants that, unless
otherewise consented to by Lender in writing, it shall:

(A) Minimum Adjusted Tangible Net Worth. Maintain at
all times during the periods set forth below an Adjusted
Tangible Net Worth of not less than the amounts set forth
below:

<PAGE>

Period Amount

1/1/97 through 12/31/97 $32,000,000

1/1/98 through 12/31/98 $32,400,000

1/1/99 through 12/31/99 $33,300,000

1/1/2000 through 12/31/2000 $34,700,000

1/1/2001 and thereafter $36,100,000
through the term of the
Agreement

(B) Current Ratio. Maintain at all times a ratio of
Current Assets to Current Liabilities of not less than 2.25
to 1.0.

(BB) Minimum Availability. Maintainat all times an
excess of the Borrowing Base over the total amount of
Revolving Credit Loans outstanding hereunder of at least
Five Million Dollars ($5,000,000).

(C) Quarterly Pre-Tax Earnings. Achieve Adjusted Net
Earnings from Operations plus Federal, State and local
income taxes deducted in the computation thereof of not less
than the amounts shown below at the end of the corresponding
time period (in the case of an indicated periodic loss, the
actual loss shall be not greater than the indicated loss)

Period Amount

January 1 through March 31 ($3,300,000)(loss)
January 1 through June 30 ($4,500,000)(loss)
January 1 through September 30 ($2,575,000)(loss)

(D) Annual Profitability. Achieve Adjusted Net
Earnings from Operations of not less than the amounts set
forth below for the periods set forth below:

<PAGE>

Period Amount

fiscal year ending 12/31/97 $1,200,000

fiscal year ending 12/31/98 $1,500,000

fiscal year ending 12/31/99 $2,000,000
and thereafter through
the term of the Agreement

3. Consent of Participants. This Amendment shall not be
effective until Lender shall have received an executed consent to
the terms hereof from both Harris Trust and Savings Bank and
Firstar Financial Services, a Division of Firstar Bank Milwaukee,
N.A., in form and substance satisfactory to Lender and its
counsel.

4. No Claims; Liens Unimpaired. Borrower acknowledges
that, as of the date hereof, it has no actual knowledge of any
existing claims, defenses (personal or otherwise) or rights of
setoff or recoupment whatsoever with respect to the Loan
Agreement or any of the other Loan Documents. Borrower agrees
that this Amendment in no way acts as a release or relinquishment
of any Liens in favor of the Lender securing payment of any of
the Obligations.

5. No Other Amendments or Waivers. Except as expressly
set forth herein, there are no other agreements or
understandings, written or oral, between Borrower and Lender
relating to the Loan Agreement and/or the other Loan Documents
that are not fully and completely set forth or described herein.
Except to the extent specifically amended hereby, all terms and
provisions of the Loan Agreement and the other Loan Documents
shall remain in full force and effect in accordance with their
respective terms, and no provisions thereof have been waived,
except as specifically set forth herein.

6. Further Assurances. Borrower agrees to execute such
other and further documents and instruments as Lender may request
to implement the provisions of this Amendment.

7. Amendments. No provision of this Amendment may be
amended, modified or waived, except by an instrument in writing
signed by the Lender.

8. Counterparts; Faxed Signatures. This Amendment may be
executed in one or more counterparts and by different parties on
different counterparts, each of which shall be deemed an original
instrument and all of which taken together shall constitute one
and the same agreement. A signature of a party delivered by
telecopy or other electronic communication shall constitute an
original signature of such party.

<PAGE>

9. Incorporation by Reference; Statement Required by
Section 432.045, Mo. Rev. Stat.

(a) Each of the Notes and the other Loan Documents is
incorporated herein in full by this reference, provided,
however, that if there is any inconsistency between this
Amendment and such other Loan Documents (as amended by this
Amendment), this Amendment shall govern.

(B) ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY,
EXTEND CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT OF A
DEBT INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT ARE NOT
ENFORCEABLE. TO PROTECT YOU (BORROWER(S)) AND US (CREDITOR)
FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE
REACH COVERING SUCH MATTERS ARE CONTAINED IN THIS WRITING,
WHICH IS THE COMPLETE AND EXCLUSIVE STATEMENT OF THE
AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER AGREE IN
WRITING TO MODIFY IT.

IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed on the date specified at the
beginning hereof.

TOASTMASTER INC.

By:_____________________________
Name:
Title:

FLEET CAPITAL CORPORATION

By:_____________________________
Name:
Title:

TOASTMASTER INC.

TOASTMASTER INCENTIVE PROGRAM

1997

<PAGE>

TOASTMASTER INCENTIVE PROGRAM

PURPOSE AND BASIS OF INCENTIVE COMPENSATION

The purpose of the Toastmaster Inc. Incentive Compensation Plan
is to motivate and reward outstanding performance on the part of
key management employees who are in a position to influence
results and the level of profits in a direct, measurable and
significant way. It is the intent of the Plan to stimulate
greater initiative, resourcefulness, teamwork and concentrated
effort on the part of this key management group, to attain and
thereafter maintain, upper quartile performance in return on
investment and growth in earnings when measured against the
performance of the industries in which the company participates.

The Management will annually establish the upper quartile levels
of return on investment and earnings growth, along with general
objectives for the corporation and each of its operating units.
All individual goals that provide the basis for incentive
compensation will be related to these corporate goals and
objectives. Form I sets forth the objectives approved by the
President.

ELIGIBILITY AND PARTICIPATION

Eligibility for participation in the Plan is limited to those who
can truly impact profits in a material way. Among other
considerations, this determination will be based upon the
evaluated level of each position and the position's impact on
profitability. Determination of participation will be the
responsibility of the Operating Committee, approved by the
President. In order to be eligible, each position must have a
position description and evaluation completed under the
Compensation Program. The evaluation will be conducted by the
Vice President of Human Resources and must be approved by the
President.

LIMITATION OF AMOUNTS PAID AS INCENTIVE COMPENSATION

The aggregate of all incentive compensation payment, excluding
salesman's commissions but including any bonus paid under this
Plan, cannot exceed 5 percent of the total consolidated profit of
the Company, before provisions for income taxes and interest.

<PAGE>

ESTABLISHMENT OF INCENTIVE FUNDS AND THE DETERMINATION OF
DISCRETIONARY INDIVIDUAL AWARDS

An incentive fund for performance and discretionary individual
achievement awards shall be established following the end of each
fiscal year as soon as practicable after the auditors have
completed their audit and appropriate authorization is received
(i.e. Barclays financial institution).

PERFORMANCE FUND

A Performance Fund will be established to reward the participants
for attainment of the desired Corporate target for return on
investment and the earnings growth necessary to sustain that
return. Such a fund will be established when earnings exceed the
predetermined minimum earnings goal. The Performance Fund will
be the sum of the individual participants' performance awards
that are earned. The individual performance awards will be
automatically determined as a percentage by which the Incentive
Base Target (hereinafter the "Incentive Base"), was achieved.
Administrative Rule 4 sets forth participant's target performance
awards based upon position evaluation points and Administrative
Rule 5 establishes the percentage of those targets that become
payable according to the percent of Incentive Base achievement.

The Performance Fund will be accrued as earned in the accounting
records.

THE DISCRETIONARY ACHIEVEMENT FUND

While the Performance Fund is designed to recognize performance
within range of the profit targets desired by the Corporation,
the continuing progress of the Corporation as a whole also
depends on outstanding achievements by participants. The
Discretionary Individual Achievement Fund is provided as a means
of recognizing outstanding individual performance.

Individual goals will, to the extent possible, have been
established prior to the beginning of the year. These goals will
have become an integral part of the operation plan. Achievement
will be measured in terms of meeting the degree overall operating
plan and the individual goals. In no case, can a participant's
discretionary individual achievement award exceed 50% of his or
her maximum payout target that would be applicable for his or her
position.

<PAGE>

Administrative Rule 9 sets forth the manner in which individual
performance will be evaluated and defines "outstanding
performance," which is the level of performance essential to the
determination of an award.

INDIVIDUAL ACHIEVEMENT AWARDS NOT AUTOMATIC

While all program participants have the opportunity to earn a
discretionary individual achievement award, no commitment can be
made that such an award will be made. These awards are not
determinable until the President has evaluated all performance
data against individual and Corporate objective and the amount of
the fund available.

APPROVAL REQUIRED

The performance and the discretionary individual achievement
award recommendations will be submitted to the President who
shall have final determination of incentive awards.

PAYMENT OF INCENTIVE AWARDS

All incentive awards will be paid by check and will be
distributed as soon as possible after the end of the year
involved. In order to receive an award, an eligible participant
must be a working employee on the Company payroll on December 31
in the year involved and also on the date of distribution.

ADMINISTRATION OF THE PLAN

Overall administration and records maintenance shall be the
responsibility of the Vice President of Human Resources. All
documents provided for in the Administrative Rules will be
forwarded to the Vice President of Human Resources.

The Vice President of Human Resources will cause this information
to be summarized, along with appropriate data on cost, and
presented to the President for consideration.

<PAGE>

Upon his approval, the President will cause, through levels of
management, a continuing communication of goals and the
evaluation and communication of performance throughout the year
to maximize the Plan's effectiveness.

AUTHORITY FOR STATEMENT OF THE PLAN AND CONDITIONS GOVERNING ITS
ADMINISTRATION

This Plan and the Administrative Rules shall be subject to all
provisions of law from time to time applicable thereto. Neither
the Plan nor the Rules may be construed to give rise to a
contract for the retention of any employee; nor shall an employee
have any right whatsoever against the Company or its
subsidiaries, the directors, the officers, or other employees,
except the right to receive payment in accordance with the terms
and conditions of the Plan and the Rules thereunder.

The President of Toastmaster Inc. has the authority to interpret
the Plan and the right to make all other determinations deemed
necessary or advisable for the administration of the Plan.

<PAGE>

TOASTMASTER INCENTIVE PROGRAM
ADMINISTRATIVE RULES

The following rules have been established to insure fairness in
the administration of the Plan. Additional rules will be defined
by the President as occasions require.

RULE 1 - GOVERNMENTAL REGULATIONS

Any incentive payouts under the terms of this plan will be
limited by any governmental regulations in effect at the time of
the incentive payouts.

RULE 2 - CORPORATE OBJECTIVES RELATING TO RETURN ON INVESTMENT
AND EARNINGS GROWTH

The upper quartile levels of return on investment and earnings
growth have been established by the President as a guide in
administering the Incentive Compensation Program and are set
forth in Form I.

RULE 3 - ELIGIBILITY FOR PARTICIPATION

A properly administered job evaluation program is basic to the
Plan. No employee can be named a participant until after a
position description has been prepared and an evaluation of the
position has been completed by the Vice President of Human
Resources. The position will then be eligible for participation
on a pro-rata basis as of the date of approval by the President.
Individuals may not be named a participant in the current year's
plan after September 30, and if named in the 3rd quarter, will
not participate in a performance award.

RULE 4 - LEVEL OF PARTICIPATION

Each participant will be assigned a level of participation based
upon the following:
Incentive Target as a Percentage
Position Evaluation Point of Base Earnings

500 - 674 10%
675 - 774 12.5%
775 - 899 15%

<PAGE>

900 - 1019 20%
1020 - 1224 30%
1225 - 1624 45%
1625 - 1924 50%
1925 - 2399 60%
2400 - over 65%

The assignment of evaluation points and incentive targets is the
responsibility of the Vice President of Human Resources with the
approval of the President.

RULE 5 - PAYOUT TABLE FOR PERFORMANCE AWARDS

The payout table that relates the percent of incentive target
payout to the percent attainment of Incentive Base will be the
following:

Actual earnings and return on investment performance as a percent
of the established "trend line" goal will be rounded to the
nearest 1/10th percent in determining the percent attainment of
the goal.

RULE 6 - TARGET AND PAYOUT TABLE FOR PERFORMANCE AWARDS

A target and payout table substantially in compliance with Form I
appended hereto, will serve as the basis for communication of the
established "trend line" goals and the manner in which the
Performance Award will be automatically determined.

RULE 7 - CALCULATION SHEET FOR PERFORMANCE AWARDS

Performance awards will be calculated by completing Corporate
Form II entitled "Calculation Sheet," which form is made part of
and is the substance of this Administrative Rule.

RULE 8 - GOAL SETTING AND PERFORMANCE APPRAISAL FOR DISCRETIONARY
INDIVIDUAL ACHIEVEMENT AWARD PURPOSES

The establishment of discretionary individual achievement
objectives must be a two-way communication process between the
individual and the manager. The goals must be quantifiable so
that performance can be measured against them. Although the
goals will include the <PAGE> achievement of profit targets, they should
specifically relate to the individual's area of responsibility
and reflect the results that the individual must accomplish as a
part of the group effort to accomplish the overall profit goals -
both short-term and longer range.

In setting goals, it should be kept in mind that unattainable
goals quickly discourage motivation for achievement while
unrealistically easy goals also lack motivational value.

Additionally, goals in each basic function, i.e., manufacturing,
finance, sales, marketing etc., should be specific, measurable,
and relate to correcting deficiencies in performance or
motivating improvement in already acceptable performance. Goals
should be perceived as being attainable but, nonetheless, cause
individuals to reach. Goals, therefore, by definition go beyond
successful execution of all job responsibilities.

The purpose of establishing individual goals and rewarding
accomplishment of those goals is to establish a common direction
toward achievement of the broader Corporate goals and to motivate
individuals to accomplish those goals.

If all of the individual goals fit together toward accomplishing
Corporate objectives, individuals have a clearer understanding of
their roles in that achievement in addition to having their own
action-oriented plan.

A complete assessment of the current year's achievement of
objectives and assessment of overall performance must be
forwarded to the Vice President of Human Resources before January
15th. The current year's assessment of goal achievement
performance will then be used in determining individual
achievement awards for the year, and the coming year's objectives
will be reviewed with the President for approval.

RULE 9 - DETERMINATION OF DISCRETIONARY INDIVIDUAL ACHIEVEMENT

<PAGE>

The determination of discretionary individual achievement and the
amount of any discretionary individual achievement award will be
based upon the degree of attainment of Corporate targets and the
assessment of individual goals and overall performance using the
Performance/Potential Appraisal Form III, appended hereto. Each
manager will be responsible for completing a total assessment of
each participant's performance and submitting that assessment to
the Operating Committee for review prior to year-end.

The amount of the discretionary award will be related to the
position's evaluated level with a proportionately greater amount
being awarded to individuals demonstrating outstanding
performance. Only individuals with at least a one hundred
twenty-seven percent (127%) or better performance rating will be
eligible to receive a discretionary achievement award.

RULE 10 - PAYMENT OF AWARDS

In order to receive an award, an eligible employee must be a
working employee on the Company payroll on December 31 of the
year involved and also on the date of incentive distribution.

RULE 11 - TERMINATION OF EMPLOYMENT

Termination of employment during the year for reasons other than
retirement, death, or disability will remove the individual as a
participant and for purposes of determining the Performance Fund.
Termination for other than retirement, death, or disability after
the year-end and prior to the time incentive payouts are made
shall result in the forfeiture of any award which might otherwise
be payable.

RULE 12 - RETIREMENT, DEATH, DISABILITY

A participant who retires, dies, or is judged disabled during the
year will be entitled to a performance award prorated to the date
of such event. Illness of two months or less will not affect the
determination of an individual's performance award; however,
where illness involves more than two months, the performance
award payment will be prorated to cover only the portion <PAGE> of the
year actually worked. If an employee is judged disabled for the
purpose of administering other Company benefit programs, he will
be judged disabled for the purpose of this plan.

An Individual Achievement award will only be made in unusual
circumstances in these situations.

RULE 13 - SALARIES ABOVE ASSIGNED GRADE

It is recognized that there may be situations where salaries
exceed the participant's salary range. Where this occurs, the
difference between the maximum of that range and the incumbent's
salary will be deducted from the total of any award granted. A
discretionary individual achievement award may be granted but
must take into consideration the general circumstances at the
time, including the over-range salary level.

RULE 14 - GENERAL OBJECTIVES FOR INCLUSION IN THE GOALS OF ALL
PARTICIPANTS

The Company has initiated a continuing program to maximize its
effectiveness as a single unit. While the Management Incentive
Plan is designed to motivate the development of each unit as a
single business, it is essential that the good of the Company as
a whole is always in the forefront of such motivation.
Accordingly, each participant will be judged according to the
following general criteria:

a) His/Her effectiveness in communicating and evaluating
the goals of the unit, including how well this Plan and
other policies of the Company are used to motivate
others in accomplishing the Company's goal;

b) His/Her acceptance and assistance in refining
organization concepts of the Company, including
training and developing a competent organization and
the identification of successor management;

c) His/Her fostering of attitudes that improve the
effectiveness of the total Company and contributing to
areas outside his/her own unit that contribute to the
growth, quality, image, and well being of the Company;

d) His/Her success in helping the unit provide a safe
operation;

<PAGE>

e) His/Her contribution in developing and conveying
reliable information about his/her area of
responsibility;

f) His/Her participation and support of Corporate programs
that relate to social responsibility;

g) His/Her creativity in developing and implementing new
concepts and ideas in his/her area of expertise as well
as the overall organizational unit;

h) His/Her success in meeting the objectives of projects
attuned to individual skills or those otherwise
assigned. An individual is expected to be a self-
starter and alert to how trained competence can make a
contribution to the unit's operation and to volunteer
this effort where it is needed. To participate in an
individual achievement award, one must be the type of
employee who is more than just being on call, and must
seek out the areas in which he believes his/her
expertise is needed.

RULE 15 - ACCOUNTING PRINCIPLES

Accounting Principles applied in this Plan will be those used in
stating the annual accounts of the Company as certified by its
independent public accountants. Earnings will be based on
profits before payouts under the Plan, interest and income taxes
but after eliminating extraordinary items as shown in the
Financial Statements. Return on investment will be based on
earnings as defined above the average investments of the unit
(total assets less accounts payable and accrued expenses)
determined by averaging the investment at the beginning of the
year and the investment at each of the twelve month-ends during
the year.

Profits that are non-operating, or clearly windfall in nature if
sizable, may be eliminated at the direction of the President in
making the final unit profit determination for the year.

Losses not economic in nature (ordinarily acts of God) which are
concluded by the President to be beyond control, may at his
direction be eliminated to the extent they are not recoverable.

<PAGE>

All other elements of operating income and expenses, regardless
of timing differences, will be treated in the same manner as they
are treated in arriving at the profits certified by the
independent accountants and in accordance with internal
accounting procedures.

MASTER EQUIPMENT
LEASE AGREEMENT

LESSEE: TOASTMASTER, INC. LESSOR: AT&T SYSTEMS LEASING
CORPORATION

STREET ADDRESS: 1801 North Address: 2555 Telegraph Road
Stadium 3rd Floor
Boulevard Bloomfield Hills, MI 48302

CITY/STATE/ZIP: Columbia, MO Lease
65202 Number:

1. AGREEMENT. Lessor agrees to lease to Lessee and Lessee
agrees to lease from Lessor the equipment (Equipment) described
in any schedule (Schedule) that incorporates this Master
Equipment Lease Agreement (Agreement) by reference. A Schedule
shall incorporate this Agreement by reference by listing the
above-referenced Lease Number thereon. Such lease shall be
governed by the terms and conditions of this Agreement, as well
as by the terms and conditions set forth in the applicable
Schedule. Each Schedule shall constitute an agreement separate
and distinct from this Agreement and any other Schedule. In the
event of a conflict between the provisions of this Agreement and
a Schedule, the provisions of the Schedule shall govern.

2. ASSIGNMENT OF PURCHASE DOCUMENTS. Lessee shall execute
and deliver to Lessor a writing acceptable to Lessor whereby
Lessor is assigned all of Lessee's rights and interest in and to:
(a) the Equipment described in the applicable Schedule and (b)
any purchase order, contract or other documents (collectively,
Purchase Documents) relating thereto that Lessee has entered into
with the Seller (as specified in the applicable Schedule). If
Seller is not an affiliate of Lessor, Lessee shall deliver to
Lessor a writing acceptable to Lessor whereby Seller
acknowledges, and provides any required consent to, such
assignment. If Lessee has not entered into any Purchase Document
for the Equipment with Seller, Lessee authorizes Lessor to act as
Lessee's agent to issue a purchase order to Seller for the
Equipment and for associated matters, and such purchase order
shall be subject to this Section 2 and all references in this
Agreement to Purchase Documents shall include such purchase
order. By executing the applicable Schedule, Lessee represents
and warrants that Lessee either (y) has reviewed, approved and
received a copy of the applicable Purchase Documents or (z) has
been informed by Lessor (i) of the identity of the Seller, (ii)
that Lessee may have rights under the Purchase Documents and
(iii) that Lessee may contact Seller for a description of such
rights. The foregoing information shall not be applicable if the
Equipment specified in the Schedule is not new equipment being
purchased by Lessor to for lease to Lessee.

3. DELIVERY; ACCEPTANCE. Lessee shall cause the Equipment
to be delivered, at Lessee's expense, to Lessee at the Equipment
Location (as specified in the applicable Schedule) and Lessee
shall accept the Equipment upon the later of (a) the installation
of the Equipment or (b) the satisfaction of the acceptance
criteria, if any, specified in the applicable Purchase Documents.
In any event, Lessee shall evidence its acceptance of the
Equipment and commencement of the lease with respect thereto by
executing and delivering to Lessor a commencement certificate
(Commencement Certificate) in a form acceptable to Lessor within
five (5) business days after delivery. By executing and
delivering a Commencement Certificate to Lessor, (x) Lessee
represents and warrants that it has selected the Equipment and
Seller specified on the applicable Schedule and (y) Lessee has
irrevocably accepted such Equipment under lease. Lessee shall
reimburse Lessor for any late payment, interest on late payment
or any other similar fee or charge imposed by Seller as the
result of Lessee's failure to timely furnish all pertinent lease
documentation.

4. PURCHASE OF EQUIPMENT. Provided that no Event of
Default (as defined in Section 18) exists, and no event has
occurred and is continuing that with notice or the lapse of time
or both would constitute an Event of Default, Lessor shall be
obligated to purchase the Equipment from Seller and to lease the
Equipment to Lessee if (and only if) Lessor receives on or before
the Latest Commencement Date (as specified in the applicable
Schedule) the related Commencement Certificate and Schedule (both
executed by Lessee), and such other documents or assurances as
Lessor may reasonably request. The foregoing information shall
not be applicable if the Equipment specified in the Schedule is
not new equipment being purchased by Lessor for lease to Lessee.

5. TERM. The initial term of each Schedule (Initial Term)
shall begin on the date specified as the Commencement Date on the
Commencement Certificate with respect to such Schedule and shall
continue for the period specified in such Schedule. Any renewal
term of a Schedule (Renewal Term) shall begin on the expiration
of, as applicable, the Initial Term or any preceding Renewal Term
(collectively, Term).

6. RENT; LATE CHARGES. Lessee shall pay Lessor the first
Rental Payment (as specified in the applicable Schedule) for the
Equipment on or before the Commencement Date of the applicable
Schedule and shall pay Lessor the remaining periodic Rental
Payments on or before the periodic payment dates specified in the
applicable Schedule. Additionally, if pursuant to this Agreement
or the applicable Schedule the Term is extended or a renewal
option exercised, Lessee shall also pay all Rental Payments
required with respect thereto. All Rental Payments will be sent
to Lessor's above-referenced address, or to such other address as
specified by Lessor in writing. Lessee agrees to pay Lessor
interest at the rate of 1-1/2% per month (or such lesser rate as
is the maximum rate allowable under applicable law) on any Rental
Payment (or other amount due hereunder) that is not paid within
10 days of its due date.

<PAGE>

7. INSURANCE. At its own expense, Lessee shall provide
and maintain the following insurance: (a) insurance against the
loss or theft of or damage to the Equipment for the greater of
the Stipulated Loss Value (computed as described in the
applicable Schedule) or full replacement value thereof, naming
Lessor as a loss payee; and (b) public liability and third party
property damage insurance, naming Lessor as an additional
insured. Such insurance shall be in a form, amount and with
companies reasonably satisfactory to Lessor, shall contain the
insurer's agreement to give Lessor 30 days' prior written notice
before cancellation or material change thereof, and shall be
payable to Lessor regardless of any act, omission or breach by
Lessee. Lessee shall deliver to Lessor the insurance policies or
copies thereof or certificates of such insurance on or before the
Commencement Date of the applicable Schedule, and at such other
times as Lessor may reasonably request. If no Event of Default
exists, and no event has occurred and is continuing that with
notice or the lapse of time or both would constitute an Event of
Default, the proceeds of any insurance required under clause (a)
hereof that have been paid to Lessor shall be applied against
Lessee's obligations to Lessor under Section 12 hereof.

8. TAXES. Lessee shall reimburse Lessor for (or pay
directly, but only if instructed by Lessor) all taxes, fees, and
assessments that may be imposed by any taxing authority on the
Equipment, on its purchase, ownership, delivery, possession,
operation, rental, return to Lessor or its purchase by Lessee
(collectively, Taxes); provided, however, that Lessee shall not
be liable for any such Taxes (whether imposed by the United
States of America or by any other domestic or foreign taxing
authority) imposed on or measured by Lessor's net income or tax
preference items. Lessee's obligation includes, but is not
limited to, the obligation to pay all license and registration
fees and all sales, use, personal property and other taxes and
governmental charges, together with any penalties, fines and
interest thereon, that may be imposed during the Term of the
applicable Schedule. Lessee is liable for these Taxes whether
they are imposed upon Lessor, Lessee, the Equipment, this
Agreement or the applicable Schedule. If Lessee is required by
law or administrative practice to make any report or return with
respect to such Taxes, Lessee shall promptly advise Lessor
thereof in writing and shall cooperate with Lessor to ensure that
such reports are properly filed and accurately reflect Lessor's
interest in the Equipment. Lessor has no obligation to contest
any such Taxes, however Lessee may do so provided that: (a)
Lessee does so in its own name and at its own expense; (b) the
contest does not and will not result in any lien attaching to any
Equipment or otherwise jeopardize Lessor's right to any
Equipment; and (c) Lessee indemnifies Lessor for all expenses
(including legal fees and costs), liabilities and losses that
Lessor incurs as a result of any such contest.

9. REPAIRS; USE; LOCATION; LABELS. Lessee shall: (a) at
its own expense, keep the Equipment in good repair, condition and
working order and maintained in accordance with the
manufacturer's recommended engineering and maintenance standards;
(b) use the Equipment lawfully and exclusively in connection with
its business operations and for the purpose for which the
Equipment was designed and intended; and (c) without Lessor's
prior written consent, not move the Equipment from the Equipment
Location. If Lessor supplies Lessee with labels stating that the
Equipment is owned by Lessor, Lessee shall affix such labels to
the Equipment pursuant to Lessor's instructions.

10. MAINTENANCE; INSPECTION; ALTERATIONS. At its own
expense, Lessee shall: (a) enter into and maintain a maintenance
agreement for the Equipment with the manufacturer or other party
acceptable to Lessor; (b) maintain the Equipment in the same
condition as when delivered, subject only to ordinary wear and
tear, and in good operating order and appearance; (c) make all
alterations or additions to the Equipment that may be required or
supplied by the Seller, the manufacturer or which is otherwise
legally necessary; and (d) make no other alterations or additions
to the Equipment (except for alterations or additions that will
not impair the value or performance of the Equipment and that are
readily removable without damage to the Equipment). Any
modifications, alterations or additions that Lessee makes to the
Equipment (except as permitted by Section 10(d) above) shall
become Lessor's property and shall also be deemed to be
Equipment. Upon request, Lessor, or any party designated by
Lessor, shall have the right to inspect the Equipment and
Lessee's applicable maintenance agreement and records at any
reasonable time.

11. PERSONAL PROPERTY; LIENS AND ENCUMBRANCES; TITLE. The
Equipment shall at all times remain personal property,
notwithstanding that the Equipment, or any part thereof, may be
(or becomes) affixed or attached to real property or any
improvements thereon. Except for the interest of Lessor, Lessee
shall keep the Equipment free and clear of all levies, liens and
encumbrances of any nature whatsoever. Except as expressly set
forth in this Agreement, the Equipment shall at all times remain
the property of Lessor and Lessee shall have no right, title or
interest therein.

12. RISK OF LOSS. As between Lessor and Lessee, Lessee
shall bear the entire risk of loss, theft, destruction or damage
to the Equipment from any cause whatsoever or requisition of the
Equipment by any governmental entity or the taking of title to
the Equipment by eminent domain or otherwise (collectively Loss).
Lessee shall advise Lessor in writing within 10 days of any of
any such Loss. Except as provided below, no such Loss shall
relieve Lessee of the obligation to pay Lessor Rental Payments
and all other amounts owed hereunder. In the event of any such
Loss, Lessor, at its option, may: (a) if the Loss has not
materially impaired the Equipment (in Lessor's reasonable
judgment), require Lessee, upon Lessor's demand, to place the
Equipment in good condition and repair reasonably satisfactory to
Lessor; or (b) if the Loss has materially impaired the Equipment
(in Lessor's reasonable judgment), require Lessee, upon Lessor's
demand, to pay Lessor its anticipated return (Lessor's Return),
which shall consist of the following amounts: (i) the Rental
Payments (and other amounts) then due and owing under the
applicable Schedule; plus (ii) the Stipulated Loss Value
(computed as described in the applicable Schedule) of the
Equipment, plus (iii) all other amounts that become due and owing
under the applicable Schedule, but only to the extent such
amounts are not included in the moneys paid to Lessor pursuant to
clauses (i) and (ii) above. Upon Lessor's full receipt of such
Lessor's Return: (y) the applicable Schedule shall terminate,
and except as provided in Section 24, Lessee shall be relieved of
all obligations under the applicable Schedule; and (z) Lessor
shall transfer all of its interest in the Equipment to Lessee "AS
IS, WHERE IS," and without any warranty, express or implied from
Lessor, other than the absence of any liens or claims by,
through, or under Lessor. Notwithstanding clause (b) hereof,
Lessee may, at its option, continue Rental Payments under the
applicable Schedule, without interruption, and replace the
damaged Equipment with Equipment of identical model,
manufacturer, and condition (Replacement Equipment) (in which
case Lessee shall cause the Replacement Equipment to be delivered
to a location acceptable to Lessor and shall convey title (lien
free) to the Lessor whereupon the Replacement Equipment shall be
subject to all of the terms and conditions of this Agreement and
the applicable Schedule).

<PAGE>

13. NON-CANCELABLE NET LEASE. ALL LEASES HEREUNDER SHALL
BE NON-CANCELABLE NET LEASES, AND LESSEE AGREES THAT IT HAS AN
UNCONDITIONAL OBLIGATION TO PAY ALL RENTAL PAYMENTS AND OTHER
AMOUNTS WHEN DUE. LESSEE IS NOT ENTITLED TO ABATE OR REDUCE
RENTAL PAYMENTS OR ANY OTHER AMOUNTS DUE, OR TO SET OFF ANY
CHARGES AGAINST THOSE AMOUNTS. LESSEE IS NOT ENTITLED TO
RECOUPMENTS, CROSS-CLAIMS, COUNTERCLAIMS OR ANY OTHER DEFENSES TO
ANY RENTAL PAYMENTS OR OTHER AMOUNTS DUE HEREUNDER, WHETHER THOSE
DEFENSES ARISE OUT OF CLAIMS BY LESSEE AGAINST LESSOR, SELLER,
THIS AGREEMENT, ANY SCHEDULE OR OTHERWISE. NEITHER DEFECTS IN
EQUIPMENT, DAMAGE TO IT, NOR ITS LOSS, DESTRUCTION OR LATE
DELIVERY SHALL TERMINATE THIS AGREEMENT OR ANY SCHEDULE, OR
AFFECT LESSEE'S OBLIGATIONS HEREUNDER. UNLESS LESSEE'S
OBLIGATION TO PAY RENTAL PAYMENTS AND OTHER AMOUNTS HAS BEEN
TERMINATED PURSUANT TO THE EXPRESS TERMS OF THIS AGREEMENT, ALL
RENTAL PAYMENTS AND OTHER AMOUNTS SHALL CONTINUE TO BE DUE AND
PAYABLE HEREUNDER.

14. LESSOR DISCLAIMERS; LIMITATION OF REMEDIES. IT IS
SPECIFICALLY UNDERSTOOD AND AGREED THAT: (A) LESSOR SHALL NOT BE
DEEMED TO HAVE MADE ANY REPRESENTATION, WARRANTY OR PROMISE MADE
BY SELLER, NEITHER SELLER NOR LESSOR SHALL ACT AS, OR BE DEEMED
TO BE, AN AGENT OF THE OTHER, AND LESSOR SHALL NOT BE BOUND BY,
OR LIABLE FOR, ANY REPRESENTATION OR PROMISE MADE BY SELLER (EVEN
IF LESSOR IS AFFILIATED WITH SELLER); (B) LESSOR SHALL NOT BE
LIABLE FOR ANY FAILURE OF ANY EQUIPMENT OR ANY DELAY IN ITS
DELIVERY OR INSTALLATION; (C) LESSOR SHALL NOT BE LIABLE FOR ANY
BREACH OF ANY WARRANTY THAT SELLER MAY HAVE MADE; (D) LESSEE HAS
SELECTED ALL EQUIPMENT WITHOUT LESSOR'S ASSISTANCE; (E) LESSOR IS
NOT A MANUFACTURER OF ANY EQUIPMENT; AND (F) LESSOR HAS NOT MADE
AND DOES NOT NOW MAKE ANY REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED, WITH RESPECT TO THE DESIGN, COMPLIANCE WITH
SPECIFICATIONS, OPERATION, OR CONDITION OF ANY EQUIPMENT (OR ANY
PART THEREOF), THE MERCHANTABILITY OR FITNESS OF EQUIPMENT FOR A
PARTICULAR PURPOSE, OR ISSUES REGARDING PATENT INFRINGEMENT,
TITLE AND THE LIKE. IT IS FURTHER AGREED THAT LESSOR SHALL HAVE
NO LIABILITY TO LESSEE, LESSEE'S CUSTOMERS, OR ANY THIRD PARTIES
FOR ANY DIRECT, INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES
ARISING OUT OF THIS AGREEMENT OR ANY SCHEDULE OR CONCERNING ANY
EQUIPMENT, OR FOR ANY DAMAGES BASED ON STRICT OR ABSOLUTE TORT
LIABILITY; PROVIDED, HOWEVER, THAT NOTHING IN THIS AGREEMENT
SHALL DEPRIVE LESSEE OF ANY RIGHTS IT MAY HAVE AGAINST ANY PERSON
OTHER THAN LESSOR. LESSEE SHALL LOOK SOLELY TO SELLER FOR ANY
AND ALL CLAIMS AND WARRANTIES RELATING TO THE EQUIPMENT. Lessor
hereby assigns to Lessee for the term of the applicable Schedule
the right to enforce; provided no Event of Default then exists
under this Agreement and such enforcement is pursued in Lessee's
name, any representations, warranties and agreements made by
Seller pursuant to the purchase documents, and Lessee may retain
any recovery resulting from any such enforcement efforts. TO THE
EXTENT PERMITTED BY APPLICABLE LAW, LESSEE WAIVES ANY AND ALL
RIGHTS AND REMEDIES CONFERRED UPON A LESSEE BY ARTICLE 2A OF THE
UCC AND ANY RIGHTS NOW OR HEREINAFTER CONFERRED BY STATUTE OR
OTHERWISE THAT MAY LIMIT OR MODIFY LESSOR'S RIGHTS AS DESCRIBED
IN THIS SECTION OR OTHER SECTIONS OF THIS AGREEMENT.

15. LESSEE WARRANTIES. Lessee represents, warrants and
covenants to Lessor that: (a) unless it is an individual, Lessee
is duly organized, validly existing and in good standing under
applicable law; (b) Lessee has the power and authority to enter
into this Agreement, all Schedules and all other related
instruments or documents hereunder (collectively, Fundamental
Agreements); (c) such Fundamental Agreements are enforceable
against Lessee in accordance with their terms and do not violate
or create a default under any instrument or agreement binding on
Lessee; (d) there are no pending or threatened actions or
proceedings before any court or administrative agency that would
have a material adverse effect on Lessee or any Fundamental
Agreement, unless such actions are disclosed to Lessor and
consented to in writing by Lessor; (e) Lessee shall comply in all
material respects with all Federal, state and municipal laws and
regulations the violation of which could have a material adverse
effect upon the Equipment or Lessee's performance of its
obligations under any Fundamental Agreement; (f) Lessee shall
obtain all governmental approvals necessary for it to enter into
and perform each Fundamental Agreement; (g) each Fundamental
Agreement shall be effective against all creditors of Lessee
under applicable law, including fraudulent conveyance and bulk
transfer laws, and shall raise no presumption of fraud; (h)
financial statements and other related in formation furnished by
Lessee shall be prepared in accordance with generally accepted
accounting principles and shall present Lessee's financial
position as of the dates given on such statements; (i) Lessee
shall furnish Lessor with its certified financial statements,
opinions of counsel, resolutions, and such other information and
documents as Lessor may reasonably request; (j) ALL EQUIPMENT IS
LEASED FOR BUSINESS PURPOSES ONLY, AND NOT FOR PERSONAL, FAMILY
OR HOUSEHOLD PURPOSES; and (k) all Equipment is tangible personal
property and shall not become a fixture or real property under
Lessee's use thereof. Lessee shall be deemed to have reaffirmed
the foregoing warranties each time it executes any Fundamental
Agreement.

16. GENERAL INDEMNITY. Lessee shall indemnify, hold
harmless, and, if so requested by Lessor, defend Lessor against
all claims (Claims) directly or indirectly arising out of or
connected with the Equipment or any Fundamental Agreement.
Claims refers to all losses, liabilities, damages, penalties,
expenses (including legal fees and costs), claims, actions, and
suits, whether based on a theory of strict liability of Lessor or
otherwise, and includes, but is not limited to, matters
regarding: (a) the selection, manufacture, purchase, acceptance,
rejection, ownership, delivery, lease, possession, maintenance,
use, condition, return or operation of the Equipment; (b) any
latent defects or other defects in any Equipment, whether or not
discoverable by Lessor or by Lessee; (c) any patent, trademark,
or copyright infringement; and (d) the condition of any Equipment
arising or existing during Lessee's use.

17. SURRENDER; EXTENSION OF TERM. Unless Lessee purchases
the Equipment or renews the Term pursuant to the applicable
Schedule, or acquires the Equipment pursuant to Section 12
hereof, Lessee shall, at its expense, deinstall, inspect and
properly pack the Equipment, and return the Equipment at the
expiration of the Term, free of all liens and rights of others,
by delivering it on board such common carrier as Lessor may
specify with freight prepaid to any destination within the United
States of America specified by Lessor. The Equipment shall be
accompanied by an original copy of the relocation inventory or
other applicable form completed by the agent performing the
deinstallation. If Lessor so requests, <PAGE> Lessor and its agents
shall have the right to enter upon any premises where Equipment
may be located to perform any of Lessee's tasks noted above in
this Section 17, and Lessee shall reimburse Lessor for all costs
and expenses Lessor incurs in fulfilling such tasks. Lessee
agrees that the Equipment, when returned to Lessor, shall be in
the same condition as when delivered to Lessee, reasonable wear
and tear excepted, and certified as being eligible for the
manufacturer's generally available maintenance contract at then
prevailing rates, without Lessor incurring any expense to repair,
rehabilitate or certify such Equipment (Lessee shall be liable
for all costs and expenses Lessor incurs to place the Equipment
in such condition). If requested by Lessor, Lessee, at its
expense, shall store the Equipment on its premises for a
reasonable period, not to exceed ten (10) business days during
which period the Equipment shall be subject to all of the terms
and conditions hereof, except for the obligation to make Rental
Payments. In all instances where Lessee is returning Equipment
to Lessor, Lessee shall give Lessor written notice thereof in
accordance with the terms of the applicable Schedule. If Lessee
fails to provide the aforementioned notice or return the
Equipment to lessor in the time and manner provided above, the
Term shall be extended in accordance with the terms of the
applicable Schedule. If any Schedule is extended pursuant to the
preceding sentence, Lessee shall continue to pay the higher of
the periodic Rental Payments in effect prior to the expiration of
the then existing term of the applicable Schedule (whether it be
the Initial Term or any Renewal Term (Applicable Term)) or such
other periodic rental payment amount as is specified for such
extension period in the Schedule, and all other provisions of
this Agreement shall continue to apply.

18. EVENTS OF DEFAULT. Any of the following shall
constitute an Event of Default under this Agreement and all
Schedules: (a) Lessee fails to pay any Rental Payment or any
other amount payable to Lessor hereunder within 10 days after its
due date; or (b) Lessee fails to perform or observe any other
representation, warranty, covenant, condition or agreement to be
performed or observed by Lessee hereunder or in any other
agreement with Lessor, or in any agreement with any other person
that in Lessor's sole opinion is a material agreement, and Lessee
fails to cure any such breach within 10 days after notice
thereof; or (c) any representation or warranty made by Lessee
hereunder, or in any other instrument provided to Lessor by
Lessee, proves to be incorrect in any material respect when made;
or (d) Lessee makes an assignment for the benefit of creditors,
whether voluntary or involuntary; or (e) a proceeding under any
bankruptcy, reorganization, arrangement of debts, insolvency or
receivership law is filed by or against Lessee or Lessee takes
any action to authorize any of the foregoing matters; or (f)
Lessee becomes insolvent or fails generally to pay its debts as
they become due, the Equipment is levied against, seized or
attached, or Lessee seeks to effectuate a bulk sale of Lessee's
inventory or assets; or (g) Lessee voluntarily or involuntarily
dissolves or is dissolved, or terminates or is terminated; or (h)
any guarantor under this Agreement is the subject of an event
listed in clauses (b) through (g) above; or (i) any letter of
credit required pursuant to any Schedule is breached, canceled,
terminated or not renewed during the Term of any such Schedule.

19. REMEDIES. If an Event of Default occurs, Lessor may,
in its sole discretion, exercise one or more of the following
remedies: (a) terminate this Agreement or any or all Schedules;
or (b) take possession of, or render unusable, any Equipment
wherever the Equipment may be located, without demand or notice,
without any court order or other process of law and without
liability to Lessee for any damages occasioned by such action,
and no such action shall constitute a termination of any
Schedule; or (c) require Lessee to deliver the Equipment at a
location designated by Lessor; or (d) declare the Lessor's Return
(as defined in Section 12 hereof and calculated by Lessor as of
the date of the Event of Default) for each applicable Schedule
due and payable as liquidated damages for loss of a bargain and
not as a penalty and in lieu of any further Rental Payments under
the applicable Schedule; or (e) proceed by court action to
enforce performance by Lessee of any Schedule and/or to recover
all damages and expenses incurred by Lessor by reason of any
Event of Default; or (f) terminate any other agreement that
Lessor may have with Lessee; or (g) exercise any other right or
remedy available to lessor at law or in equity. Also, Lessee
shall pay Lessor all costs and expenses (including legal fees and
costs and fees of collection agencies) incurred by Lessor in
enforcing any of the terms, conditions or provisions of this
Agreement. Upon repossession or surrender of any equipment,
Lessor shall lease, sell or otherwise dispose of the Equipment in
a commercially reasonable manner, with or without notice and at
public or private sale, and apply the net proceeds thereof (after
deducting all expenses (including legal fees and costs) incurred
in connection therewith) to the amounts owed to Lessor hereunder;
provided, however, that Lessee shall remain liable to Lessor for
any deficiency that remains after any sale or lease of such
Equipment. Lessee agrees that with respect to any notice of a
sale required by law to be given 10 days' notice shall constitute
reasonable notice. These remedies are cumulative of every other
right or remedy given hereunder or now or hereafter existing at
law or in equity or by statute or otherwise, and may be enforced
concurrently therewith or from time to time.

20. LESSOR'S PERFORMANCE OF LESSEE'S OBLIGATIONS. If
Lessee fails to perform any of its obligations hereunder, Lessor
may perform any act or make any payment that Lessor deems
reasonably necessary for the maintenance and preservation of the
Equipment and Lessor's interests therein; provided, however, that
the performance of any act or payment by Lessor shall not be
deemed a waiver of, or release Lessee from, the obligation at
issue. All sums so paid by Lessor, together with expenses
(including legal fees and costs) incurred by Lessor in connection
therewith, shall be paid to Lessor by Lessee immediately upon
demand.

21. FINANCING OF ADDITIONS. If, under any Schedule, Lessee
intends to make any addition to the Equipment, Lessee shall, in
writing, request Lessor to finance the costs of such addition.
Lessee shall provide Lessor with the terms under which it hopes
to obtain the financing, and upon receiving such a request Lessor
shall determine, in its sole discretion, whether to provide such
financing. If Lessor does not, within 20 days after receiving
Lessee's request, offer to finance the addition upon the terms
requested by Lessee, Lessee may obtain offers from third parties
for financing the addition, and Lessee shall notify Lessor of the
details of any third party financing offer Lessee would like to
accept (Third Party Offer). If Lessor has not made a financing
offer to Lessee on terms substantially similar to the Third Party
Offer within 20 days of receiving Lessee's notice, Lessee may
accept the Third Party Offer unless: (a) the aggregate cost to
Lessee of obtaining financing from the Third Party Offer is
greater than the aggregate cost under Lessor's financing offer,
or (b) the Third Party Offer would create a security interest in,
or a lien on, the Equipment; or (c) the addition is not permitted
under Section 10(d) hereof.

22. ASSIGNMENT BY LESSOR. Lessor shall have the
unqualified right to assign, pledge, transfer, mortgage or
otherwise convey any of its interests hereunder or in any
Schedule or any Equipment, in whole or in part, without notice
to, or consent of, Lessee. If any Schedule is assigned, Lessee
shall: (a) unless otherwise specified by the Lessor and the
assignee (Assignee) specified by Lessor, pay all amounts due
under the applicable Schedule to such Assignee, notwithstanding
any defense, setoff or counterclaim whatsoever that Lessee may
have against Lessor or <PAGE> Assignee; (b) not permit the applicable
Schedule to be amended or the terms thereof waived without the
prior written consent of the Assignee; (c) not require the
Assignee to perform any obligations of Lessor, other than those
that are expressly assumed in writing by such assignee; and (d)
execute such acknowledgments thereto as may be requested by
Lessor. It is further agreed that: (x) each assignee shall be
entitled to all of Lessor's rights, powers and privileges under
the applicable Schedule, to the extent assigned; (y) any Assignee
may reassign its rights and interest under the applicable
Schedule with the same force and effect as the assignment
described herein; and (z) any payments received by the Assignee
from Lessee with respect to the assigned portion of the Schedule
shall, to the extent thereof, discharge the obligations of Lessee
to Lessor with respect to the assigned portion of the Schedule.
LESSEE ACKNOWLEDGES THAT ANY ASSIGNMENT OR TRANSFER BY LESSOR OR
ANY ASSIGNEE SHALL NOT MATERIALLY CHANGE LESSEE'S OBLIGATIONS
UNDER THE ASSIGNED SCHEDULE.

23. ASSIGNMENT OR SUBLEASE BY LESSEE. WITHOUT LESSOR'S
PRIOR WRITTEN CONSENT, LESSEE SHALL NOT ASSIGN THIS AGREEMENT OR
ANY SCHEDULE OR ASSIGN ITS RIGHTS IN OR SUBLET THE EQUIPMENT OR
ANY INTEREST THEREIN; provided, however, that Lessee may sublease
or assign a Schedule to an affiliate or a wholly-owned subsidiary
of Lessee if: (a) Lessee and such sublessee or assignee execute
and deliver to Lessor a writing (to be provided by Lessor)
whereby the sublessee or assignee agrees to assume joint and
several liability with Lessee for the full and prompt payment,
observance and performance when due of all of the obligations of
the Lessee under such Schedule; and (b) Lessor consents to such
sublease or assignment, which consent shall not be unreasonably
withheld. In no event, however, shall any such sublease or
assignment discharge or diminish any of Lessee's obligations to
Lessor under such Schedule.

24. SURVIVAL; QUIET ENJOYMENT. All representations,
warranties and covenants made by Lessee hereunder shall survive
the termination of this Agreement and shall remain in full force
and effect. All of Lessor's rights, privileges, and indemnities,
to the extent they are fairly attributable to events or
conditions occurring or existing on or prior to the termination
of this Agreement, shall survive such termination and be
enforceable by Lessor and any successors and assigns. So long as
no Event of Default exists, and no event has occurred and is
continuing that with notice or the lapse of time or both would
constitute an Event of Default, neither Lessor nor any Assignee
will interfere with Lessee's quiet enjoyment of the Equipment.

25. FILING FEES; FURTHER ASSURANCES; NOTICES. Lessee will
promptly reimburse Lessor for any filing or recordation fees or
expenses (including lien search fees, legal fees and costs)
incurred by Lessor in perfecting or protecting its interests in
the Equipment and under this Agreement. Lessee shall promptly
execute and deliver to Lessor such documents and take such
further action as Lessor may from time to time reasonably request
in order to carry out the intent and purpose of this Agreement
and to protect the rights and remedies of Lessor created or
intended to be created hereunder. All notices under this
Agreement shall be sent to the respective party at its address
set forth on the front page of this Agreement or on the
applicable Schedule or at such other address as the parties may
provide to each other in writing from time to time. Any such
notice mailed to said address shall be effective when deposited
in the United States mail, duly addressed and with first class
postage prepaid.

26. WAIVER OF JURY TRIAL; SUCCESSORS. LESSEE AND LESSOR
EACH IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY LAWSUIT,
PROCEEDING, COUNTERCLAIM OR ANY OTHER LITIGATION OR PROCEEDING
UPON, ARISING OUT OF, OR RELATED TO, THIS AGREEMENT, ANY OTHER
FUNDAMENTAL AGREEMENT, OR THE DEALINGS OR RELATIONSHIP BETWEEN OR
AMONG LESSOR, LESSEE, SELLER OR ANY OTHER PERSON. This Agreement
and all Schedules inure to the benefit of and are binding upon
the permitted successors or assigns of Lessor and Lessee.

27. NO WAIVER; LESSOR APPROVAL. Any failure of Lessor to
require strict performance by Lessee, or any written waiver by
Lessor of any provision hereof, shall not constitute consent or
waiver of any other breach of the same or any other provision
hereof. Neither this Agreement nor any other Fundamental
Agreement shall be binding upon Lessor unless and until executed
by Lessor.

28. CAPTIONS; COUNTERPARTS; LESSOR'S AFFILIATES. The
captions contained in this Agreement are for convenience only and
shall not affect the interpretation of this Agreement. Only one
counterpart of the Schedule shall be marked "Original"
(Original), and all other counterparts thereof shall be marked
as, and shall be duplicates. To the extent that any Schedule
constitutes chattel paper (as such term is defined in the Uniform
Commercial Code in effect in any applicable jurisdiction), no
security interest in such Schedule may be created through the
transfer or possession of any counterpart other than the
Original. Lessee understands and agrees that AT&T Capital
Corporation or any affiliate or subsidiary thereof, may, as
lessor, execute Schedules under this Agreement, in which event
the terms and conditions of the applicable Schedule and this
Agreement as it relates to the lessor under such Schedule shall
be binding upon and shall inure to the benefit of such entity
executing such Schedule as lessor, as well as any successors or
assigns of such entity.

<PAGE>

29. CHOICE OF LAW; INTEGRATION; ENTIRE AGREEMENT. EACH LEASE
UNDER THIS AGREEMENT SHALL BE GOVERNED BY THE INTERNAL LAWS (AS
OPPOSED TO CONFLICTS OF LAW PROVISIONS) OF THE STATE OF NEW JERSEY.
If any provision of this Agreement or such Schedule shall be
prohibited by or invalid under that law, such provision shall be
ineffective only to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the
remaining provisions of this Agreement or such Schedule. Lessor
and Lessee consent to the jurisdiction of any local, state or
Federal court located within the State, and waive any objection
relating to improper venue or forum non conveniens to the conduct
of any proceeding in any such court. This Agreement and all other
Fundamental Agreements executed by both Lessor and Lessee
constitute the entire agreement between Lessor and Lessee relating
to the leasing of the Equipment, and supersede all prior agreements
relating thereto, whether written or oral, and may not be amended
or modified except in a writing signed by the parties hereto.

TOASTMASTER, INC. AT&T SYSTEMS LEASING CORPORATION
(Lessee) (Lessor)

By: By:
(Lessee Authorized Signature) (Lessor
Authorized Signature)

(Type/Print Name) (Type/Print Name)

(Title) (Title)

(Date) (Date)

TOASTMASTER INC.
1997 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN

TOASTMASTER INC., a corporation organized and existing
under the laws of the State of Missouri (the "Company"), hereby
formulates and adopts a non-statutory stock option plan for
non-employee directors of the Company as follows:

1. PURPOSE OF PLAN.

The purpose of this 1997 Non-employee Directors Stock Option
Plan (the "Plan") is to enable those persons who are members of
the Board of Directors of the Company who are not employees of
the Company (the "non-employee directors") to participate in the
ownership of the Company, and to provide additional incentive for
such non-employee directors to promote the success of its
business through sharing in the future growth of such business.

2. EFFECTIVE DATE OF PLAN.

The provisions of this Plan shall become effective on the
date the Plan is approved by the Board of Directors of the
Company. The granting of an option under this Plan shall be
deemed to occur immediately prior to the opening of trading with
respect to the common stock of the Company ("Toastmaster Inc.
Common Stock") on the third trading day immediately following the
date this Plan is approved by the Board of Directors of the
Company (the "granting date").

3. ELIGIBILITY.

Options to purchase shares of Toastmaster Inc. Common Stock
shall be granted under this Plan only to the three non-employee
directors of the Company serving as directors on the date this
Plan is approved in accordance with Section 2.

4. SHARES SUBJECT TO THE PLAN.

Options granted under this Plan shall be granted solely with
respect to shares of Toastmaster Inc. Common Stock. The Company
shall grant to each non-employee director an option to purchase
5,000 shares of Toastmaster Inc. Common Stock. An option
shall not be granted for a fractional share.

The shares to be delivered upon exercise of the options
granted under this Plan shall be made available from the
authorized but unissued shares of Toastmaster Inc. Common Stock.

If any option granted under this Plan shall expire or
terminate for any reason without having been exercised in full,
such option shall expire as to such shares.

<PAGE>

5. OPTION AGREEMENT.

Each option granted under this Plan shall be evidenced by a
stock option agreement which shall be signed by an officer of the
Company and by the non-employee director to whom the option is
granted (the "optionee"). The terms of said stock option
agreement shall be in accordance with the provisions of this
Plan. Each stock option agreement shall constitute a binding
contract between the Company and the optionee, and every
optionee, upon the execution of a stock option agreement, shall
be bound by the terms and restrictions of this Plan and such
stock option agreement.

6. OPTION PRICE.

The price at which shares of Toastmaster Inc. Common Stock
may be purchased under an option granted pursuant to this Plan
shall be the fair market value of such shares on the granting
date. The fair market value of shares of Toastmaster Inc. Common
Stock for purposes of this Plan shall be the mean of the high and
low sales prices of Toastmaster Inc. Common Stock on the granting
date. In no event shall the price be less than the par value of
Toastmaster Inc. Common Stock.

7. PERIOD AND EXERCISE OF OPTION.

(a) Period--Subject to the provisions of Sections 8
and 9 hereof with respect to the death or termination of status
of an optionee, the period during which each option granted under
this Plan may be exercised shall expire five (5) years from the
date on which the option is granted. In the event the Company
shall not be the surviving corporation in any merger,
consolidation, or reorganization, or in the event of acquisition
by another corporation of all or substantially all of the assets
of the Company, every option outstanding hereunder may be assumed
(with appropriate changes) by the surviving, continuing,
successor or purchasing corporation, as the case may be, subject
to any applicable provisions of the Code or replaced with new
options of comparable value (in accordance with Section 424(a) of
the Code). In the event (i) that such surviving, continuing,
successor or purchasing corporation, as the case may be, does not
assume or replace the outstanding options hereunder, or (ii) of
liquidation or dissolution of the Company, each optionee shall
have the right, within a period commencing not more than 30 days
immediately prior to and ending on the day immediately prior to
such merger, consolidation, reorganization or acquisition by
another corporation of all or substantially all of the assets of
the Company or the liquidation or dissolution of the Company, to
exercise the optionee's outstanding options to the extent of all
or any part of the aggregate number of shares subject to such
option(s).

(b) Exercise--Any option granted under this Plan may
be exercised immediately by the optionee (or by the purchaser
acting under Section 10 below) only by (i) delivering to the
Company written notice of the number of shares with respect to
which the optionee is exercising his or her option right, (ii)
paying in full the option price of the <PAGE> purchased shares, and
(iii) if the shares to be purchased have not been registered
under the applicable securities laws and if necessary, in the
opinion of counsel for the Company to secure an exemption from
such registration, furnishing to the Company such representation
or agreement in writing signed by the optionee (or purchaser) as
shall be necessary in the opinion of such counsel to secure such
exemption. Subject to the limitations of this Plan and the terms
and conditions of the respective stock option agreement, each
option granted under this Plan shall be exercisable in whole or
in part.

(c) Payment for shares--Payment for shares of
Toastmaster Inc. Common Stock purchased pursuant to an option
granted under this Plan may be made either in cash or in other
shares of Toastmaster Inc. Common Stock (such other shares of
Toastmaster Inc. Common Stock shall be valued for this purpose at
100 percent of the fair market value (as defined in Section 6
hereof) of such shares on the date that payment of the option
price is made).

(d) Delivery of certificates--As soon as practicable
after receipt by the Company of the notice and representation
described in subsection (b), and of payment in full of the option
price for all of the shares being purchased pursuant to an option
granted under this Plan, a certificate or certificates
representing such shares of stock shall be registered in the name
of the optionee and shall be delivered to the optionee. No
certificate for fractional shares of stock shall be issued by the
Company, however, but in lieu thereof the Company shall
distribute at such time to the optionee who otherwise would have
been entitled to receive a fractional share an amount in cash
equal to the value of said fractional share determined by
multiplying the fraction by the mean of the high and low bid
prices of Toastmaster Inc. Common Stock on the date on which the
Company receives the notice and representation described in
subsection (b). Neither any optionee, nor the legal
representative, legatee or distributee of any optionee, shall be
deemed to be a holder of any shares of stock subject to an option
granted under this Plan unless and until the certificate or
certificates for such shares have been issued.

(e) Limitations on exercise--Except as provided in
Sections 8 and 9 hereof, no option granted under this Plan shall
be exercised unless the optionee is at the time of such exercise
a non-employee director.

8. TERMINATION OF STATUS.

If an optionee shall cease to be a non-employee director of
the Company for any reason other than death, any option or
unexercised portion thereof granted to him under this Plan which
is otherwise exercisable shall terminate unless it is exercised
within thirty (30) days of the date on which such optionee ceases
to be a non-employee director of the Company, and in any event no
later than the expiration date of such option as specified in the
respective stock option agreement. Nothing in this Plan or in
any stock option agreement shall be construed as <PAGE> an obligation on
the part of the Company or its stockholders to continue the
status of such optionee as a non-employee director.

9. DEATH OF OPTIONEE.

In the event of the death of an optionee while he is a
non-employee director of the Company (or within ninety (90) days
of the date on which such optionee ceases to be a non-employee
director) any option or unexercised portion thereof granted to
him under this Plan which is otherwise exercisable may be
exercised by the person or persons to whom such optionee's rights
under the option pass by operation of the optionee's will or the
laws of descent and distribution, at any time within a period of
ninety (90) days following the death of the optionee (but in no
event later than the expiration date of the option as specified
in the respective stock option agreement).

10. NONTRANSFERABILITY OF OPTIONS.

Each option granted under this Plan shall not be
transferable or assignable by the optionee other than by will or
the laws of descent and distribution, and during the lifetime of
the optionee may be exercised only by said optionee.

11. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.

In the event of any change in the capital structure of the
Company, including but not limited to a change resulting from a
stock dividend, stock split, reorganization, merger,
consolidation, liquidation or any combination or exchange of
shares, the number of shares of Toastmaster Inc. Common Stock
subject to this Plan and the number of such shares subject to
each option granted hereunder shall be correspondingly adjusted.
The option price for which shares of Toastmaster Inc. Common
Stock may be purchased pursuant to an option granted under this
Plan shall also be adjusted so that there will be no change in
the aggregate purchase price payable upon the exercise of any
option.

12. AMENDMENT AND TERMINATION OF PLAN.

The Plan will expire on February 25, 2002 except as to
options then outstanding under the Plan, which options shall
remain in effect until they have been exercised or have expired.
A majority of the members of the Board of Directors who are not
eligible to participate in the Plan may at any time before such
date amend, modify or terminate the Plan. No amendment,
modification or termination of this Plan may adversely affect the
rights of any optionee under any then outstanding option granted
hereunder without the consent of such optionee.

<PAGE>

13. GOVERNING LAW.

This Plan and the rights of all persons claiming hereunder
shall be construed and determined in accordance with the laws of
the State of Missouri.

# # # #

TOASTMASTER INC.

1996 ANNUAL REPORT TO SHAREHOLDERS

(ONLY THOSE PORTIONS WHICH ARE SPECIFICALLY INCORPORATED BY
REFERENCE INTO TOASTMASTER INC.'S ANNUAL REPORT ON FORM 10-K FOR
THE YEAR ENDED DECEMBER 31, 1996)

<PAGE>

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

Except for the historical information contained herein, the
statements made in this Annual Report are forward-looking
statements that involve risks and uncertainties. The Company's
actual results, financial condition or business could differ
materially from its historical results, financial condition or
business, or the results of operations, financial condition or
business contemplated by such forward-looking statements.
Factors that could cause or contribute to such differences
include, but are not limited to, those discussed under the
caption "Factors That May Affect Future Results of Operations,
Financial Condition or Business," in the Company's Annual Report
on Form 10-K for 1996, as well as those discussed elsewhere in
the Company's reports filed with the Securities and Exchange
Commission.

RESULTS OF OPERATIONS

The following table sets forth for the periods indicated,
the percentage of net sales represented by certain items in the
Company's Consolidated Statements of Operations. Net sales
reflect a reduction from revenues of amounts related to sales
discount programs, including absorption of out-bound freight and
certain allowances for advertising, the latter of which are
accounted for by certain competitors as "advertising" expense.
The Company views these amounts as price reductions, thereby
reducing net sales and lowering gross profit as well as selling,
general and administrative expense. As used in this Annual
Report, revenues are recorded net of product returns and are
before deduction of the items referred to above that are used in
computing net sales. During the periods indicated, net sales
averaged approximately 95% of revenues.

Year ended December 31
1996 1995 1994

Net sales 100.0% 100.0% 100.0%
Cost of sales 87.4 82.9 81.9
Gross profit 12.6 17.1 18.1
Selling, general and
administrative expense 14.5 13.3 13.0
Operating income (loss) (1.9) 3.8 5.1
Interest expense 2.7 2.6 2.1
Income (loss) before taxes (4.6) 1.2 3.0
Income tax expense (benefit) (1.7) 0.5 1.2
Net income (loss) (2.9)% 0.7% 1.8%

<PAGE>

YEAR ENDED DECEMBER 31, 1996 COMPARED TO 1995

Net sales for the year ended December 31, 1996 decreased
13.5% to $163 million from $188.5 million for the year ended
December 31, 1995. Kitchen appliance revenues decreased 17.3%
from $158.1 million for the year ended December 31, 1995 to
$130.7 million for the year ended December 31, 1996. A decrease
in breadmaker shipments due to the anticipated maturation of that
product, a decrease in wafflebaker shipments due to price
competition and a decrease in blender shipments due to the
discontinuance of a private label manufacturing contract were the
primary reasons for the reduction in appliance revenues. These
decreases were partially offset by a modest increase in revenues
from toaster and other appliances revenues. The Company hopes to
increase revenues from both breadmakers and wafflebakers in 1997
by introducing new and cost reduced products. Time products
revenues increased 5.1% from $33.2 million for the year ended
December 31, 1995 to $34.9 million for the year ended
December 31, 1996 due to increased placement of wall clocks with
two major retailers. In February, 1997 the Company was informed
by a significant customer that beginning in the second half of
1997 the customer will be changing suppliers for time products to
another vendor for all of its wall clock assortment. The Company
expects this to have a negative impact on revenues from time
products of approximately 10%, or $3.5 million in 1997. The
Company believes it has received this information soon enough to
take the necessary actions to minimize the negative impact on
earnings by reducing expenses, replacing these revenues with
shipments to new customers and increasing shipments to other
existing customers. No assurances can be given that these
actions will be successful. Environmental products sales
decreased 35% to $5 million for the year ended December 31, 1996
from $7.7 million for the year ended December 31, 1995 as a
result of the Company's decision to de-emphasize that product
line. Due to low margins, lack of retail shelf space and low
growth potential, the Company announced the planned disposition
of its environmental products line. (See "RESTRUCTURING.")

The Company's top five customers sell a variety of
Toastmaster products. Shipments to these customers decreased to
42.8% of revenues for the year ended December 31, 1996 from 45.7%
of revenues for the top five customers for the year ended
December 31, 1995. It is expected that the Company's dependence
on these major retailers will continue.

The Company recorded a one-time pre-tax special charge of
approximately $7.6 million to cost of sales related to the
restructuring of its product lines. (See "Restructuring.").
Gross profit as a percentage of net sales before the one-time
charge increased slightly from 17.1% in 1995 to 17.3% in 1996 due
primarily to lower raw material prices and cost reductions
implemented during the year. These reduced costs were partially
offset by higher merchandise returns in the first half of 1996 on
reduced shipments when compared to the first half of 1995 and
increased manufacturing inefficiencies related to longer
production shutdowns during the first half of 1996 when compared
to production shutdowns incurred during the first half of 1995.

Selling, general and administrative expenses as a percentage
of net sales increased from 13.3% in 1995 to 14.5% in 1996.
Increases in engineering and research and development spending
and additional advertising promotions related to time products
revenues were partially offset by reduced advertising promotions
on lower kitchen appliance revenues. Administrative costs as a
percentage of sales were relatively unchanged.

Interest expense decreased from $4.9 million in 1995 to $4.4
million for the year ended December 31, 1996. This decrease was
primarily due to a lower average balance on borrowings <PAGE> under the
revolving line of credit. The decreased borrowings were due to
carrying lower accounts receivable from lower sales during the
year. Should market rates rise, the Company could expect future
increases in interest expense.

There are no recently issued or proposed accounting
pronouncements that will have a significant impact on the future
results of operations or financial reporting of the Company.

YEAR ENDED DECEMBER 31, 1995 COMPARED TO 1994

Net sales for the year ended December 31, 1995 decreased to
$188.5 million from $192.4 million for the year ended December
31, 1994. Kitchen appliance revenues increased 5.1% from $150.4
million for the year ended December 31, 1994 to $158.1 million
for the year ended December 31, 1995. Strong sales of Bread Box
automatic breadmakers were partially offset by moderate declines
in other kitchen appliances. Sales gains made in the weak retail
environment in the fourth quarter were not large enough to offset
the lower sales volumes experienced during the first three
quarters of 1995. Environmental products revenues decreased to
$7.7 million for the year ended December 31, 1995 from $17.7
million for the year ended December 31, 1994. The continued
deemphasis of fan sales and poor retail sales of heaters and
humidifiers from both a weak retail environment and poor seasonal
weather patterns contributed to the decline. Time products
revenues decreased from $35.3 million for the year ended December
31, 1994 to $33.2 million for the year ended December 31, 1995.
The poor retail environment for the 1995 Christmas shopping
season was a major factor contributing to this decline.

The Company's top five customers sell a variety of
Toastmaster products. Shipments to these customers decreased to
45.7% of revenues for the year ended December 31, 1995 from 47.7%
of revenues for the top five customers for the year ended
December 31, 1994.

Gross profit as a percentage of net sales decreased from
18.1% in 1994 to 17.1% in 1995. Greater returns of products from
retailers on lower sales volume, higher manufacturing
inefficiencies, primarily in the fourth quarter, resulting from
the actions to moderate inventory levels and higher material
costs contributed to the gross margin decline. The impact from
selected price increases during 1995 was chiefly offset by higher
sales of lower margin products. Some raw materials costs
increased in price during the first half of 1995, including
aluminum, steel, some plastics and cartons. Material prices
moderated or decreased slightly during the second half of 1995.
As a result of declining margins, the Company substantially
reduced the quantity of box fans produced in 1995. Assets were
dedicated to the manufacture of higher margin appliances and
other environmental products.

Selling, general and administrative expenses as a percentage
of net sales increased slightly from 13.0% to 13.3%. Increased
bad debt expense related to the bankruptcy filings of several
major retailers more than offset expense reductions in other
areas and reduced advertising expenses related to the volume
decrease.

Interest expense increased from $4.1 million in 1994 to $4.9
million for the year ended December 31, 1995. This increase was
primarily due to a higher average balance on borrowing under the
revolving line of credit as well as higher average interest
rates. The increased borrowings were primarily due to carrying
higher inventories during the year and a slight increase in
average accounts receivable as many retailers slowed payments
during the year.

<PAGE>

RESTRUCTURING

The Company has announced a restructuring plan designed to
strengthen future financial performance by improving the
Company's cost structure as well as its competitive posture. The
plan includes the out-sourcing of production of certain kitchen
countertop appliances and the disposal of the Company's
environmental products line.

Based on an evaluation of relative manufacturing and
shipping costs, the Company has determined that certain of its
kitchen counter-top appliances can be made more price competitive
by terminating their production at the Company-owned plant in
Boonville, Missouri and sourcing them from lower cost vendors.
The new cost per unit of these products, including shipping, is
expected to result in savings ranging from 10% to 30% as compared
to their 1996 cost of production.

As a result of these actions the Company recorded during the
fourth quarter of 1996 a one-time pre-tax special charge of
approximately $7.6 million ($4.9 million after taxes, or $.65 per
share). Only approximately $250,000 of this special charge will
impact cash through the payment of expenses related to the
restructuring. The remaining portion of the special charge was
non-cash in nature consisting primarily of tooling and inventory
write-downs and increases in inventory reserves.

LIQUIDITY AND CAPITAL RESOURCES

The Company's operations require substantial working
capital. The Company has used available cash flows from
operations and borrowings under its revolving credit agreement to
finance additional working capital, to retire long-term debt and
to fund capital expenditures.

Net cash flows provided by operating activities were $18.7
million in 1996. Such cash flows were primarily provided by a
decrease in accounts receivable of $21.8 million resulting from
lower sales and a reduction in sales terms given to certain
customers which were implemented during 1996, depreciation and
amortization expense of $4.1 million and the restructuring charge
of $7.6 million. These cash flows were partially offset by a net
loss of $4.7 million and lower accrued expenses and income taxes,
accounts payable and deferred income taxes totaling $8.7 <PAGE> million.
Without additional borrowing, future cash flows provided by
operations may not be adequate to support future seasonal working
capital requirements. Increased accounts receivable from sales
to customers with extended sales terms, increased inventories
required to support higher sales levels and increased customer
demand for "Just-in-time" shipments may require greater working
capital. The Company believes it will be able to obtain
additional borrowings on similar terms as current credit
arrangements.

Net cash flows used for additions to plant, property and
equipment were $4.5 million for the year ended December 31, 1996.
Capital expenditures in 1996 were primarily used to develop and
produce new products and construct a 48,000 square foot warehouse
addition to the time products manufacturing facilities in North
Carolina.

Net cash flows used by financing activities were $14.2
million in 1996 primarily in repayment of borrowings under the
revolving credit agreement.

Amounts outstanding under the revolving credit agreement
were $35.2 million at December 31, 1996. The Company could
borrow an additional $13.7 million under the revolving credit
agreement at December 31, 1996. Other long-term debt was $11.6
million at December 31, 1996, including the current portion of
$2.1 million. The terms of and collateral for the revolving
credit agreement and long-term debt are described in Note 3 of
the Notes to Consolidated Financial Statements. Under the terms
of the agreement, as amended, borrowings under the revolving
credit arrangement are generally limited to the lesser of $85
million from June 1 through January 31 or $60 million from
February 1 through May 31, or the sum of eligible accounts
receivable and inventory, as defined in the agreement.

Principal payments on the long-term debt are expected to be
funded from internally generated cash flow and future borrowings.
The revolving credit agreement expires in November, 2001.

EFFECTS OF FOREIGN CURRENCY FLUCTUATIONS AND INFLATION

The Company established Toastmaster de Mexico S.A. de C.V.,
a wholly-owned subsidiary in 1994. Currency exchange
fluctuations were not material in 1996. Due to the devaluation
of the Mexican peso during 1995, the Company recognized an after
tax foreign currency loss of $237 thousand on accounts payable of
the subsidiary due in U.S. dollars. The further devaluation of
the peso could have a negative effect on the Company's future
operations in Mexico. The results of other operations of the
Company for the periods discussed have not been significantly
affected by inflation or foreign currency fluctuations. The
Company generally negotiates its purchase orders with its foreign
manufacturers in United States dollars. Thus, notwithstanding
any fluctuation in foreign currency exchange rates, the Company's
cost under any purchase order is not subject to change after the
time the order is placed due to exchange rate fluctuations. A
weakening of the United States dollar against local currencies
could, however, result in certain manufacturers increasing the
United States dollar prices for future product purchases. Any
such increases are not expected to have a material adverse effect
on the Company's results of operations. On the other hand, a
strengthening of the United States dollar will reduce the cost of
imported products and benefit the Company relatively less than
those of its competitors who rely more heavily on imported
products.

<PAGE>

SELECTED FINANCIAL INFORMATION

The selected financial information presented below for
Toastmaster for each of the years in the five-year period ended
December 31, 1996 are derived from the Company's consolidated
financial statements which have been audited by KPMG Peat Marwick
LLP, independent public accountants. The following selected
financial information should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and
Results of Operations," the audited consolidated financial
statements, related notes thereto and other information included
elsewhere in this Annual Report.

<TABLE>

Year ended December 31
1996 1995 1994 1993 1992
(In thousands, except per share amounts)
<CAPTION>

<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA

Net sales $163,049 $188,509 $192,387 $163,895 $163,475
Cost of Sales/1/ 142,458 156,310 157,564 133,591 124,278

Gross profit 20,591 32,199 34,823 30,304 39,197
Selling, general and
administrative
expenses 23,609 24,986 24,955 21,362 24,343

Operating income
(loss)/2/ (3,018) 7,213 9,868 8,942 14,854
Interest expense 4,393 4,923 4,129 3,558 4,427

Income (loss) before
income taxes and
extraordinary loss (7,411) 2,290 5,739 5,384 10,427
Income tax expense
(benefit) (2,720) 956 2,203 1,978 3,619

Income (loss) before
extraordinary loss (4,691) 1,334 3,536 3,406 6,808
Extraordinary loss
on the extinguishment
of debt--net of
income taxes -- -- -- -- (554)
Net income (loss) $ (4,691) $ 1,334 $ 3,536 $ 3,406 $ 6,254

Weighted average
shares outstanding 7,538 7,560 7,589 7,639 7,346
Income (loss) per share
before extraordinary
loss $(.62) $ .18 $ 47 $ .45 $ .93
Extraordinary loss -- -- -- -- (.08)
Net income (loss) per
share after
extraordinary loss $(.62) $ .18 $ .47 $ .45 $ .85

BALANCE SHEET DATA

Working capital $ 61,870 $ 79,764 $75,946 $ 62,639 $ 28,669
Total assets 104,854 129,995 129,552 112,669 101,489
Current Install-
ments--LTD 2,145 2,176 2,142 2,172 27,653
Long-term debt 44,611 58,190 57,023 44,830 12,935
Stockholders'
equity 40,164 45,422 44,905 41,876 39,207
Dividends paid
per share $ .08 $ .08 $ .08 -- --

</TABLE>

1 Restructuring charges totalling $7,600,000 are reflected in cost of
sales for the year ended December 31, 1996.
2 Operating income (loss) is net of depreciation and amortization for each
of the five years ended December 31, 1996 of approximately $4,191,000,
$3,901,000, $4,078,000, $4,372,000 and $4,148,000, respectively.

<PAGE>

CONSOLIDATED BALANCE SHEETS

December 31, 1996 and 1995
ASSETS 1996 1995

Current assets:
Cash $ 97,466 $ 42,269
Accounts receivable, less
allowances for doubtful
accounts, sales discounts
and returns of $2,674,000
in 1996 and $2,672,000 in
1995 (note 3) 42,703,845 64,504,108
Inventories (notes 2 and 3) 34,476,696 39,005,396
Deferred income taxes (note 4) 2,279,741 824,206
Prepaid expenses and other
current assets 794,104 586,644
Income taxes receivable 768,428 --

Total current assets 81,120,280 104,962,623

Property, plant and equipment,
at cost (note 3):
Land 926,282 921,282
Buildings 9,057,296 9,047,872
Machinery and equipment 42,717,069 39,887,351

52,700,647 49,856,505
Less accumulated depreciation 34,175,477 30,080,274

Net property, plant and
equipment 18,525,170 19,776,231

Goodwill, net of accumulated
amortization of $1,170,572 in
1996 and $1,057,952 in 1995 3,378,119 3,490,739
Other assets 1,830,134 1,765,101

$104,853,703 $129,994,694

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Current installments of
long-term debt (note 3) $ 2,144,643 $ 2,176,463
Accounts payable 3,755,131 5,943,398
Accrued advertising 2,970,125 4,529,171
Other accrued liabilities 10,380,502 11,208,946
Income taxes payable -- 1,340,661

Total current liabilities 19,250,401 25,198,639

Long-term debt, excluding
current installments (note 3) 44,611,075 58,189,632
Deferred income taxes (note 4) 579,466 1,035,245
Other liabilities 249,111 149,548

Total liabilities 64,690,053 84,573,064

<PAGE>

Stockholders' equity:
Preferred stock, $.01 par
value; 5,000,000 shares
authorized, none issued -- --
Common stock, $.10 par value;
20,000,000 shares authorized,
7,596,775 shares issued 759,677 759,677
Additional paid-in capital 25,339,958 25,339,958
Retained earnings 14,591,056 19,885,776
Minimum pension liability
adjustment (note 5) (227,321) (267,078)
Foreign currency translation (11,666) (8,649)

40,451,704 45,709,684
Treasury stock, at cost,
58,525 shares in 1996 and 1995 (288,054) (288,054)

Total stockholders' equity 40,163,650 45,421,630
Commitments and contingencies
(note 6)

$104,853,703 $129,994,694

See accompanying notes to consolidated financial statements.

<PAGE>

CONSOLIDATED STATEMENTS OF OPERATIONS

Years ended December 31, 1996, 1995 and 1994

1996 1995 1994

Net sales $163,049,140 $188,509,337 $192,386,554
Cost of sales
(note 10) 142,458,084 156,310,057 157,563,712

Gross profit 20,591,056 32,199,280 34,822,842
Selling, general and
administrative
expenses 23,608,617 24,986,310 24,954,551

Operating income
(loss) (3,017,561) 7,212,970 9,868,291
Other expense
--interest 4,392,994 4,923,160 4,129,310

Income (loss)
before income taxes (7,410,555) 2,289,810 5,738,981
Income tax expense
(benefit) (note 4) (2,719,913) 956,066 2,202,608

Net income (loss) $ (4,690,642) $ 1,333,744 $ 3,536,373

Net income (loss)
per common and
common equivalent
share $ (.62) $ .18 $ .47

Weighted average
common and common
equivalent shares
outstanding 7,538,250 7,560,267 7,589,150

See accompanying notes to consolidated financial statements.

<PAGE>

Consolidated Statements of Stockholders' Equity

Years ended December 31, 1996, 1995 and 1994

1996 1995 1994

Common stock:
Beginning and end
of year $ 759,677 $ 759,677 $ 759,677

Additional paid-in
capital:
Beginning and end
of year 25,339,958 25,339,958 25,339,958

Retained earnings:
Beginning of year 19,885,776 19,159,164 16,229,923
Net income (loss) (4,690,642) 1,333,744 3,536,373
Cash dividends
($.08, $.08 and
$.08 per share) (604,078) (607,132) (607,132)

End of year 14,591,056 19,885,776 19,159,164

Minimum pension liability adjustment:
Beginning of year (267,078) (281,456) (435,997)
Adjustment 39,757 14,378 154,541
End of year (227,321) (267,078) (281,456)

Foreign currency translation:
Beginning of year (8,649) (54,725) --
Adjustment (3,017) 46,076 (54,725)

End of year (11,666) (8,649) (54,725)

Treasury stock:
Beginning of year (288,054) (17,695) (17,695)
Purchase of 50,900
shares -- (270,359) --

End of year (288,054) (288,054) (17,695)

Total end of year $40,163,650 $45,421,630 $44,904,923

See accompanying notes to consolidated financial statements.

<PAGE>

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years ended December 31, 1996, 1995 and 1994

1996 1995 1994
Cash flows from operating activities:

Net income (loss) $(4,690,642) $ 1,333,744 $ 3,536,373

Adjustments to
reconcile net
income to net
cash from
operating
activities:
Depreciation
and amortization 4,148,456 4,372,493 4,077,873

Gain on sale of
fixed assets (13,671) (241,825) --
Deferred income
taxes (1,933,677) (397,817) (357,595)
Restructuring
charge 7,600,000 -- --

Changes in assets and liabilities:

Accounts receivable 21,800,263 (57,756) (9,101,290)
Inventories (1,137,300) (2,005,928) (5,258,855)
Prepaid expenses
and other
current assets (207,460) 30,851 (169,443)
Other assets (65,033) 197,044 (9,606)
Accounts payable (2,188,267) (2,495,509) 133,589

Accrued advertising and
other liabilities (2,475,806) 741,637 2,561,978
Income taxes (2,109,089) 476,437 (884,787)

Total adjustments 23,418,416 619,627 (9,008,136)

Net cash flows provided by (used in)
operating activities 18,727,774 1,953,371 (5,471,763)

Cash flows from investing activities:
Additions to property,
plant and equipment (4,484,999) (3,248,827) (6,079,724)
Proceeds from
sale of property,
plant and equipment 29,895 943,372 --

Net cash flows used in
investing
activities (4,455,104) (2,305,455) (6,079,724)

Cash flows from financing activities:
Proceeds from
revolving credit
agreements 172,649,840 193,441,044 193,238,490
Repayments of
revolving credit
agreements (188,213,336) (190,149,814) (179,541,557)
Proceeds from
long-term debt 4,119,052 55,353 698,487
Repayments of
long-term debt (2,165,933) (2,145,965) (2,232,187)
Dividends on
common stock (604,078) (607,132) (607,132)
Purchases of
treasury stock -- (270,359) --

Net cash flows provided
by (used in) financing
activities (14,214,455) 323,127 11,556,101

Foreign currency
translation adjustment (3,018) 46,076 (54,725)

Net increase
(decrease) in cash 55,197 17,119 (50,111)
Cash at beginning of year 42,269 25,150 75,261

Cash at end of year $ 97,466 $ 42,269 $ 25,150

Cash paid during the year for:
Interest $ 4,393,000 $ 4,861,000 $ 4,053,000

Income taxes $ 1,323,000 $ 877,000 $ 3,532,000

See accompanying notes to consolidated financial statements

<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years ended December 31, 1996, 1995 and 1994

(1) Summary of Significant Accounting Policies

(a) Financial Statement Presentation

The consolidated financial statements include the
accounts of Toastmaster Inc. and its wholly-owned
subsidiary, Toastmaster de Mexico S.A. de C.V., referred to
collectively herein as the "Company." All significant
intercompany transactions and balances have been eliminated
in the accompanying consolidated financial statements.

(b) Operations

The Company manufactures small electrical kitchen and
household appliances and time products sold under the
Toastmaster and Ingraham labels. The Company has
manufacturing facilities in Missouri and North Carolina.
Although the Company has long-established relationships with
many of its customers, the Company does not have long-term
contracts with any of its customers. A significant
concentration of the Company's business activity is with
entities whose ability to meet their obligations with the
Company is dependent upon prevailing economic conditions
within the retail industry.

Net sales reflect a reduction of amounts related to
sales discount programs, advertising and promotional
allowances, out-bound freight and product returns.

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

(d) Property, Plant and Equipment

Property, plant and equipment are stated at cost of
acquisition or construction. Maintenance and repairs are
charged to operations as incurred. Renewals and betterments
are capitalized as additions to the appropriate asset
accounts. Upon sale or retirement of assets, the cost and
related accumulated depreciation applicable to such assets
are removed from the accounts and any resulting gain or loss
is reported in the statements of operations.

(e) Depreciation

The Company depreciates property, plant and equipment
over the useful lives of the various assets which range from
three to forty years, using principally the straight-line
method for financial reporting purposes and accelerated
methods for income tax purposes.

(f) Income Taxes

Income taxes are accounted for under the asset and
liability method. Deferred tax assets and liabilities are
recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts
of existing assets and liabilities and their respective tax
bases using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred
tax assets and liabilities for subsequent changes in tax
rates is recognized in income in the period that includes
the tax rate change.

(g) Research and Development

<PAGE>

Research and development costs, which are included in
selling, general and administrative expenses, aggregated
$573,000, $399,000 and $682,000 in 1996, 1995 and 1994,
respectively.

(h) Intangible Assets

The excess of the cost of the acquisition of the
Company over the estimated fair value of the net assets
acquired (goodwill) is being amortized on a straight-line
basis over forty years. When facts and circumstances
indicate potential impairment, the Company evaluates the
recoverability of asset carrying values, including
associated goodwill, using estimates of undiscounted future
cash flows over the remaining asset lives. When impairment
is indicated, any impairment loss is measured by the excess
of carrying values over fair values.

Costs associated with obtaining financing arrangements
are included in other assets and are being amortized over
the term of the related borrowings.

(i) Employee Benefit Plans

The Company has noncontributory retirement plans
covering salaried and hourly employees. The policy of the
Company is to fund retirement costs in amounts sufficient to
satisfy the minimum funding requirements under Employee
Retirement Income Security Act (ERISA) guidelines.

(j) Product Warranties

The Company provides for estimated future costs that
will be incurred under product warranties presently in
force.

(k) Self-insurance

The Company maintains a self-insurance program for
health claims and workers' compensation claims of all
covered employees. The Company accrues estimated future
costs that will be incurred for existing employee claims.

The Company does not provide any post-retirement health
care benefits.

(l) Product Liability Claims

The Company is involved in product liability litigation
arising in the normal course of business and purchases
product liability insurance coverage. A liability is
recognized for product liability claims when payment for
such claims is determined to be probable and the amount can
be reasonably estimated, after consideration of the
applicable insurance coverages and deductibles.

(m) Income Per Share

Income per common share is based upon the weighted
average number of common shares outstanding plus common
stock equivalents, when dilutive, consisting of common stock
options.

(n) Foreign Currency Translation

Assets and liabilities in foreign currencies are
translated into dollars at rates prevailing at the balance
sheet date. The net exchange differences resulting from
these translations are reported in stockholders' equity.
Revenues and expenses are translated at average rates for
the year. Gains and losses resulting from foreign currency
transactions are included in the consolidated statements of
operations. The net losses resulting from foreign currency
transactions were $64,000, $189,000 and $294,000 in 1996,
1995 and 1994, respectively.

(o) Use of Estimates

<PAGE>

Management of the Company has made a number of
estimates and assumptions relating to the reporting of
assets and liabilities and the disclosure of contingent
assets and liabilities to prepare these consolidated
financial statements in conformity with generally accepted
accounting principles. Actual results could differ from
those estimates.

(p) Stock Option Plans

Prior to January 1, 1996 the Company accounted for its
stock option plan in accordance with the provisions of
Accounting Principles Board ("APB") Opinion No. 25,
Accounting for Stock Issued to Employees, and related
interpretations. As such, compensation expense would be
recorded on the date of grant only if the current market
price of underlying stock exceeded the exercise price. On
January 1, 1996, the Company adopted SFAS No. 123,
Accounting for Stock-Based Compensation, which permits
entities to recognize as expense over the vesting period the
fair value of all stock-based awards on the date of grant.
Alternatively, SFAS No. 123 also allows entities to continue
to apply the provisions of APB Opinion No. 25 and provide
pro forma net income and pro forma earnings per share
disclosures for employee stock option grants made in 1995
and future years as if the fair-value-based method defined
in SFAS No. 123 had been applied. The Company has elected
to continue to apply the accounting provisions of APB
Opinion No. 25. There were no stock-based awards granted
during 1995 and 1996.

(q) Impairment of Long-Lived Assets and Long-Lived Assets
to Be Disposed Of

The Company adopted the provisions of SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed of," on January 1, 1996.
This statement requires that long-lived assets and certain
identifiable intangibles be reviewed for impairment whenever
events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable.
Recoverability of assets to be held and used is measured by
a comparison of the carrying amount of an asset to future
net cash flows expected to be generated by the asset. If
such assets are considered to be impaired, the impairment to
be recognized is measured by the amount by which the
carrying amount of the assets exceed the fair value of the
assets. Assets to be disposed of are reported at the lower
of the carrying amount or fair value of the assets.
Adoption of this statement did not have a material impact on
the Company's financial position, results of operations or
liquidity.

(2) Inventories

A summary of inventories is as follows:

1996 1995

Raw materials $ 4,329,623 $ 7,692,848
Work-in-process 2,500,575 2,170,654
Finished goods 27,646,498 29,141,894

Total $ 34,476,696 $ 39,005,396

<PAGE>

If the first-in, first-out (FIFO) method of inventory
valuation had been used, inventories at December 31, 1996 and
1995 would have been approximately $1,800,000 and $1,700,000
higher than reported. Net income for the years ended December
31, 1996, 1995 and 1994 would have been approximately $71,000,
$173,000 and $67,000 higher than reported, respectively.

During 1996, LIFO inventory layers were reduced. This
reduction resulted in charging lower inventory costs prevailing
in previous years to cost of goods sold in 1996, thus reducing
cost of goods sold by $344,000 below the amount that would have
resulted from liquidating inventory recorded at December 31, 1996
prices.

(3) Long-term Debt

A summary of long-term debt is as follows:

1996 1995

Borrowings under revolving
credit agreements $35,203,495 $50,732,980
Term note, monthly
payments of $154,762 plus
interest, balance of
$1,798,000 due November 2001 9,226,190 6,964,282
Other 2,326,033 2,668,833
Total long-term debt 46,755,718 60,366,095
Less current portion 2,144,642 2,176,463

$44,611,076 $58,189,632

The Company has a revolving credit and term loan agreement
which expires November 2001. The agreement, as modified,
provides for borrowings of up to $85,000,000 (including the
balance of the term loan) from June 1 through January 31 or
$60,000,000 from February 1 through May 31, or eligible accounts
receivable and inventory, as described therein.

Borrowings under the revolving credit agreement generally
bear interest at prime plus .75% (9.0% at December 31, 1996),
with the option to elect the London Interbank Offering Rate
(LIBOR) plus 2.25% (7.9375% at December 31, 1996). The Company
had borrowings of $30,203,495 at December 31, 1996 under the
LIBOR option. The Company may elect to pay interest on a
specified amount of borrowings (not less than $4,000,000 or more
than $12,000,000) at a fixed rate based on the U.S. treasury note
yield to maturity plus 2.5%. The interest period for any fixed
rate loan must be no less than one year. Borrowings under the
fixed rate provisions of the revolving credit agreement amounted
to $5,000,000 at December 31, 1996 and bear interest at 7.35%.

In 1996 the Company borrowed an additional $4,119,052 under
the term loan provisions of the agreement, $4,100,000 of which
bears interest at 8.32% (LIBOR) and $19,052 of which bears
interest at 9.25% (prime rate). Additionally, the interest rate
on the previously outstanding term loan, $5,107,138 at December
31, 1996, was increased from 9.22% to 9.47% and the due date was
extended to November, 2001.

The annual interest rate on any loan under the agreement
shall not be less than 5%. The Company must also pay a 1/2%
annual fee, paid monthly on the unused portion of the revolving
credit agreement. Advances under the revolving credit agreement
are secured by accounts receivable, inventory and property, plant
and equipment. At December 31, 1996, the Company could borrow an
additional $13,656,000 under the agreement. The agreement
contains restrictions as to maintenance of net worth and certain
financial ratios, minimum levels of income and working capital,
payment of cash dividends or purchases of treasury stock,
additions to property, <PAGE> plant and equipment and incurrence of
additional indebtedness. At December 31, 1996, the Company was
in compliance with or obtained waivers of compliance relating to
these covenants.

Aggregate long-term debt maturities at December 31, 1996,
including the revolving credit agreement which expires in 2001,
are as follows:

Year Amount

1997 $ 2,144,643
1998 2,098,635
1999 3,654,184
2000 1,857,144
2001 37,001,112
$ 46,755,718

The Company has obtained guarantees for letter of credit,
primarily for importing purposes, up to $8,000,000. Outstanding
letters of credit at December 31, 1996 and 1995 aggregated
approximately $709,000 and $1,402,000, respectively.

(4) Income Taxes

The components of income tax expense (benefit) are shown
below:
1996 1995 1994

Current:
Federal $ (735,825) $1,238,132 $2,355,387
State (72,774) 107,664 204,816
Deferred 1,911,314) (389,730) (357,595)

$(2,719,913) $ 956,066 $2,202,608

The actual income tax expense differs from the expected
expense computed by applying the statutory federal rate of 34% to
pre-tax income for the following reasons:

1996 1995 1994

Computed "expected"
expense (benefit) $ (2,519,589) $ 778,539 $ 1,951,254
Amortization of goodwill 38,291 38,291 38,291
State income tax expense
(benefit), net (112,702) 47,190 91,712
(Income) loss of foreign
subsidiary (79,214) 86,700 105,000
Other (46,699) 5,346 16,351

Actual income tax
expense (benefit) $ (2,719,913) $ 956,066 $ 2,202,608

<PAGE>

The tax effects of temporary differences that give rise to
significant portions of the deferred tax assets and deferred tax
liabilities at December 31, 1996 and 1995 are presented below:

1996 1995

Deferred income tax assets:
Inventories $ 1,482,408 $ 684,397
Accrued liabilities 2,710,118 3,109,469
Allowances for doubtful accounts,
sales discounts and returns 602,992 602,393

Total gross deferred assets 4,795,518 4,396,259

Deferred income tax liabilities:
Property, plant and
equipment (579,466) (1,035,245)
Inventories (2,515,777) (3,572,053)

Total gross deferred
liabilities (3,095,243) (4,607,298)

Net deferred tax asset
(liability) $ 1,700,275 $(211,039)

A valuation allowance for deferred tax assets was not
necessary at December 31, 1996 or 1995. Management believes it
is more likely than not that the results of future operations
will generate sufficient taxable income to realize the deferred
tax assets.

(5) Employee Benefit Plans

Substantially all of the Company's employees are covered by
two defined benefit pension plans. The following items are
components of net pension cost:

1996 1995 1994

Service cost - benefits
earned during the year $ 555,874 $ 550,436 $ 603,369
Interest cost on projected
benefit obligation 612,287 548,626 507,002
Actual return on plan assets (788,136) (1,323,955) 47,802
Net amortization and deferral 124,964 799,328 (565,700)

Net pension cost $ 504,989 $ 574,435 $ 592,473

<PAGE>

The following table sets forth the plans' funded status:

1996 1995

Actuarial present value of benefit obligations:

Accumulated benefit obligation,
including vested
benefits of $6,630,660
and $6,085,546 for
1996 and 1995, respectively $ 7,476,284 $ 6,893,206
Additional benefits based
on future salary levels 908,352 900,652

Projected benefit obligation 8,384,636 7,793,858
Plan assets at fair market
value 7,564,007 6,578,317

Plan assets less than
projected benefit obligation 820,629 1,215,541
Unrecognized net loss (gain)
from experience different
from that assumed 134,977 (110,047)
Unrecognized net transition
asset being amortized
over approximately fifteen
years 397,922 472,556
Additional pension liability
in excess of unrecognized
prior service cost 364,792 428,283

Accrued pension cost recorded
in other accrued liabilities
in the accompanying balance
sheets $ 1,718,320 $ 2,006,333

Under the requirements of Statement of Financial Accounting
Standards No. 87, "Employers' Accounting for Pensions," an
additional minimum pension liability for one plan, representing
the excess of accumulated benefits over plan assets and accrued
pension costs, was recognized at December 31, 1996 and 1995. A
corresponding amount $(9,603) and $(10,974) was recognized as an
intangible asset at December 31, 1996 and 1995, to the extent of
unrecognized prior service cost and unrecognized transition
obligation, with the balance recorded as a separate reduction of
stockholders' equity, net of deferred tax effect.

The plans' assets consist of a balanced portfolio of
investments in money market, common stock, bond and real estate
funds. The discount rate and the rate of increase in future
compensation levels used to determine the actuarial present value
of the projected benefit obligation were 7.5% and 5%,
respectively, for 1996 and 1995. The expected long-term rate of
return on plan assets was 9%.

The Company has a cash incentive program for certain key
employees. Under the terms of the plan, cash awards are made
based upon the achievement of certain corporate and individual
performance goals. Awards in total are limited to not more than
5% of the Company's earnings before interest and taxes. No
awards were earned under the program at December 31, 1996 and
1995.

The Company maintains a defined contribution savings plan
covering substantially all employees. The plan is funded through
employee and voluntary employer contributions. The Company
accrued contributions of $140,000, $125,000 and $150,000 for the
years ended December 31, 1996, 1995 and 1994.

<PAGE>

The Company has adopted an incentive stock option plan (the
ISO Plan), a Nonemployee Director Stock Option Plan (the
Directors' Plan) and a Non-Statutory Stock Option Plan (the Non-
Statutory Plan). Under the ISO Plan, options to acquire a total
of 98,500 shares of the Company's common stock were granted to
certain employees, 46,000 in 1993 and 52,500 in 1994. The
options vest over five years, with 20% cumulative vesting each
year. The options allow the holders to acquire stock for $8 per
share, which was the fair market value of the stock when the
options were granted. Under the Directors' Plan, options to
acquire a total of 15,000 shares of common stock were granted to
nonemployee directors in 1993. The options expire five years
after the date of the grant. The options allow the holders to
acquire stock for $7.375 per share, which was the fair market
value of the stock when the options were granted. At
December 31, 1996 and 1995, options to acquire 43,300 and 26,900
shares are exercisable under the ISO Plan and 15,000 shares are
exercisable under the Directors' Plan. No options have been
granted under the Non-Statutory Plan.

In 1994, the Company adopted a supplemental executive
retirement plan ("SERP") for certain officers of the Company who
were unable to participate in the Company's qualified defined
benefit plan beginning January 1, 1989, because of changes in the
tax laws which imposed certain antidiscrimination requirements
upon qualified plans. The SERP provides for a normal retirement
benefit for each of the officers. Early retirement benefits
under the SERP would be actuarially adjusted to reflect the
earlier commencement of the benefit. The SERP is funded by the
purchase of life insurance policies to be held in trust. The
Company reimburses the participants for the current tax
recognition resulting from insurance policy purchases. The
respective costs are being amortized over a five year vesting
employment period of the participants. The expense for this plan
was approximately $401,000, $484,000 and $377,000 for 1996, 1995
and 1994, respectively.

(6) Commitments and Contingencies

(a) Leases

The Company leases certain equipment under operating lease
agreements. Rent expense was approximately $1,139,000, $853,000
and $965,000 for the years ended December 31, 1996, 1995 and
1994.

Future lease commitments under long-term, noncancelable
operating leases are as follows:

Year Amount

1997 $ 906,812
1998 702,811
1999 396,453
2000 282,792
2001 282,792
Thereafter 565,584

$ 3,137,244

(b) Contingencies

The Company is involved in various claims and legal actions
arising in the ordinary course of business. In the opinion of
management, the ultimate disposition of these matters will not
have a material adverse effect on the Company's consolidated
financial statements.

<PAGE>

(7) Major Customer

One customer accounted for approximately 27%, 29% and 30% of
net sales for the years ended December 31, 1996, 1995 and 1994,
respectively. As of December 31, 1996 accounts receivable from a
single customer comprised 26% of total accounts receivable.

(8) Disclosures About Fair Value of Financial Instruments

Estimates of fair values are subjective in nature and
involve uncertainties and matters of significant judgment and,
therefore, cannot be determined with precision. Changes in
assumptions could affect the estimates. Except as follows, the
fair market value of the Company's financial instruments
approximates the carrying value.

December 31, 1996 December 31, 1995
Carrying Fair Carrying Fair
amount value amount value

Financial liabilities:
Long-term debt:
Term notes $9,226,190 $9,224,943 $6,964,282 $6,992,657
Other 2,326,033 2,389,166 2,668,833 2,698,844

The fair value of the Company's long-term debt is estimated
using discounted cash flow analyses based on the Company's
current incremental borrowing rate for like instruments.

(9) Unaudited Quarterly Financial Data

Unaudited quarterly financial data is as follows (amounts in
thousands, except for per share data:)
Quarter

First Second Third Fourth

1996:
Net sales $26,738 $32,634 $49,321 $54,356
Gross profit 3,359 4,282 9,573 3,377
Income (loss)
before income
taxes (2,605) (2,042) 1,481 (4,245)
Net income (loss) (1,654) (1,312) 950 (2,675)
Net income (loss)
per share (.22) (.17) .13 (.36)

1995:
Net sales $30,827 $36,528 $56,356 $64,798
Gross profit 4,196 5,267 9,759 12,977
income (loss)
before income
taxes (1,559) (939) 1,550 3,238
Net income (loss) (1,091) (608) 962 2,071
Net income (loss)
per share (.14) (.08) .13 .27

<PAGE>

1994:
Net sales $29,920 $41,787 $57,865 $62,815
Gross profit 3,758 7,442 11,241 12,382
Income (loss)
before income
taxes (1,785) 677 3,556 3,291
Net income (loss) (1,143) 433 2,271 1,975
Net income (loss)
per share (.15) .06 .30 .26

(10) Restructuring

The Company is in the process of evaluating the
restructuring of its product lines and operations. The Company
has determined that, as part of its contemplated restructuring,
it will dispose of its environmental products line and
discontinue the production of certain kitchen countertop
appliances and time products. The inventory and manufacturing
equipment related to these products will be disposed of through
normal channels of distribution and sale and abandonment,
respectively. The Company anticipates that the restructuring
will be completed at the end of 1997.

Restructuring charges incurred in the fourth quarter of 1996
consist of inventory valuation charges of $5,666,000, anticipated
losses on the disposal of fixed assets of $1,684,000 and accrued
expenses of $250,000. Total restructuring charges amounted to
$7,600,000 before income taxes and were recorded in cost of
sales.

<PAGE>

INDEPENDENT AUDITORS' REPORT

The Board of Directors
Toastmaster Inc.:

We have audited the accompanying consolidated balance sheets
of Toastmaster Inc. as of December 31, 1996 and 1995 and the
related consolidated statements of operations, stockholders'
equity and cash flows for each of the years in the three-year
period ended December 31, 1996. These consolidated financial
statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these consolidated
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 consolidated financial statements
referred to above present fairly, in all material respects, the
financial position of Toastmaster Inc. at December 31, 1996 and
1995 and the results of its operations and its cash flows for
each of the years in the three-year period ended December 31,
1996, in conformity with generally accepted accounting
principles.

KPMG Peat Marwick LLP
Kansas City, Missouri
February 21, 1997

<PAGE>

MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS

The Common Stock of Toastmaster is listed on the New York
Stock Exchange and has been traded on that exchange since
Toastmaster became a publicly held company on March 3, 1992. As
of March 5, 1997, there were approximately 278 holders of record
of Toastmaster's Common Stock. The following table sets forth
the range of high and low sales prices of the Company's stock by
quarter, and the quarterly cash dividends paid by the Company,
for each quarter of 1996 and 1995.

Market Price and Dividends Per Share
1996 1995

High Low Dividends High Low Dividends

First quarter $5 1/2 $3 3/4 $.02 $7 3/4 $5 1/8 $.02
Second quarter $6 1/4 $4 1/4 $.02 $6 1/8 $5 1/4 $.02
Third quarter $4 5/8 $3 5/8 $.02 $6 $4 5/8 $.02
Fourth quarter $4 $2 7/8 $.02 $5 $3 5/8 $.02

It is the Company's intention to continue to pay quarterly
dividends, although the payment and amount of any future
dividends will be determined by the Board of Directors, from time
to time, after taking into account various factors such as the
Company's financial condition, results of operations, current and
anticipated cash needs and plans for expansion. The Company's
agreement with its revolving credit lender contains certain
provisions which restrict the payment of cash dividends generally
to an amount not to exceed $500,000 per quarter, provided that
the amount of such dividends and all prior cash distributions
does not exceed 30% of the Company's net earnings after
January 1, 1992. See Note 3 to Consolidated Financial
Statements.

Exhibit 23

INDEPENDENT AUDITORS' CONSENT

The Board of Directors
Toastmaster Inc.:

We consent to incorporation by reference in the Registration
Statements on form S-8 (Nos. 33-78516 and 33-80208) of
Toastmaster Inc. of our report dated February 21, 1997, relating
to the consolidated balance sheets of Toastmaster Inc. and
subsidiary as of December 31, 1996 and 1995, and the related
consolidated statements of operations, stockholders' equity and
cash flows for each of the years in the three-year period ended
December 31, 1996, which report appears in the December 31, 1996
annual report of Toastmaster Inc.

\s\ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP

Kansas City, Missouri
March 20, 1997

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 97
<SECURITIES> 0
<RECEIVABLES> 45,378
<ALLOWANCES> 2,674
<INVENTORY> 34,477
<CURRENT-ASSETS> 81,120
<PP&E> 18,525
<DEPRECIATION> 34,175
<TOTAL-ASSETS> 104,854
<CURRENT-LIABILITIES> 19,250
<BONDS> 0
<COMMON> 0
0
760
<OTHER-SE> 39,404
<TOTAL-LIABILITY-AND-EQUITY> 104,854
<SALES> 163,049
<TOTAL-REVENUES> 163,049
<CGS> 142,458
<TOTAL-COSTS> 142,458
<OTHER-EXPENSES> 23,609
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,393
<INCOME-PRETAX> (7,411)
<INCOME-TAX> (2,720)
<INCOME-CONTINUING> (4,691)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,691)
<EPS-PRIMARY> (.62)
<EPS-DILUTED> (.62)

</TABLE>