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

                                  FORM 10-K 

             [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF 
                     THE SECURITIES EXCHANGE ACT OF 1934 

                 FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1997 

                         COMMISSION FILE NO. 0-21362 

                           HARVARD INDUSTRIES, INC. 
            (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) 

                FLORIDA                                 21-0715310 
   (State or other jurisdiction           (I.R.S. EMPLOYER IDENTIFICATION NO.) 
of incorporation or organization) 

     3 WERNER WAY, LEBANON, NEW JERSEY                    08833 
(Address of principal executive offices)                (ZIP CODE) 

      REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (908) 437-4100 
       Securities registered pursuant to Section 12(b) of the Act: None 
         Securities registered pursuant to Section 12(g) of the Act: 

<TABLE>
<CAPTION>
<S>                                            <C>
 Common Stock, par value $.01 per share        Over the Counter Bulletin Board Market 
 Pay-In-Kind Exchangeable Preferred Stock,     Over the Counter Bulletin Board Market 
 par value $.01 per share 
</TABLE>

   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] 

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

   The aggregate market value of Registrant's voting stock held by 
nonaffiliates of Registrant, as of December 15, 1997, was $4,299,240 based on 
the average bid and asked prices of the Common Stock in the Over the Counter 
Bulletin Board Market on such date. 

   The number of shares outstanding of Registrant's Common Stock, as of 
December 15, 1997, was 7,026,437. 

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

                     DOCUMENTS INCORPORATED BY REFERENCE 
                                     NONE 
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                                    PART I 

   This Annual Report on Form 10-K contains forward-looking statements within 
the meaning of that term in Section 27A of the Securities Act of 1933 and 
Section 21E of the Securities Exchange Act of 1934. Additional written or 
oral forward-looking statements may be made by the Company from time to time, 
in filings with the Securities Exchange Commission or otherwise. Statements 
contained herein that are not historical facts are forward-looking statements 
made pursuant to the safe harbor provisions referenced above. Forward-looking 
statements may include, but are not limited to, projections of revenues, 
income or losses, capital expenditures, plans for future operations, 
financing needs or plans, compliance with financial covenants in loan 
agreements, plans for liquidation or sale of assets or businesses, plans 
relating to products or services of the Company, assessments of materiality, 
predictions of future events, and the effects of the bankruptcy proceedings, 
the ability to obtain additional financing, including the Company's ability 
to meet obligations as they become due, and other pending and possible 
litigation, as well as assumptions relating to the foregoing. In addition, 
when used in this discussion, the words "anticipates," "believes," 
"estimates," "expects," "intends," "plans" and similar expressions are 
intended to identify forward-looking statements. 

   Forward-looking statements are inherently subject to risks and 
uncertainties, including, but not limited to, product demand, pricing, market 
acceptance, risk of dependence on third party suppliers, intellectual 
property rights and litigation, risks in product and technology development 
and other risk factors detailed in the Company's Securities and Exchange 
Commission filings, some of which cannot be predicted or quantified based on 
current expectations. Consequently, future events and actual results could 
differ materially from those set forth in, contemplated by, or underlying the 
forward-looking statements. Statements in this Annual Report, particularly in 
"Item 1. Business-Compliance with Environmental Laws," "Item 3. Legal 
Proceedings" and "Item 7. Management's Discussion and Analysis of Financial 
Condition and Results of Operations," describe factors, among others, that 
could contribute to or cause such differences. Other factors that could 
contribute to or cause such differences include unanticipated increases in 
launch and other operating costs, a reduction and inconsistent demand for 
passenger cars and light trucks, labor disputes, capital requirements, 
adverse weather conditions, the ability to consummate successfully 
negotiations looking towards defraying certain costs in connection with the 
wind-down of the Toledo, Ohio facility, unanticipated developments in the 
bankruptcy proceedings and the impact thereof, as well as other pending 
litigation, and increases in borrowing costs. 

   Readers are cautioned not to place undue reliance on any forward-looking 
statements contained herein, which speak only as of the date hereof. The 
Company undertakes no obligation to publicly release the result of any 
revisions to these forward-looking statements that may be made to reflect 
events or circumstances after the date hereof or to reflect the occurrence of 
unanticipated events. 

ITEM 1. BUSINESS 

 Material Events 

   On May 8, 1997, Harvard Industries, Inc. (the "Company" or the 
"Registrant") and its domestic subsidiaries (collectively the "Debtors") 
filed voluntary petitions for relief under Chapter 11 of the Federal 
bankruptcy laws in the United States Bankruptcy Court for the District of 
Delaware (the "Court"). 

   Under Chapter 11, holders of most claims arising prior to the filing of 
the petitions for relief under the Federal bankruptcy laws are stayed from 
collecting on such claims while the Debtors continue business operations as 
debtors-in-possession ("DIP"). Additional claims may arise subsequent to the 
filing date resulting from rejection of executory contracts, including 
leases. Holders of pre-petition claims secured by liens against the Debtors' 
assets ("secured claims") are also stayed from enforcing their rights as 
secured creditors without leave of the Court. 

   The Debtors have received approval from the Court to pay or otherwise 
honor certain pre-petition obligations, including certain employee wages, 
salaries and other compensation, employee benefits, reimbursable employee 
expenses and certain workers' compensation claims, as well as to continue 
customer practices with respect to warranties, refunds and return policies. 

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   The Debtors have not yet filed with the Court any plans of reorganization. 
Under the Bankruptcy Code, a debtor is given an exclusive period of 120 days 
to file a plan of reorganization and 180 days to solicit acceptances to such 
plan. These periods afforded to the Debtors under the Bankruptcy Code 
initially expired on September 5, 1997 and November 4, 1997, respectively, 
and have been extended by the Court from time to time. The Court has given 
the Debtors until June 2, 1998 to formulate and file their plans of 
reorganization, and until August 1, 1998 to solicit plan acceptances thereto. 
In the event such plans are formulated and approved by the creditors and the 
Court, continuation of the Debtors' business after reorganization is 
dependent upon the success of future operations and the ability to meet 
obligations as they become due. See "Item 3. Legal Proceedings" and Note 1 to 
Consolidated Financial Statements for additional information. 

 Business 

   The Company was incorporated in the State of Delaware in 1932, and 
reincorporated in the State of Florida in 1996 through a merger with and into 
a wholly-owned subsidiary. It is primarily engaged in the business of 
designing, engineering, and manufacturing components for original equipment 
manufacturers ("OEMs") producing cars and light trucks in North America. Its 
principal customers are General Motors Corporation ("GM"), Ford Motor Company 
("Ford"), and Chrysler Corporation ("Chrysler," and collectively with GM and 
Ford, the "U.S. Automakers"). 

   In connection with the election of Mr. Roger G. Pollazzi as Chief 
Operating Officer in November 1997, the Company has relocated its principal 
executive offices to 3 Werner Way, Lebanon, New Jersey 08833. The terms 
"Company" and "Registrant" as used herein mean Harvard Industries, Inc. 
together with all of its subsidiaries, unless the context indicates 
otherwise. 

   Consolidated net sales for the fiscal year ended September 30, 1997 were 
$810.8 million as compared with $824.8 million of net sales for the fiscal 
year ended September 30, 1996. Of such sales (i) approximately 43%, 33% and 
7% were attributable to GM, Ford and Chrysler, respectively, for the fiscal 
year ended September 30, 1997 and (ii) approximately 43%, 31% and 8% were 
attributable to GM, Ford and Chrysler, respectively, for the fiscal year 
ended September 30, 1996. The Company's automotive business sales represented 
98% and 96%, respectively, of the consolidated net sales for the fiscal years 
ended September 30, 1997 and September 30, 1996. 

   The Company conducts its automotive operations primarily through four 
wholly owned direct subsidiaries, The Kingston-Warren Corporation 
("Kingston-Warren"), Harman Automotive, Inc. ("Harman"), Hayes-Albion 
Corporation ("Hayes-Albion"), and Doehler-Jarvis, Inc. ("Doehler-Jarvis"). 
Doehler-Jarvis, in turn, conducts it activities through four of its direct 
subsidiaries, namely, Doehler-Jarvis Toledo, Inc. ("Toledo"), Doehler-Jarvis 
Pottstown, Inc. ("Pottstown"), Doehler-Jarvis Greeneville, Inc. 
("Greeneville") and Doehler-Jarvis Technologies, Inc. (collectively, the 
"Doehler-Jarvis entities"). The Company's subsidiaries, together with the 
Trim Trends Division of Hayes-Albion, produce a wide range of products 
including: rubber glass-run channels; rubber seals for doors and trunk lids; 
outside rearview mirrors; complex, high volume aluminum castings and other 
cast, fabricated, machined and decorated metal products; and metal stamped 
and roll form products. 

 Strategic Alternatives 

   The Company has from time to time solicited investment banking services 
for the purpose of exploring strategic financial alternatives to maximize the 
value of its assets. These alternatives could include a possible sale or 
merger of the Company or a sale of one or more of the Company's subsidiaries 
or the assets of a subsidiary or other designated plant assets. Due to the 
continuing losses, additional capacity problems and substantial capital 
expenditures required for its operations generated by its Toledo subsidiary, 
management has determined to wind down existing operations at the 
subsidiary's Toledo, Ohio plant, or otherwise sell or dispose of that 
facility. Both Ford and GM are negotiating with the Company to defray certain 
expenses and assume certain obligations in connection with the wind-down. The 

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Company is unable to estimate its costs with respect to the wind-down. The 
Company plans to maintain the operations of Greeneville and Pottstown. 
Although the Company has previously reported that it intended to sell all of 
the Doehler-Jarvis entities, no offer has been received that has been deemed 
acceptable by the Company. 

   The Company has, in furtherance of its intention to sell or dispose of 
certain non-core businesses, sold the materials handling division of its 
Kingston-Warren subsidiary in December 1997 to a non-affiliated party for an 
aggregate cash consideration of $18 million, the proceeds of which were 
applied to payment of the Company's indebtedness under its DIP Financing 
Agreement. See "Post-Petition Loan and Security Agreement." In addition, the 
Company continues to be desirous of selling or otherwise disposing of its 
Harman subsidiary as well as its Harvard Interiors furniture business (which 
are intended to be liquidated if not sold or otherwise disposed of by 
February 1998). See "Item 2. Properties" regarding an agreement to sell the 
real property of Harvard Interiors located in St. Louis, Missouri. 

   There can be no assurance that any transaction for the sale or disposition 
of any of the above entities will be approved by the Company or will be 
consummated. 

OPERATIONS DESCRIPTION 

 Overview 

   Automotive component manufacturers, like the Company, are invited to bid 
for specific products and component systems which are incorporated in both 
new and existing automotive platforms. If the platform already exists, the 
current supplier may be favored by the OEM because of the supplier's 
familiarity with the existing product as well as its existing investment in 
the manufacturing process and tooling. 

   With respect to new platforms, there has been an increasing trend toward 
involving potential suppliers much earlier in the design and development 
process in order to encourage the supplier to share some of the design and 
development burden. Achieving this cooperative supplier status is a 
significant step towards winning a long-term supply order and gives the 
supplier a decided advantage over the competition. However, even if awarded 
an order, in almost all instances it will be at least two to four years 
before these cooperative suppliers see their products incorporated into new 
platforms. Consequently, the key success factor for suppliers to the 
automotive industry has changed from pure cost minimization to total program 
management encompassing state-of-the-art design, manufacture and delivery of 
high quality components and systems. This trend reinforces the importance of 
early involvement with the automotive manufacturers and consistent quality 
performance of existing businesses. 

   There is also an increasing trend towards potential suppliers committing 
to target prices on parts or systems as a condition of being awarded a design 
and supply order. Under target price arrangements, the burden of cost 
overruns is generally borne by the supplier. In addition, in order to secure 
long-term supply arrangements, annual price concessions through productivity 
improvements are expected by OEMs. As automotive parts suppliers continue to 
face downward pricing pressures on the components supplied to the OEMs, 
automotive production volumes become critical in maintaining and increasing 
operating profitability. 

 Design, Production and Delivery 

   The Company has strong design and engineering capabilities which enable it 
to better serve its customers in the initial phases of product development. 
The Company's Computer Aided Engineering ("CAE") group, located at its 
automotive headquarters in Farmington Hills, Michigan, is the focal point of 
this initiative. At the Farmington Hills location the CAE group utilizes 
Computer Aided Design ("CAD") techniques which allow the Company's design 
engineers to input a product's physical and performance characteristics into 
state-of-the-art hardware and software systems. These systems subsequently 
produce 3-D representations of the products, which can be automatically 
downloaded into Computer Numerically Controlled ("CNC") milling and cutting 
machines. These CNC machines can produce tooling equipment and manufacture 
products with a high degree of accuracy and reduced load 

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times, thereby reducing the historically high labor content in the Company's 
product costs. Furthermore, the Company, can mathematically test its product 
designs prior to production, resulting in savings through the elimination of 
numerous physical prototypes and significantly reducing the lead time typical 
in developing and testing new products. The Company's research and 
development facilities are located in Toledo, Ohio and Newfields, New 
Hampshire where Company personnel meet with customers to incorporate the 
customer's structural and thermal requirements into the product design 
process. In addition, the Company maintains engineering facilities at 
Farmington Hills, Michigan and Wytheville, Virginia. 

   Part of the Company's design philosophy is the early involvement of its 
manufacturing engineers in the initial stages of a product's design. This 
"Design-for-Manufacture" approach helps create a product that not only meets 
its required design and performance characteristics, but also results in a 
product that is easier and less expensive to manufacture. By adopting this 
approach the Company is able to save costs typically related to engineering 
changes which can hamper the production of new products, as well as reduce 
the amount of time it takes to get new products to market. 

   Consistent with the Company's design approach is its increasing 
involvement in cooperative supplier programs. As a cooperative supplier, the 
Company receives the initial design responsibilities for a specific product 
or component for a particular vehicle in the early stages of its design. 
These programs, which effectively move the burden of design and development 
of new products from OEMs to their suppliers, resulting in corresponding 
increased costs, have represented an increasing trend in the automotive 
industry in the late 1980's and early 1990's. In 1995 and 1996, the Company 
was the cooperative supplier on three major body sealing programs at GM. 
Three additional programs (GMX230, GMT360 and GMX320) were ultimately awarded 
to the Company in 1997. 

   Following the design of its products, the Company employs work cells and 
synchronous manufacturing techniques to improve production efficiency. 
Central to this approach is the emphasis on a "continuous improvement" 
environment that enables employees to develop new and more efficient 
manufacturing techniques. 

AUTOMOTIVE INDUSTRY DEVELOPMENTS 

   The North American automotive parts supply business is composed of sales 
to OEMs and the automotive aftermarket. The Company primarily sells products 
to be installed as original equipment in new cars and trucks predominantly to 
OEMs and to other OEM suppliers. 

 New Business Development 

   Historically, the U.S. Automakers furnished their suppliers with 
blueprints and specifications for their required products and chose vendors 
based on price and reputation. However, in today's automotive supplier 
marketplace, it is typical for the U.S. Automakers to electronically furnish 
their suppliers with mathematical data describing the surfaces of the part or 
system in question, along with the technical description of its functional 
requirements. At this point, the supplier is expected to assume 
responsibility for all of the activities necessary to bring the part to 
production. The development cycle includes the design and engineering 
function and the production of prototypes for design validation. After 
validation of the prototype parts or system, tooling is designed and built to 
manufacture the finished product. This cycle usually requires between two and 
three years to complete, during which the supplier assumes most of the 
responsibility for managing the interface of the various groups within its 
own and the customer's organization. These groups include the supplier's and 
OEM's respective purchasing/sales, design, engineering, quality assurance, 
and manufacturing areas. 

   Prior to the current era of supplier total program responsibility, 
customer interface was limited to the supplier sales function dealing with 
the customer purchasing function. In today's marketplace, it is necessary for 
the Company's engineers and technicians to constantly interface with their 
counterparts at the U.S. Automakers to secure design contracts. This is the 
principal starting point in the process of being awarded future business. 
There are significant differences among suppliers in their abilities to 
design and manage complex systems and bring them through the product design 
and manufacturing cycle on time and at a competitive price. 

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 OEM Purchasing, Practices and Trends 

   In the late 1980s and early 1990s, the U.S. Automakers instituted a number 
of fundamental changes in their sourcing procedures. Principal among these 
changes has been an increased focus on suppliers' cost and improving quality 
performance, a significant consolidation in the number of suppliers and, most 
recently, a movement toward purchasing integrated systems, where the supplier 
provides the manufacturing, design, engineering and program management 
support for a complete package of integrated products. 

   OEMs have implemented cost reduction programs that require suppliers to 
pass on a portion of the benefit of productivity improvement in the form of 
lower prices in exchange for multi-year supply agreements. These initiatives 
have required suppliers to implement programs to lower their costs and reduce 
component and system prices to the OEMs. 

   As a "Tier I" supplier, the Company is responsible for delivering its 
products on a "just-in-time" basis directly into its customers' manufacturing 
facilities. To facilitate this delivery system, the Company utilizes direct 
computer links to its customers. 

   OEMs are expected to continue to purchase integrated systems in order to 
reduce the internal labor and overhead costs and design lead time associated 
with purchasing related parts from multiple suppliers. By purchasing complete 
component "systems," OEMs are able to shift engineering, design, program 
management, and product investment costs to fewer and more capable suppliers. 
By designing and supplying component systems, a supplier is able to reduce 
costs and improve quality by identifying system-wide solutions. The Company 
believes that this shift creates an opportunity for suppliers, such as the 
Company, to provide an integrated array of components. 

 New North American OEMs (Transplants) 

   Over the last decade, foreign automotive manufacturers have gained a 
significant share of the U.S. market, first through exports and more recently 
through U.S.-based manufacturing facilities. Japanese export sales have 
dropped significantly from 1983 to 1993, while Japanese Transplant sales have 
grown dramatically as Japanese car companies have shifted more of their 
production to North America. Based on industry analysts' estimates, 
Transplants produced 51.8% of the Japanese cars sold in the United States in 
1994 compared with 8.4% in 1985. As a percent of total North American car 
production, Transplant production increased from 2.0% in 1985 to 15.5% in 
1996. 

   To the extent that the growth of Transplant sales results in loss of 
market share for the Company's U.S. Automaker customers, the Company will 
experience an adverse effect. The Company plans to solicit additional 
business from Transplants. There can be no assurance, however, that any 
additional business will be generated from Transplants or if any such 
additional business is obtained that it will compensate for any lost business 
that the Company may experience. 

 Demand 

   As an OEM supplier, the Company is significantly affected by consumer 
demand for new vehicles in North America. Demand in North American car and 
light truck markets is tied closely to the overall strength of the North 
American economies. After attaining a production level of approximately 13.6 
million units in 1985, North American car and light truck production fell to 
10.4 million units in 1991. Since this low, production has risen to 15.2 
million units for the 1996 calendar year, with comparable units projected for 
calendar year 1997. 

SUBSIDIARIES 

 The Kingston-Warren Corporation 

   Kingston-Warren, which has conducted business since 1945, produces rubber 
glass-run channels, sealing strips and body seals, which weather seal the 
doors and windows of automobiles and reduce air leakage into the vehicle, 
thus contributing to noise reduction and aerodynamic efficiency. The sealing 
strip is produced by a complex process of metal roll forming, rubber 
extruding, flocking and curing, followed by secondary procedures consisting 
of trimming, notching, stretch bending and molding. Kingston-Warren 

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is a leading supplier to GM of both sealing strips and glass-run channels, 
and has been designated the sole supplier of glass-run channels for several 
new GM models. Recent new customers include Ford and Toyota. Until November 
1997, Kingston-Warren manufactured flow-through material storage racks and 
electronic order-picking systems primarily for warehouses and distribution 
centers. Kingston-Warren has three manufacturing locations -- Newfields, New 
Hampshire; Wytheville, Virginia; and Church Hill, Tennessee. 

 Doehler-Jarvis Entities 

   The businesses of the Doehler-Jarvis entities have operated since 1907. 
The Doehler-Jarvis entities specialize in complex, high volume aluminum 
castings primarily for use in the automotive industry. The Doehler-Jarvis 
entities conduct operations primarily at three manufacturing facilities 
located in Toledo, Ohio, Pottstown, Pennsylvania and Greeneville, Tennessee. 
Management is proposing to wind down the Toledo, Ohio manufacturing 
operation. 

   The automotive components manufactured by the Doehler-Jarvis entities 
include automatic transmission cases and components, cylinder heads, cam 
carriers, intake manifolds, front engine covers, water pumps and rack and 
pinion housings. These automotive products are used in over 130 vehicle 
models, predominantly light trucks and rear-wheel drive luxury automobiles. 
Management believes that this diversified sales base helps to reduce exposure 
to production declines in any particular model, while providing some 
resistance to an economic downturn due to consumer preference toward light 
trucks and luxury automobiles, sales of which historically have been less 
affected during periods of reduced economic growth. 

   Aluminum castings are manufactured using one of four principal processes: 
high pressure die casting; semi-permanent and permanent mold casting; squeeze 
casting; and sand casting. Doehler-Jarvis uses the high pressure die casting 
and semi-permanent and permanent mold casting processes in addition to its 
proprietary DoehlerCore(Copyright) process for its current production. 

   Doehler-Jarvis became a wholly-owned subsidiary of the Company pursuant to 
a merger transaction on July 28, 1995. Consolidated sales of the 
Doehler-Jarvis entities amounted to $294.5 million for the year ended 
September 30, 1997 and a gross margin loss was incurred in excess of $21.0 
million, caused primarily by operational inefficiencies offset by curtailment 
gains with respect to post-retirement obligations. The Company has 
experienced a deficiency of earnings over fixed charges as a result of the 
unprofitable operations of the Doehler-Jarvis entities and increased interest 
costs. See Note 13 of Notes to Consolidated Financial Statements for 
information regarding impairment charges. 

   The Greeneville plant utilizes a variety of advanced casting processes, 
including sand casting, to produce high volume aluminum parts for the North 
American automotive industry. The patented DoehlerCore(Registered Trademark) 
process developed in 1980 is used to produce front engine covers for several 
passenger cars including GM's new premium V-6 engine. Die cast oil pans are 
shipped from the Greeneville facility to Toyota's Canadian plant which builds 
the Camry. This facility also produces fully machined intake manifolds by the 
semi permanent mold process which are ultimately used on GM's light trucks. 

   The Pottstown plant specializes in medium size aluminum die castings and 
complements its casting capabilities with highly efficient machining centers. 
It is the largest independent supplier of hypereutectic "390" alloy in North 
America supplying heavy duty internal transmission and air compressor 
castings. Recently, the plant's new 1600 ton squeeze casting machines began 
producing the lower crankcase casting for GM's new premium V-6 engine. 

   In November 1997, GM notified Toledo that GM was resourcing the production 
of V-6 engine blocks to other parties. The Toledo V-6 program was scheduled 
to launch in late 1998, and would have constituted approximately 25% of the 
operating revenues of Toledo when in full production. 

 Harman Automotive, Inc. 

   Harman has conducted business since 1934 and is a full-line producer of 
outside rearview mirrors for use as original equipment by the U.S. 
Automakers. Harman primarily designs and produces hand- 

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controlled mirrors and remote-controlled mirrors, which are either cable or 
electric operated, and a variety of door handles. The mirrors are either 
molded plastic or die-cast zinc and are painted, fabricated and assembled 
according to customer specifications at Harman's integrated facilities. 
Harman's customers include GM and Chrysler. The Company's manufacturing 
facility is located in Bolivar, Tennessee. 

   Harman notified GM that due to continuing losses it could not meet its 
obligations under existing purchase orders. As a result, GM has notified 
Harman that it was in the process of resourcing Harman's mirror business to 
an alternative supplier. 

   Harman sales to Ford amounted to $16.0 million for the fiscal year ended 
September 30, 1995 and fell to $3.4 million and $2.0 million in the fiscal 
years 1996 and 1997, respectively. See "Strategic Alternatives" regarding the 
sale or other disposition of Harman's business by February 1998. See Note 13 
of Notes to Consolidated Financial Statements regarding charges for 
impairment of Harman's long-lived assets. 

 Hayes-Albion Corporation 

   Hayes-Albion has conducted business since 1888 and engages in casting, 
fabricating and machining a wide range of quality metal products primarily 
for the North American automotive industry and, to a lesser extent, for the 
farm equipment and general industrial markets. Hayes-Albion's products 
consist of ferrous and non-ferrous castings and fans. Products made from 
ferrous castings include transmission parts, universal joint yokes, rear axle 
housings and suspension parts and are manufactured primarily for use in the 
automotive industry. Products made from aluminum, magnesium and zinc castings 
are manufactured by Hayes-Albion for the automotive, transportation, 
construction, and machinery industries. Hayes-Albion's principal customers 
are GM, Ford, Chrysler, Caterpillar, Toyota and Dana. Hayes-Albion supplies 
cylinder head covers for delivery to Toyota's Tahara plant in Japan for use 
in Toyota's Lexus models. Hayes-Albion has six manufacturing facilities, one 
each located in Albion and Jackson, Michigan; Tiffin, Ohio; Ripley, 
Tennessee; St. Louis, Missouri; and Rock Valley, Iowa. See Note 13 of Notes 
to Consolidated Financial Statements regarding charges for impairment of 
certain long-lived assets of the Tiffin plant. 

 Trim Trends 

   Trim Trends Division has conducted business since 1948 and is a full-line 
producer of functional and decorative metal stamped and roll form products 
for use as original equipment by the U.S. Automakers. These products are 
manufactured using a variety of raw materials, including carbon steel, 
stainless steel, and aluminum that are fabricated according to customer 
specifications. The Trim Trends Division's customers include GM, Ford, and 
Chrysler. The Trim Trends Division has five manufacturing facilities -- 
Deckerville and Snover, Michigan; Spencerville and Bryan, Ohio; and Dundalk, 
Ontario. Prior to June 1995, the Trim Trends Division was also a producer of 
glass assemblies. 

   The Trim Trends Division has received the door sash business for the Ford 
Escort beginning with the 1997 model year. The Trim Trends Division has also 
been awarded the door beam business in two GM high volume programs, one 
commencing in the 1999 Model Year and the other in the 2000 Model Year. In 
addition, the Trim Trends Division is actively seeking programs at GM and 
Chrysler for upper door frames, bumper impact beams, door impact beams and 
other door and structural components. The Trim Trends Division was recently 
successful in obtaining awards from Chrysler to supply door frames for its NS 
Van platforms and structural components for the LH Sedan, and an award from 
GM to supply a door component for its GM 200 platform. 

BACKLOG 

   The automotive business operates pursuant to purchase orders filled on a 
current basis. As a result, the Company's business does not have backlog of 
any material significance. 

INTELLECTUAL PROPERTY 

   The Company from time to time applies for patents with respect to 
patentable developments, the protection of which is important to 
Doehler-Jarvis and Kingston-Warren. Otherwise, no patent or group 

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of patents held by the Company is, in the opinion of management, of material 
importance to the Company's business as a whole. The primary patents relating 
to the DoehlerCore(Copyright) System expire in November 1998, while the 
primary patents relating to the squeeze casting business expire in January 
2008. The other patents held by Doehler-Jarvis expire at various times 
through October 2017. 

COMPETITION 

   The Company is subject to competition from many companies larger in size 
and with greater financial resources and a number of companies of equal or 
similar size which specialize in certain of the Company's activities. The 
Company considers major competitors with respect to each unit in its 
automotive business to include: Kingston-Warren: Standard Products, Gencorp 
and B.T.R.; Hayes-Albion: Intermet, Grede, Schwitzer, Lunt and Racine; Trim 
Trends Division: Excel Industries, Inland Fisher Guide and Magna 
International; Doehler-Jarvis: Ryobi Die Casting (USA), Inc., Gibbs Die 
Casting Corp., ITT Lester Industries, Inc., Fort Wayne Foundry Corp., CMI 
International Inc. and Teksid SPA, as well as the captive aluminum casting 
operations of the U.S. Automakers. Competitive factors in the market include 
product quality, customer service, product mix, new product design 
capabilities, cost, reliability of supply and supplier ratings. Management 
expects the total number of suppliers to continue to decrease as OEMs 
continue to reduce their supply base. 

MARKETING AND SALES 

   The Company markets and distributes its products to non-governmental 
entities through sales persons and independent manufacturers' 
representatives, the loss of any one of whom would not have a materially 
adverse impact on the Company. The Company and its subsidiaries compete for 
OEM business at the beginning of the development of new products, upon 
customer redesign of existing components and customer decisions to outsource 
captive component production. Such sales to automotive OEMs are made directly 
by the Company's sales, customer service and engineering force. The Company's 
sales and engineering personnel services its automotive OEM customers and 
manages its continuing programs of product development and design 
improvement. In keeping with industry practice, OEMs generally award blanket 
purchase orders and contract through the life cycle of the product for 
specific parts and components for a given model for a particular powertrain 
or other mechanical component. These components are generally used across 
several platforms or models. Purchase orders do not commit customers to 
purchase any minimum number of components and are not necessarily dependent 
upon model changes. Substantially all of the Company's sales are derived from 
United States and Canadian sources. 

EMPLOYEES 

   As of September 30, 1997 the Company employed 6,476 persons, most of whom 
are involved in production and maintenance, with the balance engaged in 
administration, sales and clerical work. This represents a decline of 517 
persons from the 6,993 persons employed at September 30, 1996. Of such 
employees, 2,823 or 43.6% are unionized. Many of the Company's production and 
maintenance employees are covered by collective bargaining agreements with 
various unions, with contracts expiring for 767 employees in 1998, for 1,662 
employees in 1999 and for 412 employees in 2000. The Company believes that 
its relations with its employees are satisfactory. Although the Company has 
experienced some employee turnover since filing its voluntary bankruptcy 
petition in May 1997 and expects future turnover as well, management does not 
believe that the Company's operations will be materially adversely affected 
by these developments. 

   The Company expects that all of the collective bargaining agreements will 
be extended or renegotiated in the ordinary course of business. As a result 
of such renegotiations, the Company expects that its labor and fringe benefit 
costs will increase in the future. The Company does not believe that the 
outcome of such renegotiations will have a material effect upon the Company's 
financial position or results of operations. The Company has never 
experienced any work stoppages at its facilities and has been able to extend 
or renegotiate its various collective bargaining agreements without 
disrupting production. 

                                9           
<PAGE>
SOURCES AND AVAILABILITY OF RAW MATERIALS 

   The raw materials required by the Company are obtained from regular 
commercial sources of supply and, in most cases, multiple sources. Under 
normal conditions, there is no difficulty in obtaining requirements at 
competitive prices. However, future shortages of raw materials could have a 
material adverse effect on all phases of the Company's business. No shortages 
have been experienced by the Company in obtaining its required raw materials. 
The Company considers its major raw material suppliers with respect to each 
unit in its automotive business to include: Kingston-Warren: PPG and Burton 
Rubber; Hayes-Albion: Consumer's Power, Jackson Iron and Metal and Acustar; 
and Trim Trends Division: Inland Steel. These suppliers furnish energy, 
steel, glass, rubber, and paint to such subsidiaries. The Doehler-Jarvis 
entities are not dependent on any individual supplier. Their principal raw 
material is aluminum, which is purchased from multiple suppliers. Captive 
aluminum processing operations enable the Doehler-Jarvis entities to purchase 
less costly scrap aluminum and non-certified aluminum ingot and to refine the 
metal to the required certified specifications. Their purchase orders with 
their OEM customers provide for price adjustments related to changes in the 
cost of aluminum. 

SEASONALITY 

   The Company's principal operations are directly related to the domestic 
automotive industry. Consequently, the Company experiences seasonal 
fluctuations to the extent that the operations of the domestic automotive 
industry slow down during the summer months, when plants close for vacation 
period and model year changeovers, and during the month of December for plant 
holiday closures. 

COMPLIANCE WITH ENVIRONMENTAL LAWS 

   Although the Company is, and may from time to time in the future, be 
subject to enforcement proceedings under environmental laws, the Company does 
not believe that the ultimate disposition of these proceedings will have a 
material adverse effect upon its capital expenditures, operations, 
competitive position, financial condition, results of operations or 
liquidity. Federal, state and local environmental laws, regulations and 
requirements are a significant factor in the Company's business. The Company 
is subject to a multitude of compliance requirements, pursuant to federal 
laws such as the Clean Air and Clean Water Acts, the Resource Conservation 
and Recovery Act ("RCRA") and other solid waste management laws. Analogous 
state laws also regulate the operations of the Company. During the past 
several years, the Company has been named as a potentially responsible party 
("PRP") by the United States Environmental Protection Agency ("EPA") under 
the Comprehensive Environmental Response, Compensation and Liability Act 
("CERCLA" or Superfund") at a number of sites, including sites at Vega Alta, 
Puerto Rico and Gnadenhutten, Ohio (the latter elsewhere referred to herein 
as the "Alsco-Anaconda Site"). Management believes that it is not reasonably 
likely that the Company's share of any investigation and remediation costs 
associated with such matters will have a material adverse effect upon the 
Company's financial condition, results of operations or liquidity. 

   The Doehler-Jarvis entities have received requests for information and 
notices of potential liability under "Superfund-type laws" with respect to 
approximately eight sites which relate to offsite disposal activities 
conducted by prior owners of its assets, and thus relate to activities that 
occurred prior to the organization of Doehler-Jarvis' predecessor in 1990. 
Management believes that most of such notices and requests relate to 
activities occurring when Doehler-Jarvis was owned by NL Industries, Inc. 
("NL") which has acknowledged liability for certain sites. As part of the 
merger transaction under which the Company acquired Doehler-Jarvis in July 
1995, Farley Inc. ("Farley") has agreed to remain responsible following the 
transaction for all environmental costs and expenses relating to certain 
sites. To date, Doehler-Jarvis has not incurred any cost in connection with 
any of the above sites and, based on NL's and Farley's acknowledgment of 
responsibility, management does not expect the Company to incur any such 
costs in the future. There can be no assurance, however, that NL and Farley 
will continue to take responsibility for these sites. There also can be no 
assurance that attempts will not be made in the future to hold the Company 
responsible for contamination in newly discovered sites, and even where the 
disposal that caused the contamination occurred prior to 1990. 

                               10           
<PAGE>
POST-PETITION LOAN AND SECURITY AGREEMENT 

   The Company and substantially all of the Company's subsidiaries entered 
into a Post-Petition Loan and Security Agreement, dated as of May 8, 1997 
(the "DIP Financing Agreement") with a group of lenders (the "DIP Lenders") 
and The CIT Group/Business Credit, Inc., as Agent (the "Agent") and a DIP 
Lender. The DIP Financing Agreement contemplates that the Company and such 
subsidiaries receive financing during the Chapter 11 cases to continue to 
operate their businesses as debtors-in-possession under the bankruptcy code. 
The Court approved the DIP Financing Agreement in May 1997. 

   The DIP Financing Agreement provides up to a $175 million line of credit, 
consisting of (i) revolving loans ("Revolving Loans") of up to $110 million 
(including a letter of credit subfacility of $25 million) (the "Revolving 
Credit Line"), subject to availability under a borrowing base formula 
discussed below, and (ii) a $65 million term loan facility (the "Term 
Loans"), which is allocated among the Company and such subsidiaries as set 
forth in the DIP Financing Agreement. The commitments under the Revolving 
Credit Line terminate, and all outstanding amounts of Revolving Loans become 
due and payable on May 8, 1999, and Term Loans mature and become due and 
payable on the earlier of consummation of a plan or plans of reorganization 
concerning the Company or May 8, 1999. 

   The DIP Lenders are comprised of the pre-petition bank lenders under a 
Financing Agreement, dated October 4, 1996. All of the pre-petition 
indebtedness to the DIP Lenders outstanding at May 8, 1997 (the filing date 
of the voluntary petitions in bankruptcy), amounting to $105.044 million, was 
repaid to the DIP Lenders from borrowings under the DIP Financing Agreement. 

   As set forth above the total amount of outstanding Revolving Loans, 
together with the stated amount of letters of credit, under the DIP Financing 
Agreement is limited to $110 million in the aggregate and shall not exceed as 
to the Company and each borrowing subsidiary the sum (less certain reserves) 
of (i) 85% of the aggregate outstanding "eligible accounts receivable" of 
such company, plus (ii) a specific percentage (which percentage is 60% in the 
case of raw materials and finished goods inventory, and 25% in the case of 
work-in-process inventory) of the value of the eligible inventory of such 
company. The standards for eligibility for accounts receivable and inventory 
are set forth in the DIP Financing Agreement. 

   As security for payment of the Revolving Loans, letters of credit and 
other obligations, including the Term Loans and applicable guarantees, the 
Company and each borrowing subsidiary has granted to the Agent and the DIP 
Lenders a first priority lien and security interest (subject to certain 
specified superior liens) in and to substantially all of the property and 
assets of the Company and such borrowing subsidiaries, and their estates, 
real and personal, tangible and intangible, whether now owned or hereafter 
acquired or arising and regardless of where located. Each of the Company and 
borrowing subsidiaries is jointly and severally liable for the payment of all 
obligations under the DIP Financing Agreement. 

   If the DIP Financing Agreement and the Revolving Credit Line are 
terminated by the Company prior to May 8, 1998, an early termination fee must 
be paid in an amount equal to 1.0% of the aggregate amount of the aggregate 
line of credit. 

   Revolving Loans under the DIP Financing Agreement bear interest at the 
prime rate of The Chase Manhattan Bank (as defined in the DIP Financing 
Agreement) plus 1.5% per annum, or at the companies' option, LIBOR (as 
defined in the DIP Financing Agreement) plus 3.5% per annum. The Term Loans 
have an interest rate equivalent to prime plus 1.75% per annum. The DIP 
Lenders also earn a fee of 2% per annum on the face amount of each standby 
letter of credit in addition to passing along to the borrowers all bank 
charges imposed on the DIP Lenders by the letter of credit issuing bank. 
Further, the DIP Lenders receive a line of credit fee of .5% per annum on the 
unutilized portion of the Revolving Line of Credit, together with certain 
other fees, including a $1.375 million closing fee. The Term Loans are 
repayable in quarterly installments of $3.25 million from November 30, 1997 
through February 28, 1999, with a final payment of $45.5 million due on May 
8, 1999 provided that repayment of the entire unpaid principal amount of the 
Term Loans is due on any earlier date the line of credit is terminated. 

   The DIP Financing Agreement contains, among other things, covenants 
restricting the ability of the borrowers, without the DIP Lenders' consent, 
to sell or otherwise dispose of assets or merge, incur debt, 

                               11           
<PAGE>
pay dividends, repurchase or redeem capital stock and indebtedness, create 
liens, make capital expenditures, make certain investments or acquisitions, 
enter into transactions with affiliates and otherwise restrict corporate 
activities. 

   The DIP Financing Agreement contained a covenant requiring a fixed charge 
coverage ratio requiring the companies from and after October 1, 1997 to 
maintain a ratio of EBITDA (defined as consolidated net income of the 
borrowers before interest and tax obligations, depreciation and amortization 
as well as the non-cash portion of post-retirement benefits and other 
adjustments, including losses or gains on fixed asset dispositions) to Fixed 
Charges (as defined in the DIP Financing Agreement) from and after October 1, 
1997, of 1:1 for the period from the beginning of the fiscal year to the end 
of the most recently completed calendar month in such fiscal year for which 
financial statements are available. The DIP Financing Agreement also 
contained a covenant requiring the maintenance of a minimum amount of EBITDA 
and restrictions on the amounts expended for capital expenditures. The 
Company failed to meet the fixed charge ratio financial covenant during the 
months of October and November 1997, and has obtained a waiver of such 
default from its lenders. The Company and the lenders have amended the DIP 
Financing Agreement to provide for monthly consolidated EBITDA and 
consolidated tangible net worth covenants commencing calculations at December 
31, 1997. The amended DIP Financing Agreement requires the lenders' consent 
for capital expenditures in excess of $30 million for the year ending 
September 30, 1998. 

   The DIP Financing Agreement contains events of default which are usual and 
customary in transactions of this type, including, among other things, 
payment defaults in respect of the line of credit, cross-defaults to certain 
other indebtedness, breach of covenants and representations and warranties 
and any cessation of the collateral creating a valid lien or suffering a 
Material Adverse Change (as defined in the DIP Financing Agreement). Upon the 
occurrence and continuance of an event of default under the DIP Financing 
Agreement, the Lenders may terminate their commitments to make loans and 
issue letters of credit thereunder, declare the then outstanding loans due 
and payable and demand cash collateral in respect of outstanding letters of 
credit. 

   As of September 30, 1997, the Company and the borrowing subsidiaries 
referred to above borrowed an aggregate amount of $99.8 million, of which 
$64.0 million was borrowed as Term Loans and $23.4 million was borrowed as 
Revolving Loans. In addition, an aggregate amount of $12.7 million of letters 
of credit (principally stand-by) was issued and outstanding under the 
Revolving Credit Line. 

   The Company has been in negotiations with certain of its creditors to 
obtain a $25 million subordinated term loan, for a period maturing not later 
than the date on which there is consummated a plan of reorganization for the 
Company under Chapter 11. The proceeds of the subordinated term loan are 
intended to be applied to reduce outstanding indebtedness under the Company's 
revolving credit pursuant to the DIP Financing Agreement, thereby permitting 
the Company to increase its liquidity under the revolving credit loan. 
Although the terms of the subordinated term loan remain subject to 
negotiation, and there are no assurances of its consummation, there is an 
agreement in principle to pay $2.5 million of facility and funding fees, and 
for the loan to bear interest at a rate per annum equal to the greater of 13% 
or the highest per annum interest rate for term and revolving credit loans 
under the DIP Financing Agreement plus 3%. The new term loan obligation will 
be subordinate to the liens under the DIP Financing Agreement and will be 
collateralized by all assets previously pledged to the lenders under the DIP 
Financing Agreement. It is contemplated that upon consummation of the new 
subordinated term loan, the DIP Financing Agreement will be amended to reduce 
the required collateral availability reserve thereunder from $22.0 million at 
January 1, 1998 to $15.0 million (and to $5.0 million if certain events 
materialize). See Note 9 of the Notes to Consolidated Financial Statements. 

   For information concerning other obligations, including the Company's 
indentures, capital leases, and indebtedness, as well as its outstanding 
Pay-In-Kind Exchangeable Preferred Stock ("PIK Preferred Stock"), see Note 10 
and Note 21 of the Notes to Consolidated Financial Statements. 

OTHER 

   On October 18, 1994, the Board of Directors adopted a Stockholder Rights 
Plan providing that one Right shall be attached to each share of Common Stock 
of the Company. Each Right entitles the 

                               12           
<PAGE>
registered holder as of October 21, 1994, to purchase from the Company a unit 
(a "Unit") consisting of one one-hundredth of a share of Series A Junior 
Preferred Stock, par value $.01 per share (the "Preferred Stock"), at a 
Purchase Price of $64.00 per Unit (the "Purchase Price"), subject to 
adjustment. The description and terms of the Rights are set forth in a Rights 
Agreement (the "Rights Agreement"), dated as of October 18, 1994, as amended, 
between the Company and Shawmut Bank Connecticut, National Association, a 
national banking association, as Rights Agent (the "Rights Agent"). 

   Initially, the Rights will be attached to all Common Stock certificates 
representing shares then outstanding, and no separate Rights Certificate will 
be distributed. The Rights will be separate from the Common Stock and a 
Distribution Date will occur upon the earlier of (i) 10 days following a 
public announcement that a person or group of affiliated or associated 
persons (an "Acquiring Person"), other than an Exempted Person (as defined 
below), has acquired, or obtained the right to acquire, beneficial ownership 
of 15% or more of the outstanding shares of Common Stock (the "Stock 
Acquisition Date") or (ii) 10 business days (or such later date as may be 
determined by the Board of Directors) following the commencement of a tender 
offer or exchange offer that would result in a person or group, other than an 
Exempted Person, beneficially owning 15% or more of such outstanding shares 
of Common Stock. Until the Distribution Date, (i) the Rights will be 
evidenced by the Common Stock certificates and will be transferred with and 
only with such Common Stock certificates, (ii) new Common Stock certificates 
will contain a notation incorporating the Rights Agreement by reference and 
(iii) the surrender for transfer of any certificates for Common Stock 
outstanding will also constitute the transfer of the Rights associated with 
the Common Stock represented by such certificate. 

   Any person who, together with all affiliates and associates of such 
person, is the beneficial owner of securities representing 10% but less than 
20% of the shares of Common Stock outstanding on the date the Board of 
Directors authorized the dividend (the "Rights Dividend Declaration Date"), 
as disclosed in public filings with the Securities and Exchange Commission 
prior to such date shall be an "Exempted Person". However, any such person 
shall no longer be deemed to be an Exempted Person and shall be deemed an 
Acquiring Person if such person, together with all affiliates and associates 
of such person, becomes the beneficial owner, at any time after the Rights 
Dividend Declaration Date, of securities representing 26% or more of the 
shares of Common Stock then outstanding. The purchaser, assignee or 
transferee of the shares of Common Stock of an Exempted Person shall not be 
an Exempted Person. 

   The Rights are not exercisable until the Distribution Date and will expire 
at the close of business on October 21, 2004, unless earlier redeemed by the 
Company as described below. 

   As soon as practicable after the Distribution Date, Rights Certificates 
will be mailed to holders of record of the Common Stock as of the close of 
business on the Distribution Date and, thereafter, the separate Rights 
Certificate alone will represent the Rights. Except as otherwise determined 
by the Board of Directors, only shares of Common Stock prior to the 
Distribution Date will be issued with Rights. 

   In the event that any person becomes the beneficial owner of 15% or more 
of the then outstanding shares of Common Stock (unless such acquisition is 
made pursuant to a tender or exchange offer for all outstanding shares of the 
Company, at a price determined by a majority of the independent Directors of 
the Company who are not representatives, nominees, Affiliates or Associates 
of an Acquiring Person to be fair and otherwise in the best interest of the 
Company and its stockholders), each holder of a Right will thereafter have 
the right to receive, upon exercise, Common Stock (or, in certain 
circumstances, cash, property or other securities of the Company), having a 
value equal to two times the Exercise Price of the Right. The Exercise Price 
is the Purchase Price subject to adjustment in accordance with the terms of 
the Rights Agreement. Notwithstanding any of the foregoing, following the 
occurrence of the event set forth in this paragraph (the "Flip-In Event"), 
all Rights that are, or (under certain circumstances specified in the Rights 
Agreement) were, beneficially owned by an Acquiring Person will be null and 
void. However, Rights are not exercisable following the occurrence of the 
Flip-In Event set forth above until such time as the Rights are no longer 
redeemable by the Company as set forth below. 

   For example, at an exercise price of $64.00 per Right not owned by an 
Acquiring Person (or by certain related parties) following an event set forth 
in the preceding paragraph would entitle its holder to 

                               13           
<PAGE>
purchase Common Stock with a value of $128.00 (or other consideration, as 
noted above) for $64.00. Assuming that the Common Stock has a per share value 
of $64.00 at such time, the holder of each valid Right would be entitled to 
purchase 2.0 shares of Common Stock for $64.00. 

   In the event that following the Stock Acquisition Date, (i) the Company is 
acquired in a merger or consolidation in which the Company is not the 
surviving corporation (other than a merger that follows a tender offer 
determined to be fair to the stockholders of the Company, as described in the 
preceding paragraph) or (ii) 50% or more of the Company's assets or earning 
power is sold or transferred, each holder of a Right (except Rights which 
have previously been voided as set forth above) shall thereafter have the 
right to receive, upon exercise of the Right, Common Stock of the acquiring 
company having a value equal to two times the Exercise Price of the Right. 

   The Purchase Price payable, and the number of Units of Preferred Stock or 
other securities or property issuable upon exercise of the Rights are subject 
to adjustment from time to time to prevent dilution (i) in the event of a 
stock dividend on, or a subdivision, combination or reclassification of, the 
Preferred Stock, (ii) if holders of the Preferred Stock are granted certain 
rights or warrants to subscribe for Preferred Stock or convertible securities 
at less than the current market price of the Preferred Stock, or (iii) upon 
the distribution to holders of the Preferred Stock of evidences of 
indebtedness or assets (excluding regular quarterly cash dividends) or of 
subscription rights or warrants (other than those referred to above). 

   With certain exceptions, no adjustments in the Purchase Price will be 
required until cumulative adjustments amount to at least 1% of the Purchase 
Price. No fractional Units will be issued and, in lieu thereof, an adjustment 
in cash will be made based on the market price of the Preferred Stock on the 
last trading date prior to the date of exercise. 

   At any time until 10 days following the Stock Acquisition Date, the 
Company may redeem the Rights in whole, but not in part, at a price of $.01 
per Right. Under certain circumstances, the decision to redeem shall require 
the concurrence of a majority of the Continuing Directors (as defined below). 
Immediately upon the action of the Board of Directors ordering redemption of 
the Rights, the Rights will terminate and the only right of the holders of 
Rights will be to receive the $.01 redemption price. 

   The term "Continuing Director" means any member of the Board of Directors 
of the Company who was a member of the Board of Directors prior to the 
adoption of the Rights Plan and any person who is subsequently elected to the 
Board of Directors if such person is recommended or approved by a majority of 
the Continuing Directors, but shall not include an Acquiring Person, or an 
affiliate or associate of an Acquiring Person, or any representative of the 
foregoing entities. 

   Until a Right is exercised, the holder thereof, as such, will have no 
rights as a stockholder of the Company, including, without limitation, the 
right to vote or to receive dividends. While the distribution of the Rights 
will not be taxable to stockholders or to the Company, stockholders may, 
depending upon the circumstances, recognize taxable income in the event that 
the Rights become exercisable for Common Stock (or other consideration) of 
the Company as set forth above. 

   Other than those provisions relating to the principal economic terms of 
the Rights, any of the provisions of the Rights Agreement may be amended by 
the Board of Directors of the Company prior to the Distribution Date. After 
the Distribution Date, the provisions of the Rights Agreement may be amended 
by the Board of Directors (in certain circumstances, with the concurrence of 
the Continuing Directors) in order to cure any ambiguity, to make changes 
which do not adversely affect the interests of holders of Rights (excluding 
the interest of any Acquiring Person), or to shorten or lengthen any time 
period under the Rights Agreement; provided that no amendment to adjust the 
time period governing redemption shall be made at such time as the Rights are 
not redeemable. 

   The Rights have certain anti-takeover effects. The Rights will cause 
substantial dilution to a person or group that attempts to acquire the 
Company in certain circumstances. Accordingly, the existence of the Rights 
may deter certain acquirers from making takeover proposals or tender offers. 
However, the Rights are not intended to prevent a takeover, but rather are 
designed to enhance the ability of the Board of Directors to negotiate with 
an acquirer on behalf of all of the shareholders. 

                               14           
<PAGE>
   The Company has not determined the impact of the bankruptcy filing upon 
the Stockholders Rights Plan. 

CERTAIN PROVISIONS OF FLORIDA LAW 

   The Company is subject to certain anti-takeover provisions that apply to a 
public corporation organized under Florida law, unless the corporation has 
elected to opt out of those provisions in its articles of incorporation or 
bylaws. The Florida Business Corporation Act (the "FBCA") prohibits the 
voting of shares in a publicly-held Florida corporation that are acquired in 
a "control share acquisition" unless the holders of a majority of the 
corporation's voting shares (exclusive of shares held by officers of the 
corporation, inside directors, or the acquiring party) approve the granting 
of voting rights as to the shares acquired in the control share acquisition. 
A "control share acquisition" is defined as an acquisition that immediately 
thereafter entitles the acquiring party to vote in the election of directors 
within each of the following ranges of voting power: (i) one-fifth or more 
but less than one-third of such voting power, (ii) one-third or more but less 
than a majority of such voting power, and (iii) more than a majority of such 
voting power. 

   The Board of Directors may, however, exclude an acquisition from the reach 
of the prohibition on the voting of shares acquired in a control share 
acquisition. The Company's Board of Directors has excluded such a transaction 
by Pengo Securities Corp., certain affiliated companies and Mr. John Adams, 
certain of whom are Company shareholders. See "Item 12. Security Ownership of 
Certain Beneficial Owners and Management." These shareholders may increase 
their aggregate holdings of the Company's Common Stock up to a total of 25% 
of the Company's outstanding Common Stock, without triggering the 
disenfranchisement of the voting rights of such shares pursuant to the FBCA. 

   The FBCA also contains an "affiliated transaction" provision that 
prohibits a publicly-held Florida corporation from engaging in a broad range 
of business combinations or other extraordinary corporate transactions with 
an "interested shareholder" unless (i) the transaction is approved by a 
majority of disinterested directors before the person becomes an interested 
shareholder, (ii) the interested shareholder has owned at least 80% of the 
corporation's outstanding voting shares for at least five years, or (iii) the 
transaction is approved by the holders of two-thirds of the corporation's 
voting shares other than those owned by the interested shareholder. An 
"interested shareholder" is defined as a person who together with affiliates 
and associates beneficially owns more than 10% of the corporation's 
outstanding voting shares. 

   The above-described provisions may have certain anti-takeover effects. 
Such provisions may make it more difficult for other persons, without the 
approval of the Company's Board of Directors, to make a tender offer or 
acquisitions of substantial amounts of the Common Stock or to launch other 
takeover attempts that might result in the payment of a premium over market 
price for the Common Stock held by such shareholder. 

PBGC SETTLEMENT AGREEMENT 

   On July 26, 1994, the Company entered into a Settlement Agreement (the 
"PBGC Settlement Agreement") with the Pension Benefit Guaranty Corporation 
("PBGC") pursuant to which it is obligated to make contributions to certain 
of its underfunded pension plans. These contributions will be in addition to 
the minimum statutory funding requirements with regard to such plans. 
Pursuant to the PBGC Settlement Agreement, the Company contributed $24.0 
million through September 30, 1997 to the Company's pension plans. See Note 
19 of the Notes to Consolidated Financial Statements. 

   In addition, the PBGC Settlement Agreement restricts the Company's ability 
to redeem the PIK Preferred Stock and contains certain other restrictive 
covenants. Upon an event of default thereunder, subject to bankruptcy 
considerations, the PBGC will have certain rights, including the right to 
declare all additional contributions immediately due and payable. Subject to 
bankruptcy considerations, the PBGC may also create a lien to secure any 
unpaid additional contributions (regardless of whether the unpaid additional 
contributions were accelerated) similar to the lien to which a plan is 
entitled under Section 412(n) of the Internal Revenue Code with respect to 
unpaid minimum statutory contributions. 

                               15           
<PAGE>
ITEM 2. PROPERTIES 

   The Company's principal executive offices are located in leased space at 3 
Werner Way, Lebanon, New Jersey 08833. The principal properties of the 
Company include its production facilities, all of which are owned by the 
Company and its subsidiaries except for the real property in Ripley, 
Tennessee and, upon consummation of a transaction to sell its St. Louis 
facility, the leasing of real property thereat. The Company also leases 
certain warehouse and distribution facilities and regional sales offices that 
are not included among the Company's principal properties. None of the leases 
is material to the Company's business as a whole or provides any unique 
advantage. Capacity at any plant depends, among other things, on the product 
mix, the processes and equipment used and tooling. Capacity varies 
periodically, depending on customer demand. The Company currently estimates 
that its automotive business plants generally operate between 60.0% and 
100.0% of capacity on a five-day week basis. The Company believes that its 
existing facilities are sufficient to meet its existing needs and its 
anticipated growth requirements. 

   The following table sets forth certain information with respect to the 
Company's principal properties: 

<TABLE>
<CAPTION>
    SUBSIDIARY OR 
       DIVISION                LOCATION                        TYPE OF FACILITY               SQ. FT. 
--------------------  -------------------------   -----------------------------------------  --------- 
<S>                   <C>                         <C>                                        <C>
Harvard Industries .. Farmington Hills, Michigan  Automotive headquarters                      70,000 
Kingston-Warren...... Newfields, New Hampshire    Manufacturing plant, office and warehouse   302,200 
Kingston-Warren...... Wytheville, Virginia        Manufacturing plant, office and warehouse    86,000 
Kingston-Warren...... Church Hill, Tennessee      Manufacturing plant, office and warehouse   162,900 
Harman............... Bolivar, Tennessee          Manufacturing plant, warehouse and office   294,400 
Hayes-Albion......... Albion, Michigan            Manufacturing plant                         458,300 
Hayes-Albion......... Bridgeton, Missouri         Manufacturing plant                         128,300 
Hayes-Albion......... Jackson, Michigan           Manufacturing plant                         218,600 
Hayes-Albion......... Rock Valley, Iowa           Manufacturing plant                          86,000 
Hayes-Albion......... Ripley, Tennessee           Manufacturing plant (1)                     100,000 
Hayes-Albion......... Tiffin, Ohio                Manufacturing plant                         467,400 
Trim Trends            
 Division............ Kingston, Michigan          Rental property                              12,000
Trim Trends            
 Division............ Deckerville, Michigan       Manufacturing plant                          74,900
Trim Trends            
 Division............ Snover, Michigan            Manufacturing plant                          75,500
Trim Trends, Canada . Dundalk, Ontario, Canada    Manufacturing plant                          80,000 
Trim Trends            
 Division............ Bryan, Ohio                 Manufacturing plant                         141,500
Trim Trends            
 Division............ Spencerville, Ohio          Manufacturing plant                         159,000
Doehler-Jarvis....... Toledo, Ohio                Manufacturing plant and office building     542,000 
Doehler-Jarvis....... Pottstown, Pennsylvania     Manufacturing plant                         470,000 
Doehler-Jarvis....... Greeneville, Tennessee      Manufacturing plant                         256,000 
Harvard Interiors ... St. Louis, Missouri         Manufacturing plant, warehouse facility,    321,000 
                                                   and office building (2) 
Harvard Interiors ... Arnold, Missouri            Assembly plant                               31,400 
</TABLE>
------------ 
(1)    The land underlying this facility is leased through August 30, 1999. 
(2)    The Company entered into an agreement in November 1997 to sell this 
       property; a closing is anticipated by early January 1998. 

ITEM 3. LEGAL PROCEEDINGS 

   Various legal actions, governmental investigations and proceedings and 
claims are pending or may be instituted or asserted in the future against the 
Company and its subsidiaries. Included among the foregoing matters are the 
following: 

 Bankruptcy Proceedings 

   As a result of the filing of voluntary petitions under Chapter 11 of the 
United States Bankruptcy Code by each of the Company and certain of its 
subsidiaries, it is anticipated that claims will be asserted 

                               16           
<PAGE>
in excess of those amounts set forth in the Debtors' books and records, and 
that the Company and such subsidiaries will dispute and file objections to 
certain of such claims. The Company's management cannot express any opinion 
as to the likelihood of an outcome respecting any claims asserted or to be 
asserted in the Chapter 11 cases, including claims resulting from the 
assumption or rejection of leases and executory contracts and various 
reclamation claims. The Court has established February 9, 1998 as a bar date 
by which time all proofs of claim must be filed against the Debtors or be 
forever barred from assertion. 

 ESNA -- Specialty Fasteners 

   The Company sold certain assets related to its then Elastic Stop Nut 
Division ("ESNA") located in Union, New Jersey in March 1995, after having 
sold ESNA's Pocahontas, Arkansas operations in December 1994. ESNA had 
conducted business since 1934 and was engaged primarily in the engineering, 
design and manufacture of specialty fasteners for the aerospace, industrial 
and commercial markets until manufacturing operations ceased in July 1995. 
Until completion of such sales and cessation of ESNA's operations the Company 
continued to operate ESNA in the ordinary course and reflected ESNA's 
operating results as discontinued operations. In 1996 the Company wrote down 
the ESNA facility to nominal net realizable value, including continuing costs 
of carrying and cleaning up this facility and ongoing participation in the 
Department of Defense Voluntary Disclosure Program. The Company anticipates 
the receipt of certain royalties from the purchaser of its Union, New Jersey 
aerospace operations over the next three years. 

   The Company determined in September 1993 that certain plated and 
non-plated self-locking fasteners sold to the United States Government and 
other customers for application in the construction of aircraft engines and 
airframes manufactured at the Union, New Jersey facility of ESNA were not 
manufactured and/or tested in accordance with applicable specifications. In 
connection therewith, in September 1993 the Company notified the Department 
of Defense (the "DoD") Office of Inspector General ("OIG") and, upon request, 
was admitted into the Voluntary Disclosure Program (the "Program") of the 
DoD. The Company also notified ESNA's customers, including the Defense 
Industrial Supply Center ("DISC"), of these matters and offered to retest 
and/or reprocess affected parts. After disclosure was made, DISC indicated 
that it intended to scrap flight safety critical parts which were in its 
inventory and also it suspended ESNA's Union, New Jersey facility from two 
Qualified Products Lists ("QPLs"), QPL-25027 and QPL-7873, in November and 
December 1993. This required ESNA to suspend sales of parts covered by such 
QPLs to the United States Government and its contractors and undergo 
procedures to requalify for those QPLs. The Company was notified by DISC in 
early May 1994 that it had requalified for those QPLs and could resume 
shipments. 

   On February 23, 1994 the Company ascertained that certain fasteners 
manufactured at ESNA's Pocahontas, Arkansas facility and sold to the United 
States Government and other customers for applications in the manufacture of 
automotive, marine and farm equipment products, as well as heavy trucks and 
general commercial products, were not being tested in accordance with 
applicable government and other customer specifications. The Company notified 
the DoD OIG and DISC of the testing samples from the affected lots identified 
at the Pocahontas facility. 

   The Company also learned in 1994 that an additional test regarding the 
measurement of fastener threads had not been performed at the Union and 
Pocahontas facilities on every lot for which it was required by applicable 
specifications since April 1993. The Company notified the DoD OIG of this 
matter in accordance with its participation in the Program. The Company 
identified the lots affected by this deficiency, and notified, in December 
1994 and January 1995 customers who purchased these lots and took other 
appropriate corrective actions. 

   If it is ultimately determined that the deviations from specifications, 
and certifications made in connection therewith, constitute violations of 
statutory and regulatory provisions, the Company may, among other things, be 
subject to criminal prosecution, treble damages and penalties under the Civil 
False Claims Act as well as administrative sanctions such as debarment from 
future government contracting. 

                               17           
<PAGE>
The Company may also be subject to civil damages which could result from 
claims that have been or may be made by ESNA's other customers. It is 
believed that any such civil damages would constitute pre-petition unsecured 
claims against the Company. 

   As a result of its admission into the Program based on its disclosures 
regarding the Union facility, the Company expects to receive favorable 
consideration from the Government with respect to whether or not criminal 
charges should be brought, administrative sanctions should be imposed and 
civil penalties should be sought in connection with the sales of affected 
parts to the Government. The Company also expects to receive such treatment 
with respect to its subsequent disclosures regarding the Pocahontas facility. 
In particular, the Company believes that, in accordance with past practice 
under the Program, if the Company maintains its status in the Program and 
complies fully with the terms and conditions of the agreement entered into in 
connection with the Company's admittance into the Program (i) the government 
probably will not seek criminal sanctions against the Company, (ii) the 
Company probably will not be suspended or debarred from government 
contracting, (iii) the government probably will not seek Civil False Claims 
Act penalties against the Company and (iv) the government probably will seek 
to resolve claims against the Company under the Civil False Claims Act based 
upon double rather than treble damages. There is no assurance, however, the 
Company will receive such treatment with respect to any or all of these 
disclosures. 

   In carrying out its offer to retest and/or reprocess affected parts, the 
Company engaged in such activities, including retesting, and/or reprocessing 
its own parts inventory, from September 1993 until July 31, 1995 when such 
activities terminated with respect to those parts which were returned by 
customers. For those fasteners which had been destroyed during retesting, 
credits were issued to affected customers' accounts. At September 30, 1997 
the accrued costs totaled $4.8 million, which represented costs attributable 
to the Company's participation in the Program and related matters which, in 
turn, cover, among other things, legal costs, fines and penalties. However, 
ultimate costs are dependent upon future events, the outcomes of which are 
not determinable at the present time. Such ultimate costs could have a 
material effect on the Company's financial condition, results of operations 
or liquidity. See "Management's Discussion and Analysis of Financial 
Condition and Results of Operations -- The Company-Liquidity and Capital 
Resources -- ESNA" and Note 4 to the Consolidated Financial Statements. 

   The Company is unable at this time to determine the effect, if any, of the 
bankruptcy filing upon the ESNA matter. 

  Environmental Matters 

   The Company may incur liability for alleged environmental damage 
associated with past off-site waste disposal practices. Generators of 
hazardous substances who place the substances in disposal sites at which 
environmental problems are alleged to exist, the owners of those sites and 
certain other classes of persons, are subject to claims brought by state and 
federal regulatory agencies pursuant to statutory authority. Since 1981, the 
EPA has sought compensation and remedial action from waste generators, site 
owners and operators, and others under CERCLA, which authorizes such action 
by the EPA regardless of fault or the legality of original disposal. The 
Company's most significant involvement in CERCLA proceedings relates to the 
Vega Alta and Alsco-Anaconda Superfund sites. 

   Vega Alta Site. The Company's Harman subsidiary was named as one of 
several PRPs by the EPA pursuant to CERCLA concerning environmental 
contamination at the Vega Alta, Puerto Rico Superfund site (the "Vega Alta 
Site"). Other named PRPs include subsidiaries of General Electric Company 
("General Electric"), Motorola, Inc. ("Motorola"), The West Company, Inc. 
("West Company") and the Puerto Rico Industrial Development Corporation 
("PRIDCO"). PRIDCO owns the industrial park where the PRPs were operating 
facilities at the time of alleged discharges. Another party, Unisys 
Corporation, was identified by General Electric as an additional PRP at the 
Superfund Site as the successor to the prior operator at one of the General 
Electric facilities. Unisys Corporation was not initially designated as a PRP 
by the EPA, although it was named as a PRP in conjunction with settlement 
proceedings and consent decree. 

                               18           
<PAGE>
   There are currently two phases of administrative proceedings in progress. 
The first phase, known as Operable Unit I ("OUI"), involves a Unilateral 
Order by the EPA that the named PRPs implement the Vega Alta Site remedy 
chosen by the EPA, consisting of the replacement of the drinking water supply 
to local residents and installation and operation of a groundwater treatment 
system to remediate groundwater contamination. In addition, the EPA sought 
recovery of costs it had expended at the Vega Alta Site. 

   Motorola, West Company and Harman completed construction of the OUI remedy 
pursuant to a cost-sharing arrangement. In June 1995 the parties agreed that 
the total amount due from Harman to West and Motorola was $557,297, payable 
in twenty equal quarterly installments. Payments were proceeding; however, 
due to the current bankruptcy proceedings, payments have been suspended 
pending determination by the Court as to the treatment of such obligation. As 
of September 30, 1997 Harman's remaining share of costs owed to West and 
Motorola was approximately $286,000. 

   As to Harman's share of all other costs, Harman, Motorola and West Company 
each agreed to pay General Electric the sum of $800,000 in return for General 
Electric's agreement to assume liability for, and indemnify and hold Harman 
and the others harmless against the EPA's cost recovery claim, to undertake 
operation and maintenance of the OUI cleanup system and to construct, operate 
and maintain any other proposed system that may be required by the EPA under 
OUI, and to conduct any further work required under OUI investigatory and 
cleanup requirements concerning further phases of work at the Vega Alta Site. 
Harman's settlement payment to General Electric was being made in 20 equal 
quarterly installments that commenced in January 1995 with 9% interest per 
annum. As a result of Harman's bankruptcy filing in May 1997 such payments at 
September 30, 1997 (which amounted to principal and interest of approximately 
$560,000) have been suspended pending direction from the Court. Harman, West 
Company and Motorola retained liability for any cleanup activities that may 
in the future be required by EPA at their respective facilities due to their 
own actions, for toxic tort claims and for natural resource damage claims. In 
light of the settlement, Harman, Motorola and West Company have stipulated 
with the EPA to liability at the Vega Alta Site. In the suit by the United 
States, a consent decree among all of the PRPs and the United States was 
fully executed by all parties, and was entered by the federal district court, 
finally resolving the cost recovery litigation. 

   Pursuant to a letter dated January 31, 1994 and subsequent notices since 
that date, Harman and the other PRPs have been put on notice of potential 
claims for damages, allegedly suffered by the owners and operators of farms 
located in the vicinity of the Vega Alta Site. If Harman were to be found 
liable in any future lawsuit, some of the alleged damages (e.g., personal 
injury, property and punitive damages) would not be covered by the settlement 
agreement with General Electric. In a letter to General Electric's counsel, 
counsel for the owners and operators alleged estimated losses of 
approximately $400 million "based primarily on lost income stream," 
purportedly based on certain assumptions concerning the value of the 
property, its potential for development and groundwater contamination issues. 
At this time, however, Harman, has no information which would support such 
unindemnified claims, and believes the claims to be speculative. Harman has 
received oral notice from counsel for the owners, advising that a lawsuit was 
being filed for the owners. To date, Harman has not been served with a copy 
of a complaint. 

   On December 8, 1997 the EPA issued an amendment to its cleanup 
requirements, together with a supplemental statement of work required at the 
Vega Alta site. Harman has notified General Electric that it expects General 
Electric to comply with the EPA's further requirements pursuant to the 
settlement agreement among the PRPs. 

     Alsco-Anaconda Site. Alsco Company, a predecessor of the Company, was 
the former owner and operator of a manufacturing facility located in 
Gnadenhutten, Ohio. The Alsco division of the Company was sold in August 1971 
to the Anaconda Company. Subsequently, Alsco became Alsco-Anaconda, Inc., a 
subsidiary of the Anaconda Company. In January 1977 when the Atlantic 
Richfield Company ("ARCO") purchased the Anaconda Company, the Gnadenhutten 
facility became a part of ARCO Metals Company and was renamed Alsco. The 
facility, when acquired by ARCO, consisted of an architectural manufacturing 
plant, office buildings, a wastewater treatment plant, two sludge settling 
basins and a sludge pit. The basins and pit were used for treatment and 
disposal of substances generated 

                               19           
<PAGE>
from the manufacturing processes; they were proposed for inclusion on EPA's 
National Priorities List in October 1984. The basins and pit were formally 
listed as the "Alsco-Anaconda Superfund Site" in June 1986. ARCO sold the 
facility in 1986 to Pony Industries but retained ownership of a 4.8 acre 
Superfund Site. 

   Under arrangements between the Company and ARCO, each has accepted that it 
is a PRP with respect to the Site. The Company, however, maintained that 
under the CERCLA statute its responsibility was limited to waste actually 
produced and deposited on the Site during its period of ownership 
(1965-1971). Although it is not possible to determine definitively the 
Company's ultimate exposure, management believes that the Company's 
obligations will likely be limited to those accepted under the settlement 
agreement with ARCO described in the next sentence, which settlement was 
based upon an allocated percentage of total anticipated remediation costs, 
which as alleged by ARCO, will aggregate $19.0 million to $21.5 million. The 
Company and ARCO reached a settlement in January 1995 whereby the Company has 
agreed to pay ARCO $6.25 million (as its share of up to $25.0 million of the 
cleanup and environmental costs at the Site) in twenty equal quarterly 
installments with accrued interest at the rate of 9% per annum, of which nine 
installments have been paid through May 7, 1997. In return, ARCO has assumed 
responsibility for cleanup activities at the Site and is obligated to 
indemnify the Company from any environmental claims below the cap. If cleanup 
costs should exceed $25.0 million, the parties will be in the same position 
as if the litigation was not settled. The most recent accounting summary 
provided by ARCO indicates that total costs are expected to be in the range 
of $20.0 million. Due to the current bankruptcy proceedings, payments to 
ARCO, pursuant to the settlement agreement, have been suspended pending 
direction from the Bankruptcy Court. 

    American Littoral Society. By letters dated June 4, 1996 and September 
30, 1996 the American Littoral Society, a public interest group operated 
through the Environmental Law Clinic of the Widener University School of Law, 
sent notices pursuant to the Clean Water Act to the Company threatening suit 
based upon past and anticipated future discharges to the Schuykill River in 
excess of the limits established in the National Pollutant Discharge 
Elimination System permit ("NPDES") for the Pottstown, Pennsylvania plant. In 
February 1997 a lawsuit was filed by the American Littoral Society against 
the Company in the U.S. District Court of the Eastern District of 
Pennsylvania. The Pottstown plant has been and is currently operating under 
an expired but still effective NPDES permit. The plant's wastewater treatment 
system (or use "equipment") was not capable of achieving routine compliance 
with certain discharge limitations, including limits for phenol, oil and 
grease and total dissolved solids. The Pottstown plant had been attempting to 
solve this problem by arranging to convey its effluent to the Pottstown 
Publicly Owned Treatment Works. In March 1997, the Pennsylvania Department of 
Environmental Protection filed an action against the Company seeking 
penalties, and the action was settled by the Company entering into a Consent 
Decree in March 1997. Pursuant to the settlement, Doehler-Jarvis is required 
to construct a wastewater recycling system by December 31, 1997 that 
eliminates discharges to the Schuylkill river and to undertake various other 
minor projects addressing potential pollution at the facility. In addition, 
the Company agreed to pay civil penalties of $1.125 million, of which 
$375,000 may be allocated to the costs of installing the new system and 
$50,000 may be allocated to the cost of pollution prevention. The Consent 
Decree subjects the Company to penalties if construction milestones for the 
wastewater recycling system are not met and if agreed upon discharge limits 
are violated. Doehler-Jarvis has met its construction schedule, but the 
$1.125 million penalty has not been paid, since it is a pre-bankruptcy 
petition liability. 

   West Jackson Groundwater Contamination Site. The Hayes-Albion facility in 
Jackson, Michigan is located within a regional area of groundwater 
contamination designated as "West Jackson Groundwater Contamination Site" 
("Site"). Hayes-Albion has completed several investigations on its property 
since 1989 to assist in defining the nature and source of the chlorinated 
solvent contamination at the Site. The Company believes that the results, 
which have been submitted to the Michigan Department of Environmental Quality 
("MDEQ"), establish that the Hayes-Albion facility is not the source of the 
contamination, and that the contaminants are migrating onto the Hayes-Albion 
property from another source. On August 25, 1997, however, MDEQ notified the 
Company that it is a responsible person as defined in the Michigan natural 
Resources and Environmental Protection Act. MDEQ has also orally 

                               20           
<PAGE>
indicated that it will be seeking reimbursement of past costs from 
Hayes-Albion, together with a commitment to remediate the contamination. The 
future investigation, remediation and oversight costs are unknown at this 
time. Hayes-Albion denies that it is responsible for the contamination and 
intends to vigorously defend this action. 

   Other Environmental Matters. As of September 30, 1997 and in addition to 
the above matters, the Company has received information requests or 
notifications alleging that the Company is a PRP pursuant to the provisions 
of CERCLA or analogous state laws from EPA, state agencies, and private 
parties; or is currently participating in the remedial investigation or 
closure activities at 23 other sites (including eight sites with respect to 
Doehler-Jarvis). 

   In accordance with the Company's policies and based upon consultation with 
legal counsel regarding pending environmental suits and claims, management of 
the Company has provided accruals for environmental matters of $8.7 million 
as of September 30, 1997, of which approximately $6.0 million is reflected in 
the caption "Liabilities subject to Compromise" in the Consolidated Financial 
Statements. See Note 17 to the Consolidated Financial Statements. 

   While it is not feasible to predict the outcome of pending environmental 
suits and claims, based upon the most recent review by management of these 
matters and after consultation with legal counsel, management is of the 
opinion that the ultimate disposition of these matters will not have a 
material effect on the financial position or results of operations of the 
Company. 

   Other. In June 1995 a group of former employees of the Company's 
subsidiary, Harman Automotive-Puerto Rico, Inc., commenced an action against 
the Company and individual members of management in the Superior Court of the 
Commonwealth of Puerto Rico seeking approximately $48.0 million in monetary 
damages and unearned wages relating to the closure by the Company of the Vega 
Alta, Puerto Rico plant previously operated by such subsidiary. Claims made 
by the plaintiffs in such action include the following allegations: (i) such 
employees were discriminated against on the basis of the national origin in 
violation of the laws of Puerto Rico in connection with the plant closure and 
that, as a result thereof, the Company is alleged to be obligated to pay 
unearned wages until reinstatement occurs, or in lieu thereof, damages, 
including damages for mental pain and anguish; (ii) during the years of 
service, plaintiffs were provided with a one-half hour unpaid meal break, 
which is alleged to violate the laws of Puerto Rico, providing for a one-hour 
unpaid meal break and demand to be paid damages and penalties and request 
seniority which they claim was suspended without jurisdiction; and (iii) 
plaintiffs were paid pursuant to a severance formula that was not in 
accordance with the laws of Puerto Rico, which payments were conditioned upon 
the plaintiff's executive releases in favor of the Company, and that, as a 
result thereof, they allege that they were discharged without just cause and 
are entitled to a statutory severance formula. 

   Management believes that it has meritorious defenses to the action and is 
vigorously defending its position. Although there can be no assurance as to 
the ultimate outcome, and proceedings have been stayed since the Company's 
bankruptcy filing, nevertheless, based on advice by its local counsel in 
Puerto Rico, the Company does not believe that the ultimate disposition of 
this matter will have a material adverse effect on its financial condition or 
results of operations. The Company believes that any claim arising out of 
this matter constitutes a pre-petition unsecured claim against the Debtors. 

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

   No matters were submitted to a vote of security holders during the fourth 
quarter of the fiscal year ended September 30, 1997 covered by this Annual 
Report on Form 10-K. 

                               21           
<PAGE>
                                   PART II 

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

   The Company's Common Stock is traded on the Over-the-Counter Bulletin 
Board of NASDAQ since March 17, 1997 under the symbol "HAVAQ." Prior to that 
time, the Common Stock was traded on the NASDAQ National Market. The table 
below sets forth the high and low bid quotations for the Company's Common 
Stock from October 1, 1995 through September 30, 1997. These bid prices, 
which were obtained from NASDAQ Trading and Market Services, represent prices 
between dealers without adjustment for retail mark-ups, mark-downs or 
commissions and may not represent actual transactions. 

                           COMMON STOCK PRICE RANGE 

<TABLE>
<CAPTION>
 FISCAL YEAR           HIGH        LOW 
------------------  ---------- --------- 
<S>                 <C>        <C>
1996: 
First Quarter .....  $29.25     $24.875 
Second Quarter  ...  $29.625    $19.625 
Third Quarter .....  $23.250    $11.625 
Fourth Quarter  ...  $16.375    $ 6.625 

1997: 
First Quarter .....  $10.875    $ 2.75 
Second Quarter(1)    $ 4.500    $ 0.6875 
Third Quarter .....  $ 1.1875   $ 0.4375 
Fourth Quarter  ...  $ 0.96875  $ 0.28125 
</TABLE>

------------ 
(1)    Reflects prices on NASDAQ National Market to March 17, 1997, and on the 
       Over-the-Counter Bulletin Board from that date to March 31, 1997. 

   On December 15, 1997, the closing bid and asked prices per share for the 
Common Stock were $0.65625 and $0.84375, respectively. On December 15, 1997 
there were approximately 144 holders of record. 

   The Company has paid no cash dividends in its last two fiscal years. The 
Company is restricted under the terms of its borrowings, including its debt 
instruments and DIP Financing Agreement, from paying cash dividends on its 
Common Stock. 

                               22           
<PAGE>
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA 
        (IN THOUSANDS OF DOLLARS EXCEPT SHARE AND PER SHARE DATA) 

<TABLE>
<CAPTION>
                                                                      YEAR          YEAR         YEAR        YEAR         YEAR 
                                                                      ENDED        ENDED        ENDED        ENDED        ENDED 
                                                                     9/30/97      9/30/96    9/30/95 (3)    9/30/94      9/30/93 
                                                                  ------------ ------------  ----------- -----------   ------------ 
<S>                                                               <C>          <C>           <C>         <C>          <C>
STATEMENT OF OPERATIONS DATA: 
Sales............................................................  $  810,769    $  824,837   $  631,832  $  614,952   $  583,063 
Cost of sales....................................................     797,774       776,141      557,340     543,532      553,465 
                                                                  ------------ ------------  ----------- -----------   ------------ 
Gross profit.....................................................      12,995        48,696       74,492      71,420       29,598 
Selling, general and administrative expenses ....................      45,822        42,858       33,037      32,217       36,381 
Interest expense (4) ............................................      36,659        47,004       19,579      11,947       15,450 
Impairment and restructuring charges (5) ........................     288,545        --           --          --           40,711 
Amortization of goodwill ........................................       8,448        15,312        2,986       1,584        2,592 
Other (income) expense, net (6) .................................       5,530         1,538       (1,789)       (532)       8,649 
                                                                  ------------ ------------  ----------- -----------   ------------ 
Income (loss) from continuing operations before reorganization 
 items, income taxes and extraordinary item .....................    (372,009)      (58,016)      20,679      26,204      (74,185) 
Reorganization items ............................................      16,216        --           --          --           -- 
                                                                  ------------ ------------  ----------- -----------   ------------ 
Income (loss) from continuing operations before income taxes 
 and, extraordinary item ........................................    (388,225)      (58,016)      20,679      26,204      (74,185) 
Provision (benefit) for income taxes.............................       1,204         3,196       11,566       9,536        1,955 
                                                                  ------------ ------------  ----------- -----------   ------------ 
Income (loss) from continuing operations before extraordinary 
 item............................................................    (389,429)      (61,212)       9,113      16,668      (76,140) 
Loss from discontinued operations, net of tax (2)................      --            (7,500)      --          (9,038)     (54,409) 
                                                                  ------------ ------------  ----------- -----------   ------------ 
Income (loss) before extraordinary item .........................    (389,429)      (68,712)       9,113       7,630     (130,549) 
Extraordinary item...............................................      --            --           (2,192)     --           -- 
Cumulative effect of change in accounting for postretirement 
 benefits other than pensions ...................................      --            --           --          --           -- 
                                                                  ------------ ------------  ----------- -----------   ------------ 
Net income (loss)................................................  $ (389,429)   $  (68,712)  $    6,921  $    7,630   $ (130,549) 
PIK preferred dividends and accretion (7)........................  $   10,142    $   14,844   $   14,809  $   14,767   $   12,769 
                                                                  ------------ ------------  ----------- -----------   ------------ 
Net loss attributable to common stockholders ....................  $ (399,571)   $  (83,556)  $   (7,888) $   (7,137)  $ (143,318) 
                                                                  ============ ============  =========== ===========   ============ 
Ratio of earnings to fixed charges (8)...........................      n/a           n/a           1.17x       1.42x       n/a 
SHARE DATA: 
Earnings (loss) per share of common shares and common equivalent 
 shares: 
PRIMARY 
Income (loss) from continuing operations ........................  $   (56.91)   $   (10.87)  $    (0.82) $     0.28   $   (13.48) 
Loss from discontinued operations ...............................      --             (1.07)      --           (1.31)       (8.26) 
Extraordinary item ..............................................      --            --            (0.32)     --           -- 
                                                                  ------------ ------------  ----------- -----------   ------------ 
Net loss.........................................................  $   (56.91)   $   (11.94)  $    (1.14) $    (1.03)  $   (21.74) 
                                                                  ============ ============  =========== ===========   ============ 
Weighted average number of shares and equivalents................   7,020,692     6,999,279    6,894,093   6,875,267    6,593,407 
                                                                  ============ ============  =========== ===========   ============ 
FULLY DILUTED 
Income (loss) from continuing operations ........................  $   (56.91)   $   (10.87)  $    (0.82) $     0.27   $  (13.48) 
Loss from discontinued operations ...............................                     (1.07)      --           (1.28)      (8.26) 
Extraordinary item ..............................................      --            --            (0.32)     --           -- 
                                                                  ------------ ------------  ----------- -----------   ------------ 
Net loss.........................................................  $   (56.91)   $   (11.94)  $    (1.14) $    (1.01)  $   (21.74) 
                                                                  ============ ============  =========== ===========   ============ 
Weighted average number of shares and equivalents ...............   7,020,692     6,999,279    6,894,093   7,041,324    6,593,407 
                                                                  ============ ============  =========== ===========   ============ 
FINANCIAL RATIOS AND OTHER DATA: 
Depreciation and amortization ...................................  $   60,186    $   65,658   $   34,856  $   29,855   $   34,280 
Cash flows from continuing operations ...........................      12,877         2,090       25,051      87,324       54,749 
Capital expenditures ............................................      36,572        40,578       22,080      10,141       13,918 
Cash flows (used) provided by investing activities ..............     (35,988)      (48,224)    (226,769)    (12,207)     (14,310) 
Cash flows (used) provided by financing activities ..............      31,216        27,316      161,283     (30,348)     (35,589) 
BALANCE SHEET DATA (AT END OF PERIOD): 
Working capital (deficiency)(9)..................................  $    2,096    $   (7,158)  $   19,417  $   30,333   $  (59,138) 
Total assets ....................................................     307,494       617,705      662,262     387,942      364,853 
   
Liabilities subject to compromise ...............................     397,319        --           --          --           -- 
DIP Financing, including current portion ........................      87,471        --           --          --           -- 
Long-term debt, including current portion .......................      14,087       360,603      324,801     113,381      117,494 
PIK preferred stock .............................................     124,637       114,495       99,651      99,841       95,074 
Shareholders' (deficiency) ......................................  $ (547,128)   $ (145,724)  $  (62,206) $  (59,032)  $  (60,813) 
</TABLE>

                               23           
<PAGE>
------------ 
(1)    On May 8, 1997, the Company and substantially all of its subsidiaries 
       filed voluntary petitions for relief under Chapter 11 of the federal 
       bankruptcy laws. See Note 1 to the Consolidated Financial Statements. 
(2)    The Company, in the first quarter of fiscal 1994, decided to 
       discontinue its then specialty fastener segment (ESNA) and therefore 
       applied the accounting guidelines for discontinued operations. 
       Accordingly, all prior period financial statements were reclassified to 
       reflect the results of ESNA as a discontinued operation. In fiscal 
       1993, the Company recorded certain restructuring and other charges 
       aggregating $40,667 relating to ESNA and included such charges in loss 
       from discontinued operations. In 1996, the Company recorded a $7,500 
       charge to discontinued operations representing the write-down of the 
       ESNA facility and continuing carrying costs. See Note 4 to the 
       Consolidated Financial Statements. 
(3)    Includes the results of operations of the Doehler-Jarvis entities from 
       July 28, 1995, the effective date of acquisition. 
(4)    Interest expense does not include interest after May 7, 1997 amounting 
       to $13,605 on the 12% and 11 1/8% Senior Notes. See Note 1 to the 
       Consolidated Financial Statements. 
(5)    During 1997, the Company recorded charges for impairment of long-lived 
       assets of the Doehler-Jarvis entities and at two other plants. The 
       Company also recorded restructuring charges related to two operations 
       scheduled for closing. See Note 13 to the Consolidated Financial 
       Statements. Additionally, the Company recorded restructuring and other 
       charges in the fourth quarter of fiscal 1993 aggregating $40,711. No 
       tax benefit is currently available for all of these charges. 
(6)    Other (income) expense, net includes approximately $2,200 related to 
       joint venture losses in 1997. For the year ended September 30, 1993, 
       other (income) expense, net includes a charge for the write-down and 
       disposition of assets no longer required in operations amounting to 
       $4,434 and provision for estimated settlements of various litigation 
       matters amounting to $4,850. 
(7)    PIK Preferred dividends after May 7, 1997 do not include $6,749 of 
       accrued dividends. 
(8)    For purposes of computing the ratio of earnings to fixed charges, 
       earnings consist of income (loss) from continuing operations before 
       provision for income taxes and extraordinary item plus fixed charges. 
       Fixed charges consist of interest expense and one-third of rental 
       expense, which is deemed to be representative of the interest factor 
       thereon, plus preferred dividends and accretion. Earnings were 
       insufficient to cover fixed charges for the years ended September 30, 
       1997, 1996 and 1993 by $398,367, $53,062, and $86,954, respectively. 
       Earnings were sufficient to cover fixed charges for the years ended 
       September 30, 1995 and 1994 by $5,870 and $11,437, respectively. 
(9)    At September 30, 1993, bank and other debt of $66,517 and prepetition 
       trade payables of $11,122, were classified as current liabilities in 
       accordance with their terms. 

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (IN THOUSANDS OF DOLLARS) 

RESULTS OF OPERATIONS 

 1997 COMPARED TO 1996 

   Sales. Consolidated sales decreased $14,068 from $824,837 to $810,769, or 
1.7%. Aggregate sales for Harman Automotive, the furniture production line of 
Harvard Interiors, Toledo and the Material Handling Division of 
Kingston-Warren, each of which has been designated for sale ("Operations 
designated for sale or wind-down"), decreased approximately $35,574 from 
$251,442 to $215,868 (including $5,700 due to a decline in average aluminum 
prices, the benefit of which was passed on to customers). The remaining 
operations sales increased $21,506 from $573,395 to $594,901 due to a higher 
demand for its products. 

   Gross Profit. The consolidated gross profit expressed as a percentage of 
sales (the "gross profit margin") decreased from 5.9% to 1.6%, after 
recording curtailment gains with respect to post-retirement obligations of 
$8,249 in 1997. The decrease was due primarily to operational inefficiences 
at most of the Company's operating units, price reductions and from 
unfavorable comparisons relative to tooling margins and long-term contract 
recoveries. The gross profit (loss) for Operations designated for sale or 
wind-down amounted to $(14,952) and $12,312 in 1997 and 1996, respectively, 
and the change represents 76% of the consolidated decrease in gross profits. 
The remaining operations gross profit decreased from $36,384 to $27,947. 

   Selling, General and Administrative Expenses. Selling, general and 
administrative expenses increased $2,964, due principally to charges in 
excess of $3,000 in the second quarter, primarily related to the Termination, 
Consulting and Release Agreement dated February 12, 1997 with Mr. Vincent J. 
Naimoli, the former Chairman of the Board, President and Chief Executive 
Officer of the Company. 

                               24           
<PAGE>
   Interest Expense. Interest expense decreased from $47,004 to $36,659. 
However, but for giving effect to the discontinuance of accruing interest on 
the senior notes of $13,605 after May 7, 1997 interest expense increased by 
$3,260. This increase resulted from increased borrowings under financing 
agreements. 

   Amortization of Goodwill. The decrease of $6,864 in goodwill amortization 
occurred because goodwill amortization related to Doehler-Jarvis ceased March 
31, 1997, when such goodwill was written-off as impaired. 

   Other (Income) Expense, Net. The increase of $3,992 was mainly due to an 
increase in loss on disposal of machinery and equipment and losses from a 
joint venture. 

   Impairment of Long-Lived Assets and Restructuring Costs. As a result of 
continuing losses and projections of future operations and cash flows, the 
Company recorded charges in 1997 of $288,545 reflecting the permanent 
impairment of long-lived assets at its Doehler-Jarvis and Harman Automotive 
subsidiaries and one plant. The goodwill portion of this charge is $114,385. 
See Note 13 to the Consolidated Financial Statements. Operations designated 
for sale accounted for approximately $101,000 of the impairment charge. 

   Reorganization items. As a result of the bankruptcy, the Company adjusted 
the senior notes to the amount of its allowed claim with a charge to 
operations of $10,408. In addition, the Company incurred professional fees in 
the amount of $5,828. 

   Provision for Income Taxes. The decrease in the provision for income taxes 
resulted from a decrease in operating profit in Canada. 

   Net Loss. The net loss increased from $68,712 to $389,429 for the reasons 
described above. 

 1996 COMPARED TO 1995 

   Sales. Excluding the 1996 and 1995 Doehler-Jarvis sales, consolidated 
sales decreased $57,388, primarily during the first six months. The 
automotive accessories segment sales accounted for 96% and 95%, respectively, 
of consolidated sales for the years 1996 and 1995. Automotive sales, 
excluding such sales by Doehler-Jarvis, decreased $59,000, of which $41,000 
was due mainly to the lower volumes for existing light vehicle platforms, 
principally for large passenger cars and somewhat to the effects of the March 
1996 strike at GM, and $18,000 was attributable to the inclusion in 1995 of 
sales to Ford phased out in June 1995, as previously disclosed. 
Non-automotive sales increased $1,600 due to an increase in furniture sales. 

   Gross Profit. The consolidated gross profit expressed as a percentage of 
sales (the "gross profit margin") decreased from 11.8% to 5.9%. The decrease 
in the gross profit was due principally to the lower passenger car sales 
mentioned above and somewhat to the effects of the adverse weather 
conditions, the GM strike, and excess launch costs for new and replacement 
products in 1996. In 1996, sales of certain products aggregated $50,000 for 
which a negative gross margin of $7,800 was incurred. More than half of the 
decrease in the gross profit margin was attributable to the fact that 
Doehler-Jarvis contributed no gross profit on over $296,000 of sales, which 
was caused mainly by operational inefficiencies at the Toledo and Pottstown 
plants, including the impact of significant overtime resulting from operating 
the Toledo plant on a seven day week basis and the negative margins incurred 
from sales of the Programs. The remaining gross profit margin decrease was 
caused by decreases in the other automotive operations due to the reasons 
mentioned, in particular excess launch costs and the GM strike. The 
non-automotive segment had a decrease in gross profit of $1,600 due 
principally to the fact that the prior year's gross profit included a 
one-time favorable settlement with a supplier amounting to $475, as well as 
lower margins on increased sales to major retailers in 1996. 

   Selling, General and Administrative Expenses. Selling, general and 
administrative expenses increased $3,700, or 13.8%, after excluding such 
expenses of Doehler-Jarvis, and after considering the fact that 1996 does not 
include any bonus provision with respect to the Company's key management and 
operating personnel, as compared to $3,700 in 1995. The current year includes 
salary increases and additional non-automotive selling costs incurred to 
penetrate the mass merchandising furniture market. As a percentage of sales, 
such consolidated expenses were 5.2% for both 1996 and 1995. 

                               25           
<PAGE>
   Interest Expense. Interest expense increased from $19,579 in 1995 to 
$47,004 in 1996. The increase in interest expense was the result of the 
issuance in July 1995 of the 11 1/8% Senior Notes, capital leases (which were 
assumed in the Doehler-Jarvis acquisition), the revolving working capital 
loans under the Credit Agreement, dated as of July 28, 1995, among the 
Company, the Guarantors and Chemical Bank, as Agent (the "Chemical 
Agreement") and the $7,000 short term credit facility utilized from August 2, 
1996 to September 27, 1996. The effective rate of interest was 13.6% in 1996 
and 12.1% in 1995. 

   Amortization of Goodwill. Amortization of goodwill increased $12,326 due 
to the additional goodwill resulting from the acquisition of Doehler-Jarvis. 
In the fourth quarter of 1996, based upon Doehler-Jarvis' unprofitable 
operating results since acquisition and projected operating results for 1997, 
the life of such goodwill was changed from 15 years to 10 years effective 
October 1, 1995. 

   Other (income) Expense, Net. The change was due, principally, to the 
reduction in interest income due to the use of approximately $26,300 of cash 
on hand in the acquisition of Doehler-Jarvis. 

   Provision for Income Taxes. The differences between the statutory federal 
income tax rate and the Company's effective income tax rates result, 
principally, from generating an operating profit in Canada and an operating 
loss in the U.S. for which no tax benefit has been recognized. 

   Loss from Discontinued Operations. Discontinued operations was charged 
$7,500 representing the write-down of the ESNA facility, continuing costs 
associated with the Company's ongoing participation in the Department of 
Defense Voluntary Disclosure Program and carrying costs of the Union, N.J. 
facility. See Note 4 to the Consolidated Financial Statements. 

   Net Income (Loss). Net loss for 1996 was $68,712 compared to a net income 
of $6,921 in 1995. The change is because operating results (as described 
above) were insufficient to cover increases of $27,425 in interest expense, 
$12,326 in amortization of goodwill and the $7,500 loss from discontinued 
operations. 

LIQUIDITY AND CAPITAL RESOURCES 

   For the years ended September 30, 1997 and 1996, the Company had cash 
flows from continuing operations of $12,877 and $2,090, respectively. The 
1997 cash flows were enhanced by the Court stay relating to the payment of 
pre-petition liabilities and by more rapid payment terms by a major customer, 
but were negatively affected by payments of reorganization items and advance 
and accelerated payments to post-petition suppliers. The cash flow from 
operations in 1997 was used primarily to fund working capital needs and to 
fund a portion of the capital expenditures. Net borrowings under financing 
agreements during 1997 were used to fund the balance of the investing 
activities, to fund pension payments of $6,000 pursuant to the PBGC settlement 
agreement and EPA payments of $1,570, and to fund $7,682 of long-term debt 
payments. 

   The Company has been in negotiations with certain of its creditors to 
obtain a $25,000 subordinated term loan, and there is no assurance that such 
loan will be successfully consummated. Projected cash flows for 1998 
contemplate reorganization items of $15,000 to be paid, resulting in a 
negative cash flow from continuing operations. Since capital expenditures of 
$38,000 are contemplated for 1998 (although lenders' consent is required for 
such expenditures in excess of $30.0 million), it is necessary for the 
Company to borrow under the DIP Financing Agreement and proposed $25,000 
subordinated term loan for this purpose. However, giving effect to proceeds 
from asset sales and other dispositions, as well as the increased borrowing 
availability under the DIP Financing Agreement provided by the proposed 
$25,000 subordinated term loan, management anticipates having sufficient 
liquidity to conduct its activities during the Chapter 11 period. 

   The Company is required to make principal payments of an aggregate of 
$13.0 million in quarterly installments under the DIP Financing Agreement. 
See Note 28 of Notes to Consolidated Financial Statements for satisfaction of 
the first three quarterly payments, commencing November 30, 1997 as a result 
of asset sales. The Company had a deficiency of earnings over fixed charges 
and dividends on preferred stock of $398,367 and $53,062 in 1997 and 1996, 
respectively. 

CAPITAL EXPENDITURES 

   Capital Expenditures. Company expenditures for property, plant and 
equipment during 1997 and 1996 were $36,572 and $40,578, respectively, 
principally for machinery and equipment required in the 

                               26           
<PAGE>
ordinary course of operating the Company's business. The Company is currently 
projecting to spend approximately $38,000 principally for machinery and 
equipment in 1998. The projected capital expenditures are required for new 
business and on-going cost saving programs necessary to maintain competitive 
benefits, and the balance for normal replacement. The actual timing of 
capital expenditures for new business may be impacted by customer delays and 
acceleration of program launches and the Company's continual review of 
priority of the timing of capital expenditures, as well as the need to obtain 
lenders' consent to capital expenditures in excess of $30.0 million for the 
year ending September 30, 1998. 

   Tax Loss Carryforwards. At September 30, 1997, the Company had available 
net operating loss carryforwards and general business tax credits of 
approximately $246,000 and $1,300, respectively, for federal income tax 
purposes. Carryforwards expire in the years 2002 through 2012 and 
approximately $67,000 are subject to annual utilization limitations under 
Internal Revenue Code Section 382 due to the change in ownership arising from 
the conversion of the 14-1/4% senior subordinated debentures into stock of 
the postconfirmation Company and the acquisition of Doehler-Jarvis. The 
utilization of the above described carryforwards is limited to approximately 
$11,000 and $6,000 per tax year, respectively, until fully utilized. Unused 
portions of such annual limitations may be carried forward and utilized in 
subsequent years. The unused portion of the Company and Doehler-Jarvis annual 
limitations at September 30, 1997 is approximately $37,000 and $13,000 which 
may be carried forward and utilized in subsequent years. The reorganization 
of the Company may have a significant impact on the income tax liability of 
the Company in future years. The Internal Revenue Code requires certain 
reductions and/or limitations in the amount of net operating loss deduction 
and general business credits available for utilization if a substantial 
change in ownership or forgiveness of debt occurs. Due to the complexity of 
the tax laws involved and uncertainties relating to a final plan of 
reorganization, the actual tax effects will not be known until such a final 
plan of reorganization is approved. 

   ESNA. The Company believes that the 1998 estimated costs of the ESNA 
matter, exclusive of possible fines, damages and penalties, if any, will not 
be material. Such costs relate to carrying costs of the Union, N.J. facility 
and costs associated with the Company's ongoing participation in the 
Department of Defense Voluntary Disclosure Program. However, the ultimate 
cost of disposition of this matter, as well as the required funding of such 
costs, depends upon future events, the outcomes of which are not determinable 
at the present time, including the Company receiving favorable consideration 
from the government as a result of its admission into the Voluntary 
Disclosure Program. Such outcomes could have a material effect on the 
Company's financial condition, results of operations and/or liquidity. If it 
is ultimately determined that the deviations from specifications and 
certifications made in connection therewith, constitute violations of various 
statutory and regulatory provisions, the Company may, among other things, be 
subject to criminal prosecution, treble damages and penalties under the Civil 
False Claims Act or Racketeer Influenced and Corrupt Organization Act, as 
well as administrative sanctions, such as debarment from future government 
contracting. The Company is unable to determine the effect, if any, of the 
bankruptcy filing on the ESNA matter. 

   Year 2000 Compliance. Certain of the Company's information systems are not 
presently compliant with the requirements of the year 2000. The Company has 
committed the resources necessary to ensure that its critical information 
systems and technology infrastructure are "Year 2000 Compliant" before 
transactions for the year 2000 are expected. Certain of the Company's systems 
will be replaced with an "Enterprise Resource Planning" (ERP) solution, which 
the Company intends to implement shortly and will be Year 2000 compliant and 
provide the Company with significantly enhanced manufacturing and business 
systems capability. 

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 

   The financial statements and schedules listed in Item 14(a)(1)(2) are 
included in this Annual Report on Form 10-K beginning on Page F-1. 

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

   Inapplicable. 

                               27           
<PAGE>
                                   PART III 

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT 

   The following table sets forth certain information regarding the directors 
and executive officers of the Company at December 15, 1997: 

<TABLE>
<CAPTION>
 NAME                       AGE  POSITION 
-------------------------  ----- -------------------------------------------------- 
<S>                        <C>   <C>
John W. Adams                54   Chairman of the Board and Chief Executive Officer 
Michael Hoffman              47   Director 
Craig Scott Bartlett, Jr.    64   Director 
General Joseph P. Hoar       62   Director 
Bruce D. Broussard           35   Director 
Roger G. Pollazzi            60   Chief Operating Officer 
Roger L. Burtraw             57   President 
Joseph J. Gagliardi          58   Senior Vice President, Finance and Chief Financial 
                                   Officer 
Richard T. Dawson            52   Senior Vice President--Law and Administration and 
                                   General Counsel 
Brian D. Benninger           50   Senior Vice President 
David L. Kuta                53   Senior Vice President 
David C. Stegemoller         56   Senior Vice President 
William J. Warren            60   Vice President and Chief Accounting Officer 
Arnold M. Sheidlower         63   Vice President, Associate General Counsel and 
                                   Secretary 
Marston J. Fortress          54   Vice President and Controller 
Douglas D. Rossman           47   Vice President--Purchasing 
</TABLE>

   Mr. John W. Adams was elected a Director in October 1994, and was elected 
as Chairman of the Board and Chief Executive Officer of the Company in 
February 1997. He was Chairman of the Board of Regency Health Services, Inc., 
a national chain of nursing homes and provider of long-term health services, 
from January 1996 to October 1997. He has been President of Smith Management 
Company, an investment firm, since 1984. He also serves as Chairman of the 
Board of Servico, Inc., an owner and manager of hotel facilities, and Hawaii 
Airlines, Inc., a Honolulu based airline. See "Item 12. Security Ownership of 
Certain Beneficial Owners and Management." 

   Mr. Michael Hoffman has been a Director of the Company since August 1992 
and has been a general partner of The Blackstone Group, L.P., an investment 
banking firm, since January 1989. For more than five years prior thereto, Mr. 
Hoffman was a partner in Smith Barney & Co., investment bankers. Mr. Hoffman 
is also a Director of Unilab Corporation, a chain of medical laboratories. 
See "Item 13. Certain Relationships and Related Transactions" for additional 
information. 

   Mr. Craig Scott Bartlett, Jr. has been a Director of the Company since 
August 1992. He is a consultant on banking matters and served as Senior Vice 
President and Chief Credit Officer of MTB Bank, a private banking firm from 
1992 to 1994. From 1984 to 1990, he was Executive Vice President, Senior 
Lending Officer and Chairman, Credit Policy Committee, of National 
Westminster Bank, USA. He is a director of NVR Inc., a home builder, MTB 
Bank, Janus, Inc., (successor to United States Lines), and The Bibb Company 
(a manufacturer of bedding, linens and napery). 

   General Joseph P. Hoar USMC (Ret.) was elected a Director in September 
1994. He was Commander-in-Chief of the United States Central Command, a joint 
headquarters responsible for military planning and operations in 19 countries 
located in Africa, the Middle East and South Asia, from August 1991 to August 
1994. Prior thereto, he served as Assistant Chief of Staff for Plans, 
Programs and Operations for the U.S. Marine Corps from June 1990 to August 
1991. He was Chief of Staff of the United States Central Command from October 
1988 to June 1990. He is the President and Chief Executive 

                               28           
<PAGE>
Officer of J.P. Hoar and Associates, Inc., a consulting firm engaged in 
business development in the Middle East and Africa. General Hoar serves as 
Co-Chairman of the Middle East Panel of the Council on Foreign Relations and 
is a Fellow of the World Economic Forum. 

   Mr. Bruce D. Broussard has been a director of the Company since April 
1997. He has been a Chief Executive Officer of Harbor Dental Company, a 
dental practice management company, since December 1997. He was Executive 
Vice President and Chief Financial Officer of Regency Health Services, Inc., 
a national chain of nursing homes and provider of long-term health services, 
from January 1996 to October 1997. For the period from 1993 to 1996 he was 
Chief Financial Officer and director of Sun Health Care Group, a health care 
provider, and prior thereto be served as Vice President and Treasurer of 
Continental Medical Systems, a health care provider, and in various positions 
with the national accounting firms of Arthur Andersen & Co. and Price 
Waterhouse & Co. 

   Mr. Roger G. Pollazzi was elected Chief Operating Officer of the Company 
in November 1997. He was associated with Concord Investment Partners, an 
investment firm headquartered in Concord, Massachusetts, from 1996 to October 
1997. From 1992 to 1996, Mr. Pollazzi was Chief Executive Officer and 
Chairman of The Pullman Company, an automotive parts manufacturer. 

   Mr. Roger L. Burtraw has been President of the Company since February 
1997. From August 1995 to February 1997 he had been an Executive Vice 
President of the Company. Prior thereto, he was Senior Vice President of the 
Company from January 1993 to August 1995 and President of the Company's 
subsidiary, Kingston-Warren, from April 1991 to January 1993. 

   Mr. Joseph J. Gagliardi, prior to his election as Senior Vice President, 
Finance and Chief Financial Officer in February 1993, has been Vice 
President, Finance and Chief Financial Officer since 1980. 

   Mr. Richard T. Dawson has been an officer of the Company since 1994 and 
was Special Counsel to the Company from July 1994 to September 1994. Mr. 
Dawson is an attorney, who was a partner in the law firm of Holland & Knight 
from August 1993 to July 1994. Prior thereto, from July 1988 to July 1993, 
Mr. Dawson was Vice President, General Counsel and Secretary of Anchor Glass. 

   Mr. Brian D. Benninger has been a Senior Vice President of the Company 
since August 1995. Between February 1992 and July 1995, Mr. Benninger was an 
executive of the Company's subsidiary, Kingston-Warren. In addition, from 
October 1993 to the time he became an officer of the Company, Mr. Benninger 
served as Vice President, Sales, Marketing and Product Design for both Harman 
Automotive Sales, Marketing and Project Design and Corporate CAE. Prior 
thereto, he was employed by Clevite Elastometers as a Vice President of Sales 
and Marketing. 

   Mr. David L. Kuta has been a Senior Vice President of the Company since 
July of 1996. Prior to joining the Company in 1996, Mr. Kuta was Vice 
President of Operations for United Technologies Automotive -- Interiors 
Division since 1994 and from 1990 to 1994, Vice President and General Manager 
of the Padded Products Division -- Interiors Division. 

   Mr. David C. Stegemoller has been a Senior Vice President of the Company 
since August 1995. For the past five years, Mr. Stegemoller served in various 
positions with Hayes-Albion and its Trim Trends Division (which was then a 
subsidiary of the Company). 

   Mr. William J. Warren has been an officer of the Company since May 1989. 
He was a partner with KPMG Peat Marwick, and a predecessor firm since 1972. 

   Mr. Arnold M. Sheidlower has been an officer of the Company since August 
1992. He has been a practicing attorney in New York, New York, for more than 
30 years. 

   Mr. Marston J. Fortress has been an officer of the Company since December 
1996, prior to which he has been controller. He has been an employee of 
Hayes-Albion for more than 30 years. 

   Mr. Douglas D. Rossman has been an officer of the Company since December 
1996. He was Purchasing Manager of Federal Mogul Corp., an automobile parts 
manufacturer, for more than eight years. 

                               29           
<PAGE>
   All directors of the Company serve terms of one year, or until election of 
their respective successors. The Audit Committee of the Board of Directors 
consists of Messrs. Broussard, Bartlett and Hoffman and the Compensation 
Committee of the Board of Directors consists of Messrs. Hoffman, Hoar and 
Bartlett. Officers of the Company are elected for a one-year term by the 
Board of Directors at its annual meeting. 

   The Board of Directors of the Company elects the executive officers of the 
Company who hold their offices for such terms and exercise such powers and 
perform such duties as determined from time-to-time by the Board of 
Directors; and all executive officers of the Company hold office until their 
successors are chosen and qualified, or until their earlier resignation or 
removal. Any executive officer elected by the Board of Directors may be 
removed at any time by the affirmative vote of a majority of the Board of 
Directors. No executive officer has been elected pursuant to any arrangement 
or understanding between such person and anyone other than the Company. There 
are no family relationships among the Company's directors and executive 
officers. 

   The Company is unaware of any person who has not filed on a timely basis 
reports required by Section 16(a) of the Securities Exchange Act of 1934. 

   Meetings of the Audit Committee during the fiscal year ended September 30, 
1997 were held on November 14, 1996, April 28, 1997 and August 7, 1997. The 
Audit Committee is responsible for meeting with the Company's auditors and 
reviewing recommendations. A meeting of the Compensation Committee during the 
fiscal year ended September 30, 1997 was held on November 14, 1996. The 
Compensation Committee is responsible for reviewing salaries and bonuses of 
the Company and its subsidiaries and all bonus and incentive plans. 

   See "Item 11. Executive Compensation" and "Item 13. Certain Relationships 
and Related Transactions" for information regarding fees paid to directors 
and the members of the Compensation and Audit Committee of the Board of 
Directors. 

                               30           
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION 

   Shown below is information concerning the cash and noncash compensation 
for the fiscal years ended September 30, 1997, 1996 and 1995 awarded to or 
earned by the current and former Chief Executive Officers of the Company, and 
the four other most highly compensated executive officers of the Company (the 
"Named Officers"): 
<TABLE>
<CAPTION>
                                                                        LONG-TERM 
                                ANNUAL COMPENSATION                    COMPENSATION 
                               ----------------------                -------------- 
                                                                        NUMBER OF 
                                                                        SECURITIES      ALL OTHER 
NAME AND                                                                UNDERLYING    COMPENSATION 
PRINCIPAL POSITION              YEAR     SALARY ($)        BONUS       OPTIONS (#)       ($)(1) 
-----------------------------  ------ --------------  -------------- --------------  -------------- 
                                                         $                $               $ 
<S>                            <C>    <C>             <C>            <C>             <C>
John W. Adams                   1997     $  250,000(2)       --             --              -- 
Chairman of the Board           1996         --              --             --              -- 
and Chief Executive Officer     1995         --              --             --              -- 
Vincent J. Naimoli              1997        519,879(3)       --             --              -- 
Former Chairman of the Board,   1996      1,202,807(3)       --             --              -- 
President and Chief             1995      1,286,778(3)   1,100,000(3)       --              -- 
Executive Officer 
Roger L. Burtraw                1997        350,000         35,000        8,000(4)        3,177 
President                       1996        350,000(4)       --           8,000(4)        3,167 
                                1995        244,616        205,425          --            3,122 
Joseph J. Gagliardi             1997        236,250          --           5,000(5)        3,177 
Senior Vice President           1996        220,000          --             --            3,300 
Finance and Chief               1995        220,000        198,500          --            3,088 
Financial Oficer 
David L. Kuta                   1997        185,004          --           5,000(5)          925 
Senior Vice President           1996         92,502         54,000          --              -- 
                                1995         --              --             --              -- 
David C. Stegemoller            1997        174,092          --           5,000(6)        3,439 
Senior Vice President           1996        164,300          --           2,000(6)        3,286 
                                1995        158,303         95,886          --            3,174 
</TABLE>
------------ 
(1)    All Other Compensation represents amounts contributed or accrued for 
       fiscal 1997, 1996, and 1995 for the Named Officers under the Company's 
       401(k) savings plan, except that in the case of Mr. Naimoli information 
       with respect to additional compensation is set forth below in footnote 
       (3).
 
(2)    Mr. Adams was elected Chairman of the Board and Chief Executive Officer 
       in February 1997. Reflects compensation from February 16, 1997 through 
       September 30, 1997 at the rate of $400,000 per annum. 

(3)    Compensation for the fiscal year ended September 30, 1997 and 1996, 
       includes (i) $136,140 and $172,280, respectively, in insurance premiums 
       paid by the Company by reason of the maintenance by the Company of a 
       life insurance policy in the face amount of $2,000,000 on Mr. Naimoli's 
       life, of which Mr. Naimoli's beneficiaries are entitled to receive the 
       benefit proceeds and (ii) $8,739 and $30,527, respectively, in 
       connection with the maintenance of a separate office. Included in the 
       above compensation for the fiscal year ended September 30, 1995 is the 
       amount of $250,000 paid to Anchor Industries International Inc. 
       ("Anchor"), by Doehler-Jarvis for the period from October 1, 1994 
       through July 28, 1995 based on an annual rate of compensation of 
       $300,000 plus bonus pursuant to a Management Agreement between Anchor 
       and Doehler-Jarvis dated as of June 13, 1994. In addition, Anchor 
       received during the same period, consulting fees at the rate of 
       $300,000 per annum for financial advisory services pursuant to a 
       Consulting Fee Agreement, dated as of June 13, 1994 with 
       Doehler-Jarvis. The Company paid $100,000 during the fiscal year ended 
       September 30, 1995 in insurance premiums on the aforementioned 
       insurance policy. Moreover, effective as of January 1, 1995, Mr. 
       Naimoli received benefits through September 30, 1995 in the amount of 
       $95,758 under the Harvard Retirement Plan, the Harvard Nonqualified 
       Additional Credited Service Plan and the Harvard Nonqualified ERISA 
       Excess Benefit Plan. For the periods from October 1, 1994 to July 28, 
       1995 and from July 28, 1995 to September 30, 1995, Doehler-Jarvis 
       carried $600,000 of "key man" life insurance on Mr. Naimoli's life at a 
       cost of $24,278 to Doehler-Jarvis. See "Termination, Consulting and 
       Release Agreement" below for additional information. 

                               31           
<PAGE>
(4)    During the periods presented, Mr. Burtraw served as President and 
       Senior Vice President of the Company. Of the reflected options, options 
       for 8,000 shares were granted in October 1995, pursuant to the 
       Company's Employee Stock Option Plan at an exercise price of $28.00 per 
       share and options for 8,000 shares were granted in November, 1996 at an 
       exercise price of $8.00 per share. See "Severance Agreements and 
       Retention Bonuses" for additional compensation information. 
(5)    Each of the reflected options was granted in November, 1996 at an 
       exercise price of $8.00 per share. 
(6)    The 1997 stock options were granted in November 1996 at an exercise 
       price of $8.00 per share and options for 2,000 shares were granted in 
       October, 1995 at an exercise price of $28.00 per share. 

   Mr. Roger G. Pollazzi is being compensated at the annual rate of $600,000 
since November 1997 in his capacity as Chief Operating Officer of the 
Company. 

OPTIONS 

   The following table presents information concerning grants of stock 
options, net of options cancelled during the fiscal year ended September 30, 
1997, to each of the Company's Named Officers. No stock appreciation rights 
were granted during the fiscal year. 

                    OPTION/SAR GRANTS IN LAST FISCAL YEAR 

<TABLE>
<CAPTION>
                                                                                     POTENTIAL 
                                                                                  REALIZABLEVALUE 
                                                                                 AT ASSUMED ANNUAL 
                                                                                   RATES OF STOCK 
                                                                                 PRICE APPRECIATION 
                                         INDIVIDUAL GRANTS                        FOR OPTION TERM 
                      ------------------------------------------------------- ----------------------- 
                                        PERCENT OF 
                                          TOTAL 
                         NUMBER OF     OPTIONS/SARS 
                        SECURITIES      GRANTED TO    EXERCISE 
                        UNDERLYING      EMPLOYEES      OR BASE 
                       OPTIONS/SARS     IN FISCAL       PRICE     EXPIRATION 
         NAME             GRANTED        YEAR (1)      ($/SH)        DATE       5% ($)      10% ($) 
--------------------  -------------- --------------  ---------- ------------  ---------- ----------- 
<S>                   <C>            <C>             <C>        <C>           <C>        <C>
Roger L. Burtraw. ...      8,000           13.1%        $8.00      11/14/06     $40,248    $102,000 
Joseph J. Gagliardi .      5,000            8.2          8.00      11/14/06      25,155      63,750 
David C. 
 Stegemoller.........      5,000            8.2          8.00      11/14/06      25,155      63,750 
</TABLE>

------------ 
(1)    Based on a total of 61,000 options granted, net of options cancelled in 
       the fiscal year to all employees. 
(2)    Options are exercisable to the extent of 33 1/3% on October 16, 1997 
       and 33 1/3% on each anniversary thereof. 

              AGGREGATED OPTION/SAR EXERCISED IN LAST FISCAL YEAR
                         AND FY END OPTION/SAR VALUES

   No options were exercised by the Named Officers during the fiscal year 
ended September 30, 1997. No SAR's are currently outstanding. The following 
table presents information concerning such exercise of options during such 
fiscal year as well as the value of unexercised options: 

<TABLE>
<CAPTION>
                                                       NUMBER OF SECURITIES 
                                                      UNDERLYING UNEXERCISED          VALUE OF UNEXERCISED 
                                                        OPTIONS AT FISCAL             IN-THE-MONEY OPTIONS 
                                                           YEAR END (#)              AT FISCAL YEAR END ($) 
                                                  ------------------------------ ------------------------------ 
                          SHARES 
                       ACQUIRED ON      VALUE 
         NAME          EXERCISE (#)  REALIZED ($)  EXERCISABLE    UNEXERCISABLE   EXERCISABLE    UNEXERCISABLE 
--------------------  ------------- ------------  ------------- ---------------  ------------- --------------- 
<S>                   <C>           <C>           <C>           <C>              <C>           <C>
Roger L. Burtraw ....                                 26,300         22,100           None           None 
Joseph J. Gagliardi .                                 14,925          9,975           None           None 
David L. Kuta........                                   None          5,000           None           None 
David C. 
 Stegemoller.........                                 15,425         11,475           None           None 
</TABLE>

TERMINATION, CONSULTING AND RELEASE AGREEMENT 

   Pursuant to a Termination, Consulting and Release Agreement, dated as of 
February 12, 1997, among the Company, Vincent J. Naimoli and his affiliated 
corporation, the parties agreed to terminate 

                               32           
<PAGE>
Mr. Naimoli's management services relationship with the Company, and cancel 
the prior Management and Option Agreement, as amended, under which Mr. 
Naimoli's services had been performed as the Company's then Chairman of the 
Board and Chief Executive Officer, except for certain provisions of the 
Management and Option Agreement relating to options, registration rights and 
certain indemnification. 

   The Termination, Consulting and Release Agreement provides for Mr. Naimoli 
to receive vested benefits which accrued prior to termination, and Mr. 
Naimoli agreed to act as a consultant to the Company for three years after 
termination at a rate of $41,666 per month for the first 12 months of the 
consulting period and $104,166.67 per month for the remaining 24 months of 
such period. 

   On June 19, 1997, the Company applied to the Court for an Order 
authorizing the rejection of the Termination, Consulting and Release 
Agreement, and on July 16, 1997, Mr. Naimoli filed an objection to the 
Company's motion. The matter is currently pending in the Court. 

   The following table shows estimated annual benefits payable under the 
Company's Retirement Plan (which benefits are not subject to offset) on a 
straight life annuity basis upon retirement to participants in specified 
years of service and remuneration classes: 

PENSION AND RETIREMENT BENEFITS 

                              PENSION PLAN TABLE 

<TABLE>
<CAPTION>
                                   YEARS OF SERVICE (3)
                   ------------------------------------------------------
REMUNERATION(1)(2)    15        20         25          30         40 
------------------ --------- ---------  ---------- ----------  ---------- 
<S>                <C>       <C>        <C>        <C>         <C>
    $150,000        $33,075    $44,100   $ 55,125    $ 66,150   $ 88,200 
     200,000         44,325     59,100     73,875      88,650    118,200 
     250,000         55,575     74,100     92,625     111,150    148,200 
     300,000         58,073     85,862    111,375     133,650    178,200 
     400,000         59,197     86,870    120,724     162,091    238,200 
     500,000         60,320     87,877    121,625     162,893    274,814 
     800,000         63,691     90,899    124,326     165,300    276,709 
</TABLE>

------------ 
(1)    Covered compensation is composed of base salary for the calendar year, 
       excluding bonuses, commissions and other special forms of compensation. 
       The maximum amount of compensation used to determine the benefits shown 
       in the Pension Table above has been limited by federal law. The limit 
       on compensation for 1997 is $150,000. 
(2)    Under applicable federal law, the annual benefit payable to any 
       participant under the Retirement Plan may not exceed a ceiling 
       currently $120,000 a year (subject to certain reductions based upon age 
       and certain increases based upon adjustments to the consumer price 
       index). 
(3)    The Named Officers will have the following estimated credited years of 
       service under the Retirement Plan based on continued service to normal 
       retirement age: Mr. Gagliardi: 24; Mr. Burtraw: 15; Mr. Kuta: 12; and 
       Mr. Stegemoller: 16. 

   The Company adopted, effective January 1, 1995, a Nonqualified Additional 
Credited Service Plan for the benefit of certain key management employees 
selected by the Chairman of the Board and affirmed by the Board of Directors 
which is intended to provide retirement benefits to such employees over and 
above the benefits provided under the Company's Retirement Plan. The Plan 
provides supplemental benefits to the participant based upon the difference, 
if any, between such participant's total monthly retirement income payable 
from the combination of the Company's Retirement Plan and the Excess Benefit 
Plan and his Adjusted Retirement Income representing the monthly retirement 
income that would be payable to the participant on a combined basis from the 
Retirement Plan and the Excess Benefit Plan. The Excess Benefit Plan provides 
for crediting the participant with Credited Service and Continuous Service in 
excess of actual service. Moreover, each participant is vested with ten years 
of Credited Service and ten years of Continuous Service in the event of a 
change of control, provided that he has been employed for more than five 
years. The benefits would be paid in the same form as the monthly retirement 
income from the Company's Retirement Plan, unless the Chairman designates 
otherwise. If the participant's employment terminates within two years 
following change of control, the benefits are to be paid in a lump sum cash 
payment within thirty days of such termination of employment at the 
"actuarial 

                               33           
<PAGE>
equivalent" of the benefits that the participant would have otherwise 
received. As of September 30, 1995 two officers of the Company had been 
selected for participation in the Plan and are credited with 1-1/2 years and 
two years, respectively, of credited service and continuous service for each 
year of actual service. The officers become vested with their benefits after 
five years of continuous service. 

   The Company adopted a Nonqualified ERISA Excess Benefit Plan, effective 
January 1, 1995, for the benefit of certain key management employees, which 
is intended to provide retirement benefits to such employees over and above 
the benefits provided those employees under the Company's Retirement Plan. 
All key management employees are eligible to participate in the Plan which 
provides for supplemental benefits equal to the difference, if any, between a 
participant's monthly retirement income payable from the Company's Retirement 
Plan and his adjusted retirement income calculated under the Agreement. Such 
calculation would be the monthly retirement income that would be payable to 
the participant under the Company's Retirement Plan without regard to certain 
benefit limitations set forth in the Internal Revenue Code. Supplemental 
benefits payable under this Plan are not to be reduced by benefits payable 
under the Company's Nonqualified Additional Credited Service Plan. Benefits 
under the Plan do not vest until five years of continuous service have been 
completed. 

SEVERANCE AGREEMENTS AND RETENTION BONUSES 

   The Company has applied to the Court to obtain authority to implement a 
severance plan for full-time salaried employees in order to ensure the 
retention of qualified key employees and executives. 

   The severance plan, which will cover approximately 1,200 employees, 
provides for severance benefits to employees based upon length of service and 
continues the pre-petition practice of paying severance equal to one week's 
pay per year or partial year of service, with a maximum of 26 weeks' pay. 
Corporate officers not covered by an employment agreement are to receive a 
severance benefit equal to three months' pay or equal to one week's pay per 
year of service, whichever is greater. In addition, corporate officers may 
apply for and receive up to three additional months of severance on a monthly 
basis, with the approval of certain senior officers, unless such officers 
have secured other employment. The total severance benefit to any officer is 
limited to 26 weeks' pay. 

   The anticipated annual cost of the severance plan, assuming Court approval 
is obtained, but of which there is no assurance, would be less than $1 
million at the present time. 

   The Company is also seeking Court approval of Modified Executive Severance 
Agreements with each of Roger W. Burtraw, President of the Company, Joseph J. 
Gagliardi, Senior Vice President of Finance and Chief Financial Officer of 
the Company, as well as one other Senior Vice President, to replace existing 
Pre-petition Executive Severance Agreements, as an inducement for them to 
remain with the Company through the bankruptcy proceedings. The Pre-petition 
Executive Severance Agreements, which provided for two years of salary and 
annual target bonuses to be paid out in a lump sum, two years of continued 
welfare benefits, a lump sum payment of the actuarial value of two years of 
additional pension accrual and outplacement benefits, are to be modified to 
continue the terms of the previous severance agreements, except to increase 
the severance for Mr. Gagliardi from two years to three years and to no 
longer require that there be a change in control as a precondition to 
receiving severance payments. To receive payment, however, the executives 
would have to continue employment until consummation of the Company's plan of 
reorganization and up to 60 days beyond, if so requested by the Company's 
Board of Directors. The estimated costs to the Company to carry out the 
Modified Executive Severance Agreements (inclusive of pension and other 
benefits), assuming all executives are terminated 60 days after consummation 
of the plan of reorganization and assuming no bonus arrangements are in 
effect for the executive officers during the fiscal year in which the 
termination occurs, are $2.925 million, of which $1.446 million is 
attributable to Mr. Burtraw and $1.069 million is attributable to Mr. 
Gagliardi. 

   The Company has also applied to the Bankruptcy Court for authorization and 
approval of a Retention Incentive Plan geared towards retaining certain key 
executives and employees. The Retention Incentive Plan would cover 
approximately 75 employees. Management has recommended to the Company's Board 
of Directors that bonus compensation be paid to retention employess covered 
by the Plan out of a fund of approximately $2.2 million, and up to $250,000 
is proposed to be awarded as 

                               34           
<PAGE>
incentives to retention employees, who will include members of the corporate 
staff at the Company's Tampa, Florida office, various plant managers and 
divisional staff members at the Company's manufacturing facilities. The 
retention employees include three Senior Vice Presidents, of whom Messrs. 
David L. Kuta and David C. Stegemoller will each receive a bonus of $185,000. 
The Plan contemplates that the retention bonuses be paid the earlier of (i) 
as soon as practicable after termination of the employee without cause, and 
(ii) within 10 days following consummation of the Company's plan of 
reorganization. There is no assurance that Court approval of the Retention 
Incentive Plan will be approved. 

DIRECTORS' REMUNERATION 

   Directors who are not employees of the Company receive compensation at the 
rate of $25,000 per annum, payable $6,250 quarterly, plus $1,000 for 
attendance at each meeting of the Company's Board of Directors, $500 for 
telephonic meetings, and $1,000 for each meeting of the Audit Committee and 
Compensation Committee of which they are members. 

   In January 1994, Messrs. Bartlett and Hoffman, Directors of the Company 
since 1992, were each granted options under the Company's Non-Employee 
Director Stock Option Plan for 4,000 shares of Common Stock at an exercise 
price of $8 per share. In June 1994, Messrs. Bartlett and Hoffman were each 
granted options thereunder for 6,000 shares of Common Stock at an exercise 
price of $13 per share. Thereafter, such individuals were each to be granted 
options to purchase 2,000 shares of Common Stock on January 19, 1996 and on 
each anniversary thereof. On January 19, 1996 and January 19, 1997, Messrs. 
Bartlett and Hoffman were each granted options thereunder for 2,000 shares of 
Common Stock at exercise prices of $26.625 and $3.375 per share, 
respectively. 

   Under the Company's Non-Employee Director Stock Option Plan, Directors who 
become such after June 7, 1994 were entitled to receive options to purchase 
4,000 shares of Common Stock immediately following their election and 2,000 
shares on the second and each subsequent anniversary of such date prior to 
termination of the Plan. 

   Messrs. Hoar and Adams were each granted options to purchase 4,000 shares 
of Common Stock at the time of their election as Directors in September 1994 
and October 1994, respectively, at exercise prices of $16 and $16.875 per 
share, respectively, and in September and October 1996, respectively, they 
each were granted options to purchase 2,000 shares of Common Stock at 
exercise price of $11.25 and $9.375, respectively. Mr. Bruce D. Broussard, 
who was elected a Director of the Company in April 1997, was granted options 
to purchase 4,000 shares of Common Stock at an exercise price of $0.8125 per 
share. 

   The Board of Directors terminated the Non-Employee Director Stock Option 
Plan in November 1997. 

                               35           
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 

   The following table lists all shares of the Company Common Stock as of 
December 15, 1997 (unless otherwise noted below), beneficially owned by each 
director of the Company, Named Officers of the Company, and each person known 
by the Company to own beneficially more than 5% of such outstanding shares of 
Common Stock at such date. The table also reflects the percentage of the 
shares of Common Stock owned beneficially by all executive officers and 
directors of the Company as a group. As of December 15, 1997, there were 
7,026,437 shares of the Company's Common Stock outstanding. 

<TABLE>
<CAPTION>
                                                                 NO. OF SHARES OF 
NAME AND ADDRESS OF BENEFICIAL OWNER                               COMMON STOCK     % OF CLASS 
---------------------------------------------------------------  ---------------- ------------ 
<S>                                                              <C>              <C>
Pengo Securities Corp. (1)                                            617,900          8.79% 
885 Third Avenue, 34th Floor 
New York, New York 10022 
John W. Adams                                                         650,287(1)       9.25% 
885 Third Avenue, 34th Floor 
New York, New York 10022 
Vincent J. Naimoli                                                    788,946(2)      11.23% 
2502 North Rocky Point Drive 
Suite 960 
Tampa, Florida 33607 
Michael Hoffman                                                        14,000(3)           * 
Craig Scott Bartlett, Jr.                                              14,000(3)           * 
Joseph P. Hoar                                                          6,000(3)           * 
Bruce D. Broussard                                                     15,743(4)           * 
Roger L. Burtraw                                                       42,067(5)           * 
Joseph J. Gagliardi                                                    21,567(6)           * 
David L. Kuta                                                           1,667(6)           * 
David C. Stegemoller                                                   24,067(7)           * 
All executive officers and directors as a group
  (16 persons)(8)                                                     840,883         13.53% 
</TABLE>
------------ 
*      Less than one percent 
(1)    Mr. John W. Adams, Chairman of the Board and Chief Executive Officer of 
       the Company, is President of Pengo Securities Corp. See "Item 10. 
       Directors and Executive Officers of the Registrant." The foregoing 
       information is based upon a Schedule 13D filed under date of January 
       10, 1995, as amended. Includes options covering 6,000 shares of Common 
       Stock which are exercisable as of December 15, 1997. The shares of 
       Common Stock subject to such options are deemed outstanding for 
       purposes of calculating the percent of class owned by Mr. Adams and by 
       all officers and directors as a group. 
(2)    These amounts reflect 5,700 shares owned of record by Mr. Naimoli's 
       immediate family, 14,150 shares owned of record and beneficially by Mr. 
       Naimoli either in his individual capacity or in his retirement account 
       and 400,000 shares owned of record and beneficially by an affiliated 
       corporation. In addition 369,096 shares of Common Stock are 
       attributable to Mr. Naimoli, of which options for 96,278 shares are 
       exercisable at an exercise price of $6.00 per share, options for 
       172,818 shares are exercisable at $13.75 per share, and options for 
       100,000 shares are exercisable at $14.00 per share. Mr. Naimoli's 
       affiliated corporation was granted stock options on August 4, 1994 to 
       purchase 300,000 shares of Common Stock at an exercise price of $14.00 
       per share, of which options for 100,000 shares became exercisable on 
       August 16, 1995 and the remaining options become exercisable on August 
       16, 2001 only if such affiliated corporation is then providing services 
       to the Company. Neither Mr. Naimoli nor the affiliated corporation is 
       deemed the beneficial owner in respect of the options for such latter 
       200,000 shares since such options are not exercisable within 60 days. 
       No options became exercisable during 1997. 
(3)    Represent options which are exercisable at December 15, 1997 covering 
       the shares indicated. 
(4)    Mr. Broussard beneficially owns 11,743 shares of Common Stock, and has 
       options which are exercisable at December 15, 1997 covering 4,000 
       shares of Common Stock. 
(5)    Mr. Burtraw owns beneficially 3,000 shares of Common Stock and has 
       options which are exercisable at December 15, 1997 covering 39,067 
       shares of Common Stock. 
(6)    Represents options which are exercisable at December 15, 1997 covering 
       the shares indicated. 
(7)    Mr. Stegemoller owns beneficially 1,500 shares of Common Stock, and has 
       options which are exercisable at December 15, 1997 covering 22,567 
       shares of Common Stock. 
(8)    The number of shares of Common Stock beneficially owned by all 
       executive officers and directors as a group includes options in respect 
       of shares which are exercisable as of December 15, 1997 or within 60 
       days thereafter. 

   As of December 15, 1997, the Retirement Plan owned 30,000 shares of the 
Common Stock and 23,070 shares of the Company's PIK Preferred Stock. The 
Committee administering the Retirement Plan, which consists of officers and 
employees if the Company, has the power to vote and dispose of such 
securities. 

                               36           
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 

   See "Item 11. Executive Compensation -- Termination, Consulting and 
Release Agreement" for information concerning settlement arrangements with 
Mr. Vincent J. Naimoli, formerly Chief Executive Officer of the Company, and 
various payment issues, including pension and retirement matters thereunder, 
presently pending before the Bankruptcy Court. 

   Mr. Naimoli is a stockholder of Nice and Easy Travel & Co., Inc. ("Nice 
and Easy"), a travel agency, which has acted as exclusive travel agent to 
arrange travel services for the Company and its employees and representatives 
since December 1994. During the year ended September 30, 1997, Nice and Easy 
billed the Company approximately $2.1 million for travel services and rebated 
$28,000 (3% of the annual billings) to the Company. Additionally, Nice and 
Easy has not paid approximately $30,000 in rebates to the Company for 1997. 
Under the Termination, Consulting and Release Agreement, Nice and Easy is 
entitled to occupy a portion of the premises on a rent free basis. 

   In October 1995 the Board of Directors of the Company approved the lease 
of a private suite at the Tropicana Field in St. Petersburg, Florida for the 
Tampa Bay Devil Rays baseball. It is contemplated that the Company will lease 
the suite for the period of five years at an annual rental of $60,000, plus 
increases provided by the Consumer Price Index without premium. In addition, 
a license fee of $25,000 was paid upon execution of the License Agreement, 
representing a security deposit which is to be returned at the end of the 
lease term. An additional $25,000 payment was made in June 1996. In 
connection with the transaction, the Board determined that the transaction 
was fair and on terms comparable to those which would be obtained from a 
third party in an arm's-length transaction. Mr. Naimoli is the Managing 
General Partner of Tampa Bay Devil Rays, Ltd., a Florida limited partnership, 
which owns the Tampa Bay Devil Rays baseball team. 

ADVISORY FEES 

   The Company paid $129,000 to The Blackstone Group L.P. as fees for 
financial advice during the year ended September 30, 1997. The services 
related to structuring strategic alternatives to enhance shareholder value 
and to pay designated success fees in the event any such alternatives are 
effected and consummated successfully. Michael Hoffman, a director of the 
Company, is a general partner of The Blackstone Group L.P. See "Item 11. 
Executive Compensation -- Directors' Remuneration." 

                               37           
<PAGE>
             CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS 

We hereby consent to the incorporation by reference in the Registration 
Statements on Form S-8 (Nos. 33-90166 and 33-98748) of Harvard Industries, 
Inc. of our report dated November 14, 1997, except for Note 9 as to which the 
date is December 29, 1997, appearing on page F-2 of this Form 10-K. 

Price Waterhouse LLP 
Tampa, Florida 
December 29, 1997 

                               38           
<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. 

                                          HARVARD INDUSTRIES, INC. 

Date: December 29, 1997 
                                          By: /s/John W. Adams 
                                              ------------------------------- 
                                              John W. Adams 
                                              Chairman of the Board, 
                                              Chief Executive Officer and 
                                              Director 

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

<TABLE>
<CAPTION>
<S>                      <C>
 Date: December 29, 1997    By:/s/ Joseph J. Gagliardi 
                            -------------------------------- 
                            Joseph J. Gagliardi 
                            Sr. Vice President Finance and 
                            Chief Financial Officer 
                            (Principal Financial Officer) 

Date: December 29, 1997     By:/s/ William J. Warren 
                            -------------------------------- 
                            William J. Warren 
                            Vice President and 
                            Chief Accounting Officer 
                            (Principal Accounting Officer) 

Date: December 29, 1997     By:/s/ C. Scott Bartlett, Jr. 
                            -------------------------------- 
                            C. Scott Bartlett, Jr. 
                            Director 

Date: December 29, 1997     By:/s/ Michael Hoffman 
                            -------------------------------- 
                            Michael Hoffman 
                            Director 

Date: December 29, 1997     By:/s/ Joseph P. Hoar 
                            -------------------------------- 
                            Joseph P. Hoar 
                            Director 

Date: December 29, 1997     By:/s/ Bruce D. Broussard 
                            -------------------------------- 
                            Bruce D. Broussard 
                            Director 
</TABLE>

                               39           






<PAGE>

                                    PART IV


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

    (a)  (1)(2)  Financial Statements and Schedules.

       The following financial statements and schedules are filed as part of
this Annual Report on Form 10-K.


                           HARVARD INDUSTRIES, INC.

                INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND
                         FINANCIAL STATEMENT SCHEDULES

<TABLE>
<CAPTION>
CONSOLIDATED FINANCIAL STATEMENTS                                       PAGE
---------------------------------                                       ----
<S>                                                                     <C>
Report of Independent Accountants .....................................  F-2
Consolidated Balance Sheets............................................  F-3
     September 30, 1997 and 1996
Consolidated Statements of Operations..................................  F-4
     Years Ended September 30, 1997, 1996 and 1995
Consolidated Statements of Shareholders' Deficiency....................  F-5
     Years Ended September 30, 1997, 1996 and 1995
Consolidated Statements of Cash Flows..................................  F-6
     Years Ended September 30, 1997, 1996 and 1995
Notes to Consolidated Financial Statements.............................  F-7
</TABLE>

FINANCIAL STATEMENT SCHEDULES
-----------------------------
All schedules are omitted because they are either not applicable or the
required information is included in the Consolidated Financial Statements or
Notes thereto.


                                      F-1



<PAGE>



              Report of Independent Certified Public Accountants


The Board of Directors and Shareholders
Harvard Industries, Inc.:


In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, of cash flows and of changes in
shareholders' deficiency present fairly, in all material respects, the
financial position of Harvard Industries, Inc. and its subsidiaries (the
"Company ") at September 30, 1997 and 1996, and the results of their
operations and their cash flows for each of the three years ended September 30,
1997, 1996 and 1995, in conformity with generally accepted accounting 
principles. These financial statements are the responsibility of the Company's 
management; our responsibility is to express an opinion on these financial 
statements based on our audits. We conducted our audits of these statements in
accordance with generally accepted auditing standards which 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, assessing the accounting principles used and 
significant estimates made by management, and evaluating the overall financial 
statements presentation. We believe that our audits provide a reasonable basis 
for the opinion expressed above.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1
to the financial statements, on May 8, 1997, Harvard Industries, Inc. and
substantially all of its subsidiaries each filed a voluntary petition for
reorganization under Chapter 11 of the United States Bankruptcy Code, thereby
raising substantial doubt about their ability to continue as a going concern.
The Company has not filed a plan of reorganization with the Bankruptcy Court.
The accompanying consolidated financial statements do not include any
adjustments that might result from the outcome of the petitions for
reorganization.










Price Waterhouse LLP
Tampa, Florida
November 14, 1997, except for Note 9
as to which the date is December 29, 1997


                                      F-2



<PAGE>

                           HARVARD INDUSTRIES, INC.
                            (DEBTOR-IN-POSSESSION)
                          CONSOLIDATED BALANCE SHEETS
                          SEPTEMBER 30, 1997 AND 1996
                           (IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>

                                                                   September 30,     September 30,
ASSETS                                                                 1997              1996
                                                                   -------------     -------------  
<S>                                                                <C>               <C>  
  Current assets:
    Cash and cash equivalents                                       $   9,212          $   1,107
    Accounts receivable, net of allowance of $ 2,589 in 1997
      and $744 in 1996 ........................................        76,190             99,581 
    Inventories ...............................................        54,218             53,901    
    Prepaid expenses and other current assets .................         7,602              1,637     
                                                                    ---------          ---------
      Total current assets ....................................       147,222            156,226      

  Property, plant and equipment, net ..........................       132,266            300,673 
  Intangible assets, net ......................................         4,417            127,250   
  Other assets, net ...........................................        23,589             33,556 
                                                                    ---------          ---------

                                                                    $ 307,494          $ 617,705  
                                                                    =========          =========

LIABILITIES AND SHAREHOLDERS' DEFICIENCY

  Current liabilities:
    Current portion of debtor-in-possession (DIP) loans .......     $  36,436          $      --
    Current portion of long term debt .........................         1,748              1,487     
    Accounts payable ..........................................        32,267             89,073 
    Accrued expenses ..........................................        72,235             66,949 
    Income taxes payable ......................................         2,440              5,875 
                                                                    ---------          ---------
      Total current liabilities ...............................       145,126            163,384 

  Liabilities subject to compromise ...........................       397,319                 --
  DIP loans ...................................................        51,035                 --
  Long-term debt ..............................................        12,339            359,116 
  Postretirement benefits other than pensions .................        96,929            100,464 
  Other .......................................................        27,237             25,970 
                                                                    ---------          ---------
      Total liabilities .......................................       729,985            648,934 
                                                                    ---------          ---------

  14 1/4% Pay-In-Kind Exchangeable Preferred Stock,
     (At September 30, 1997 - includes
     $10,142 of undeclared accrued dividends) .................       124,637            114,495
                                                                    ---------          ---------

  Shareholders' deficiency:
    Common Stock, $.01 par value; 15,000,000 shares authorized;
      shares issued and outstanding: 7,026,437 at September 30,
      1997 and 7,014,357 at September 30, 1996 ................            70                 70
    Additional paid-in capital ................................        32,134             42,245 
    Additional minimum pension liability .....................         (3,665)            (1,767) 
    Foreign currency translation adjustment ...................        (1,930)            (1,964) 
    Accumulated deficit .......................................      (573,737)          (184,308) 
                                                                    ---------          ---------
      Total shareholders' (deficiency).........................      (547,128)          (145,724) 

  Commitments and contingent liabilities ......................
                                                                    ---------          ---------
                                                                    $ 307,494          $ 617,705
                                                                    =========          =========    
</TABLE>
         See accompanying Notes to Consolidated Financial Statements.


                                      F-3
<PAGE>


                           HARVARD INDUSTRIES, INC.
                            (DEBTOR-IN-POSSESSION)
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                 YEARS ENDED SEPTEMBER 30, 1997, 1996 AND 1995
          (IN THOUSANDS OF DOLLARS, EXCEPT SHARE AND PER SHARE DATA)


<TABLE>
<CAPTION>

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

<S>                                                                 <C>           <C>          <C>               
   Sales........................................................... $  810,769    $  824,837   $  631,832        
                                                                    ----------    ----------   ---------- 

   Costs and expenses:
     Cost of sales.................................................    797,774       776,141      557,340 
     Selling, general and administrative...........................     45,822        42,858       33,037
     Interest expense (contractual interest of $50,264 in 1997)....     36,659        47,004       19,579                  
     Amortization of goodwill......................................      8,448        15,312        2,986
     Impairment of long-lived assets and restructuring costs.......    288,545            --           --
     Other (income) expense, net...................................      5,530         1,538       (1,789)
                                                                    ----------    ----------   ---------- 
                              Total costs and expenses.............  1,182,778       882,853      611,153
                                                                    ----------    ----------   ---------- 

   Income (loss) from continuing operations before reorganization
     items, income taxes and extraordinary item....................   (372,009)      (58,016)      20,679
   Reorganization items............................................     16,216            --           --
                                                                     ---------    ----------   ---------- 

   Income (loss) from continuing operations before income
     taxes and extraordinary item..................................   (388,225)      (58,016)      20,679
   Provision for income taxes......................................      1,204         3,196       11,566
                                                                     ---------    ----------   ---------- 

   Income (loss) from continuing operations before
     extraordinary item............................................   (389,429)      (61,212)       9,113
   Loss from discontinued operations...............................         --        (7,500)          --                        
                                                                     ---------    ----------   ---------- 

   Income (loss) before extraordinary item.........................   (389,429)      (68,712)       9,113

   Extraordinary item- early extinguishment of debt (net of
     income tax benefit of $1,200).................................         --            --       (2,192)
                                                                     ---------    ----------   ---------- 

   Net income (loss)...............................................  $(389,429)   $  (68,712)  $    6,921
                                                                     =========    ==========   ========== 

   PIK preferred dividends and accretion (contractual amount of
     $16,891 in 1997)..............................................  $  10,142    $   14,844   $   14,809
                                                                     =========    ==========   ========== 

   Net loss attributable to common shareholders....................  $(399,571)   $  (83,556)  $   (7,888)
                                                                     =========    ==========   ========== 

   Primary per common and common equivalent share:
     Loss from continuing operations before extraordinary item.....  $  (56.91)   $   (10.87)  $    (0.83)
     Loss from discontinued operations.............................         --         (1.07)          --
     Extraordinary item............................................         --            --        (0.32)                  
                                                                     ---------    ----------   ----------
     Loss per common and common equivalent share...................  $  (56.91)   $   (11.94)  $    (1.14)
                                                                     =========    ==========   ========== 

     Weighted average number of common and common equivalent
       shares outstanding..........................................  7,020,692     6,999,279    6,894,093
                                                                     =========    ==========   ========== 
</TABLE>



         See accompanying Notes to Consolidated Financial Statements.

                                      F-4

<PAGE>


                           HARVARD INDUSTRIES, INC.
              CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIENCY
                 YEARS ENDED SEPTEMBER 30, 1997, 1996 AND 1995
                   (IN THOUSANDS OF DOLLARS, EXCEPT SHARES)


                                               
<TABLE>
<CAPTION>
                                                                                                              TOTAL 
                                          COMMON STOCK       ADDITIONAL              MINIMUM     ACCUMU-      SHARE-  
                                    ------------------------  PAID-IN    FOREIGN     PENSION      LATED      HOLDERS'
                                    NO. OF SHARES   AMOUNTS    CAPITAL   CURRENCY   LIABILITY    DEFICIT    DEFICIENCY
                                    ------------- ---------- ----------  --------   ---------   ---------   ----------
  <S>                                <C>           <C>      <C>         <C>       <C>         <C>          <C>            
   Balance, September 30, 1994......  6,593,407     $  66    $  67,772   $ (1,720) $   (2,633) $ (122,517)  $  (59,032)
   Net income -- 1995...............         --        --           --         --          --       6,921        6,921
   PIK preferred stock dividend.....         --        --      (14,026)        --          --          --      (14,026)
   Accretion of discount on PIK
     preferred stock................         --        --         (783)        --          --          --         (783)
   Exercise of stock options including
     related tax benefits...........    401,500         4        3,936         --          --          --        3,940
   Minimum pension liability........         --        --           --         --         797          --          797
   Foreign currency adjustment......         --        --           --        (23)         --          --          (23)
                                      ---------     -----    ---------   --------   ---------  ----------   ----------

   Balance, September 30, 1995......  6,994,907        70       56,899     (1,743)     (1,836)   (115,596)     (62,206)

   Net loss -- 1996.................         --        --           --         --          --     (68,712)     (68,712)
   PIK preferred stock dividend.....         --        --      (14,375)        --          --          --      (14,375)
   Accretion of discount on PIK
     preferred stock................         --        --         (469)        --          --          --         (469)
   Exercise of stock options including
     related tax benefits...........     19,450        --          190         --          --          --          190
   Minimum pension liability........         --        --           --         --          69          --           69
   Foreign currency adjustment......         --        --           --       (221)         --          --         (221)
                                      ---------     -----    ---------   --------   ---------  ----------   ----------

   Balance, September 30, 1996......  7,014,357        70       42,245     (1,964)     (1,767)   (184,308)    (145,724)

   Net loss -- 1997.................         --        --           --         --          --    (389,429)    (389,429)
   PIK preferred stock dividend.....         --        --       (9,854)        --          --          --       (9,854)
   Accretion of discount on PIK
     preferred stock................         --        --         (288)        --          --          --         (288)
   Sale of stock....................     12,080        --           31         --          --          --           31
   Minimum pension liability........         --        --           --         --      (1,898)         --       (1,898)
   Foreign currency adjustment......         --        --           --         34          --          --           34
                                      ---------     -----    ---------   --------   ---------  ----------   ----------

   Balance, September 30, 1997......  7,026,437     $  70    $  32,134   $ (1,930)  $ (3,665)  $ (573,737)  $ (547,128)
                                      =========     =====    =========   ========   =========  ==========   ========== 
</TABLE>







         See accompanying Notes to Consolidated Financial Statements.

                                     F-5

<PAGE>


                           HARVARD INDUSTRIES, INC.
                            (DEBTOR-IN-POSSESSION)
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                 YEARS ENDED SEPTEMBER 30, 1997, 1996 AND 1995
                           (IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
                                                                             1997        1996        1995
                                                                         ----------- ----------- -----------
<S>                                                                     <C>         <C>         <C> 
   Cash flows related to operating activities:
     Loss from continuing operations before reorganization items........ $(373,213)  $ (61,212)  $   9,113 
     Add back (deduct) items not affecting cash and cash equivalents:
       Income tax allocation related to reorganization value, exercise
         of stock options and discontinued operations...................        --          --       6,251 
       Depreciation and amortization....................................    60,186      65,658      34,856 
       Impairment of long-lived assets and restructuring charges........   288,545          --          -- 
       Loss on disposition of property, plant and equipment
         and property held for sale.....................................     1,931       2,053         461 
       Postretirement benefits..........................................    (4,138)      5,822       4,373 
       Write-off of deferred debt expense...............................     1,792          --          -- 
       Senior notes interest accrued not paid...........................     9,728          --          -- 
     Changes in operating assets and liabilities of continuing operations, 
      net of effects from acquisitions and reorganization items:
       Accounts receivable..............................................    22,798       3,133      (9,865)
       Inventories......................................................    (7,225)      7,112         880 
       Other current assets.............................................    (5,965)       (222)      1,712 
       Accounts payable.................................................   (56,806)      9,371       1,696 
       Accounts payable prepetition.....................................    81,429          --          -- 
       Accrued expenses and income taxes payable........................   (10,254)    (30,444)    (21,954)
       Other noncurrent liabilities.....................................     6,933         819      (2,472)
                                                                         ---------   ---------   --------- 

     Net cash provided by continuing operations before reorganization 
       items............................................................    15,741       2,090      25,051 

     Net cash used in reorganization items..............................    (2,864)         --          -- 
                                                                         ---------   ---------   --------- 

     Net cash provided by continuing operations.........................    12,877       2,090      25,051 
                                                                         ---------   ---------   --------- 

   Cash flows related to investing activities:
     Acquisition of property, plant and equipment.......................   (36,572)    (40,578)    (22,080)
     Cash flows related to discontinued operations......................       713      (3,332)      5,029 
     Proceeds from disposition of property, plant and equipment.........     1,703         909       1,259 
     Acquisition of Doehler-Jarvis, including debt refinancing, net of 
      cash acquired.....................................................        --          --    (210,231)
     Net change in other noncurrent accounts............................    (1,832)     (5,223)       (746)
                                                                         ---------   ---------   --------- 

     Net cash used in investing activities..............................   (35,988)    (48,224)   (226,769)
                                                                         ---------   ---------   --------- 

   Cash flows related to financing activities:
     Proceeds from Senior Notes Offering ...............................        --          --     200,000 
     Issuance costs of Senior Notes and financing agreements............    (2,200)         --     (11,804)
     Net borrowings and (repayments) under credit agreement.............   (38,834)     38,834          -- 
     Net borrowings under DIP financing agreement.......................    87,471          --          -- 
     Redemption of PIK preferred stock..................................        --          --     (15,000)
     Proceeds from sale of stock and exercise of stock options..........        31         190       2,419 
     Repayments of long-term debt.......................................    (7,682)     (3,032)     (5,820)
     Pension fund payments pursuant to PBGC settlement agreement........    (6,000)     (6,000)     (6,000)
     Payment of EPA settlements.........................................    (1,570)     (2,676)     (2,512)
                                                                         ---------   ---------   --------- 

     Net cash provided by financing activities..........................    31,216      27,316     161,283 
                                                                         ---------   ---------   --------- 

     Net increase (decrease) in cash and cash equivalents...............     8,105     (18,818)    (40,435)

     Beginning of period................................................     1,107      19,925      60,360 
                                                                         ---------   ---------   --------- 

     End of period...................................................... $   9,212   $   1,107   $  19,925 
                                                                         =========   =========   =========

   Supplemental disclosure of cash flow information:
      Interest paid..................................................... $  37,328   $  41,868   $  16,042 
                                                                         =========   =========   =========
      Income taxes paid................................................. $   2,244   $   5,092   $   4,782 
                                                                         =========   =========   ========= 
</TABLE>

         See accompanying Notes to Consolidated Financial Statements.

                                      F-6


<PAGE>

                           HARVARD INDUSTRIES, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
          (IN THOUSANDS OF DOLLARS, EXCEPT SHARE AND PER SHARE DATA)


(1)    BASIS OF PRESENTATION

       Harvard Industries, Inc., a Florida corporation and its subsidiaries
(the "Company") are primarily engaged in the business of designing,
engineering and manufacturing components for OEMs producing cars and light
trucks. The Company's principal customers are General Motors, Ford Motor
Company and Chrysler Corporation. The Company acquired the outstanding stock
of Doehler-Jarvis, Inc. ("Doehler-Jarvis") effective July 28, 1995.

       The Company operates in the automotive accessories business.
The Company produces a wide range of products, including: rubber glass-run
channels; rubber seals for doors and trunk lids; aluminum castings; outside
rearview mirrors; cast, fabricated, machined and decorated metal products; and
metal stamped and roll form products. General Motors, Ford and Chrysler
accounted for 43%, 33%, and 7%, respectively, of the consolidated sales in 
1997, and 43%, 31%, and 8%, respectively, in 1996 and 35%, 27% and 11%,
respectively, in 1995.

       On May 8, 1997, Harvard Industries, Inc. and its domestic subsidiaries 
(all of whom are hereinafter sometimes designated the "Debtors") filed 
voluntary petitions for relief under Chapter 11 of the Federal bankruptcy laws 
in the United States Bankruptcy Court for the District of Delaware (the 
"Court"). Under Chapter 11, holders of most claims arising prior to the filing 
of the petitions for relief under the Federal bankruptcy laws are stayed from 
collecting on such claims while the Debtors continue business operations as 
debtors-in-possession ("DIP"). Additional claims may arise subsequent to the 
filing date resulting from rejection of executory contracts, including leases. 
Holders of pre-petition claims secured by liens against the Debtors' assets 
("secured claims") also are stayed from enforcing their rights as secured 
creditors without leave of the Court.

       The Debtors have received approval from the Court to pay or otherwise
honor certain pre-petition obligations including certain employee wages, 
salaries and other compensation, employee benefits, reimbursable employee 
expenses and certain workers' compensation claims, as well as to continue 
pre-petition customer practices with respect to warranties, refunds and return
policies. The Court has established February 9, 1998 as a bar date by which
time all proofs of claim must be filed against the Debtors or be forever
barred from assertion. 

       The Debtors have not yet filed with the Court any plans of
reorganization. Under the Bankruptcy Code, a Debtor is given an exclusive
period of 120 days to file a plan of reorganization and 180 days to solicit
acceptances to such plan. These periods afforded to the Debtors under the
Bankruptcy Code initially expired on September 5, 1997 and November 4, 1997
respectively, and have been extended by the Court from time to time. The Court 
has given the Debtors until June 2, 1998 to formulate and file their plans of 
reorganization, and until August 1, 1998 to solicit plan acceptances thereto. 
In the event such plans are formulated and approved by the creditors and the 
Court, continuation of the Debtors' business after reorganization is dependent 
upon the success of future operations and the ability to meet obligations as 
they become due. The accompanying consolidated financial statements have been 
prepared on a going concern basis, which contemplates continuity of



                                      F-7



<PAGE>



operations and the realization of assets and liquidation of liabilities in the
ordinary course of business. However, as a result of the Chapter 11
proceedings and circumstances related to this event, including the Company's
highly leveraged financial structure and recurring losses from operations as
reflected in the consolidated statements of operations, such realization of
assets and liquidation of liabilities is subject to substantial doubt.
Management is unable to predict how and when the Chapter 11 proceedings will
be concluded or the expense associated therewith, which could be substantial.
There can be no assurances that the liabilities of the Company will not be
found in the Chapter 11 proceedings to exceed the fair value of its assets.
This could result in claims being provided for in the Chapter 11 proceedings
at less than 100% of their face value. It is impossible at this time to predict
with certainty the actual recovery the creditors and shareholders will
realize.

       Liabilities subject to Chapter 11 proceedings consist of the following
at the filing date:

Accounts Payable                                      $    79,060
Senior notes                                              309,728 (a)
Taxes                                                       3,269
Other                                                       5,262
                                                      -----------

                                                      $   397,319
                                                      ===========


             (a) Includes accrued interest to the date of bankruptcy of $9,728.

       Reorganization expenses included in the consolidated statement of
operations and retained earnings for the year ended September 30, 1997 are
comprised of the following:

Adjustment to record senior notes to
    amount of allowed claims                        $      10,408
Professional fees                                           5,828
Interest income on cash resulting from
   Chapter 11 proceedings                                     (20)
                                                   --------------

                                                    $      16,216
                                                   ==============

       The Company previously had a Plan of Reorganization confirmed by the
Court on August 10, 1992, and such Plan became effective on August 30, 1992.
In connection with its emergence from its earlier Chapter 11 bankruptcy
proceedings, the Company implemented "Fresh Start Reporting" as of August 23,
1992. Accordingly, all assets and liabilities were restated to reflect
respective fair values at that date. The portion of the reorganization value
which could not be attributed to specific tangible or identifiable intangible
assets of the reorganized Company has been reported under the caption
"Intangible Assets."


                                      F-8



<PAGE>



(2)    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 

       General. Preparation of financial statements in accordance with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the consolidated financial
statements. Actual results could differ from those estimates.

       Principles of Consolidation. The consolidated financial statements
include the accounts of the Company and its wholly-owned subsidiaries.
Investments of 50% or less in companies and/or joint ventures are accounted
for under the equity method. All material intercompany transactions and
balances have been eliminated in consolidation.

       Cash and Cash Equivalents. The Company considers all investments in
highly liquid bank certificates of deposit to be cash equivalents. Cash
equivalents include only investments with purchased maturities of three months
or less. In accordance with the DIP financing agreement, substantially all the
Company's cash receipts from trade receivables must be applied against the
revolving line of credit. Accordingly, the Company offset approximately
$12,160 against the revolving line of credit for cash held in lockboxes at
September 30, 1997.

       Trade Receivables. A substantial portion of the Company's trade
receivables are mainly concentrated with the three largest U.S. automotive
companies. The Company does not require collateral or other security to
support credit sales. General Motors, Ford and Chrysler accounted for 42%, 12%
and 11%, respectively, of consolidated trade receivables at September 30, 1997.

       Inventories. Inventories are stated at the lower of cost or market.
Cost is determined using the first-in, first-out (FIFO) method.

       Property, Plant and Equipment. All property, plant and equipment owned
at August 23, 1992 was restated to reflect fair value in accordance with "fresh
start reporting." Additions after August 23, 1992 are recorded at cost.
Depreciation and amortization, which includes the amortization of machinery
and equipment under capital leases, is calculated using the straight-line
method at rates to depreciate assets over their estimated useful life or
remaining term of leases. The rates used are as follows: buildings and
building improvements, 2.5% to 20.0%; and machinery, equipment and furniture
and fixtures, 5.0% to 33.3%. Replacements and betterments are capitalized.
Major scheduled furnace maintenance and die replacement programs are accrued
based on units of production; all other maintenance and repairs are expensed
as incurred. Upon sale or retirement of property, plant and equipment, the
related cost and accumulated depreciation are removed from the accounts and
any resultant gain or loss is recognized. See Note 13 for impairment of
certain property, plant and equipment.

       Intangible Assets. Intangible assets consist of goodwill and
reorganization value in excess of amounts allocable to identifiable assets.
Goodwill applicable to the acquisition of Doehler-Jarvis, originally being
amortized

                                      F-9



<PAGE>



over 15 years was changed to 10 years in the fourth quarter of 1996, effective
October 1, 1995, based upon Doehler-Jarvis' unprofitable operating results
since acquisition and projected future operating results. Reorganization value
in excess of amounts allocated to identifiable assets is being amortized using
the straight-line method over 10 years for the automotive accessories segment.
See Note 13 for impairment of goodwill.

       Long-Lived Assets. The Company assesses the recoverability of its
long-lived assets by determining whether the amortization of each such asset
over its remaining life can be recovered through projected undiscounted future
cash flows. The amount of impairment, if any, is measured based on projected
discounted future cash flows using a discount rate reflecting the Company's
average costs of funds. See Note 13.

       Deferred Debt Expense. The Company amortizes its deferred debt issuance
costs over the term of the related debt using the effective interest method.

       Revenue Recognition.  Revenues are recognized as products are shipped.

       Income Taxes. The Company accounts for income taxes in accordance with
Financial Accounting Standards Board (FASB) Statement No. 109. Such statement
requires the recognition of deferred tax liabilities and assets for the
expected future tax consequences of temporary differences between tax basis
and financial reporting basis of assets and liabilities.

       Environmental Liabilities. It is the Company's policy to accrue and
charge against operations environmental remediation costs when it is probable
that a liability has been incurred and an amount is reasonably estimable. As
assessments and cleanups proceed, additional information becomes available and
these accruals are reviewed periodically and adjusted, if necessary. These
liabilities can change substantially due to such factors as additional
information on the nature or extent of contamination, methods of remediation
required, and other actions required by governmental agencies or private
parties. Cash expenditures often lag behind the period in which an accrual is
recorded by a number of years.

       Foreign Currency Translation Adjustment. Exchange adjustments resulting
from foreign currency transactions are generally recognized in the results of
operations, whereas adjustments resulting from the translation of balance
sheet accounts are reflected as a separate component of shareholders'
deficiency. Net foreign currency transaction gains or losses are not material
in any of the years presented.

       Net Loss Per Common Share. Primary net loss per common share is based
on the weighted average number of shares of common stock outstanding during
each year and common stock equivalents of dilutive stock options. Fully
diluted net loss per common share assumes the additional dilution of stock
options based upon ending market prices, unless such calculations are
anti-dilutive.

                                     F-10



<PAGE>




       Statement of Financial Accounting Standards No. 128 "Earnings Per
Share" ("SFAS 128"). In February 1997, the Financial Accounting Standards
Board issued SFAS 128, which is effective for financial statements issued for
periods ending after December 15, 1997. SFAS 128 simplifies the previous
standards for computing earnings per share and requires the disclosure of
basic and diluted earnings per share. For the year ended September 30, 1997,
the amount reported as net loss per common share is not different than that
which would have been reported for basic and diluted loss per share in 
accordance with SFAS 128.

(3)    ACQUISITION

       On July 28, 1995, the Company acquired Doehler-Jarvis for a purchase
cost aggregating approximately $107,000, including transaction costs of
approximately $3,000. The acquisition was accounted for under the purchase
method of accounting. The purchase costs and repayment of existing Doehler-
Jarvis debt aggregated approximately $218,000, and was financed through the
proceeds from the sale of $200,000 principal amount of 11 1/8% Senior Notes
Due 2005 and cash on hand.

       Pro forma unaudited results of operations for the year ended September
30, 1995, assuming the acquisition had occurred on October 1, 1994, are as
follows:

                                                      (In thousands of dollars 
                                                        except per share data)


Sales                                                        $   855,446
Income (loss) from continuing operations before
    extraordinary item                                            (8,466)
Net loss                                                         (10,658)
  Net loss attributable to common shareholders                   (25,467)
Net loss per share
  Loss from continuing operations                                  (3.38)
  Net loss                                                   $     (3.69)


       The summary pro forma financial data do not purport to represent what
the Company's results of operations would actually have been had the
transaction, in fact, occurred on such date or to project the Company's
results of operations at any future date or for any future period.

(4)    ESNA DISCONTINUED OPERATIONS AND MATERIAL UNCERTAINTIES

       On three separate occasions in fiscal 1994, the Company became aware
that certain products of its Elastic Stop-Nut Corporation of America ("ESNA") 
division were not manufactured and/or tested in accordance with required 
specifications at its Union, New Jersey and/or Pocohontas, Arkansas facility. 
These fastener products were sold to the United States Government and other

                                     F-11



<PAGE>



customers for application in the construction of aircraft engines and air
frames. In connection therewith, the Company notified the Department of
Defense Office of Inspector General ("DoD/OIG") and, upon request, was
admitted into the Voluntary Disclosure Program of the Department of Defense
(the "ESNA matter"). At September 30, 1997, the remaining accrued costs of
discontinued operations, including the ESNA matter, are primarily related to
legal costs, fines and penalties. The ultimate cost of disposition of the
ESNA matter, as well as the required funding of such cost, is dependent upon
future events, the outcomes of which are not determinable at the present time.
Such outcomes could have a material effect on the Company's financial
condition, results of operations and/or liquidity. If it is ultimately
determined that the deviations from specifications and certifications made in
connection therewith constitute violations of various statutory and regulatory
provisions, the Company may, among other things, be subject to criminal
prosecution, treble damages and penalties under the Civil False Claims Act or
the Racketeer Influenced and Corrupt Organization Act ("RICO" ), as well as
administrative sanctions, such as debarment from future government
contracting. The Company is unable to determine the effect, if any, of the
bankruptcy filing on the ESNA matter.

       In September 1996 the Company determined that it is not likely that the
agreement entered into in May 1996 with a developer to sell the Company's ESNA
facility in Union, N.J. would be successfully concluded, due to Environmental
Protection Agency ("EPA") requirements necessary to bring the site up to 
residential standards. After considering the length of time, current market 
conditions and environmental cleanup costs to dispose of the facility for 
residential and/or industrial use, the Company determined that it was 
appropriate to reflect the value of the ESNA facility to the Company at a 
nominal net realizable value including clean up costs. As a result, the 
Company recorded a $7,500 charge to discontinued operations in the fourth 
quarter of 1996 representing the write-down of the ESNA facility, continuing 
carrying costs associated with the Company's ongoing participation in the 
Department of Defense Voluntary Disclosure Program and carrying costs of the 
Union, N.J. facility.

       Net assets of discontinued operations of $1,051 at September 30, 1997
reflect the estimated net realizable value of remaining assets consisting
primarily of royalty receivables and are included in other non-current assets.

(5)    INVENTORIES

       Inventories at September 30 consist of the following:

<TABLE>
<CAPTION>

                                                       1997           1996
                                                       ----           ----
<S>                                                  <C>             <C>
Finished goods                                       $   3,530       $   3,735
Work-in-process                                         16,805          19,051
Tooling                                                 19,934          20,689
Raw materials                                           13,949          10,426
                                                      ---------       ---------
                                                     $  54,218       $  53,901
                                                      =========       =========
</TABLE>



                                     F-12



<PAGE>





(6)    PROPERTY, PLANT AND EQUIPMENT

       Property, plant and equipment at September 30 consists of the
following:
<TABLE>
<CAPTION>

                                                   1997              1996
                                                   ----              ----
<S>                                             <C>              <C>
Land                                            $   4,537        $   7,730
Buildings and improvements                         57,367           72,954
Machinery and equipment                           177,127          312,650
Furniture and fixtures                              2,011            1,961
Construction in progress                           14,799           28,139
                                                ---------        ---------
                                                  255,841          423,434
Less accumulated depreciation                     123,575          122,761
                                                ---------        ---------
                                                $ 132,266        $ 300,673
                                                =========        =========
</TABLE>


       Depreciation expense amounted to $46,377, $42,632 and $28,955 in 1997,
1996 and 1995, respectively. See Note 13 regarding the impairment of property,
plant and equipment.

(7)    INTANGIBLE ASSETS

       Intangible assets at September 30 consist of the following:
<TABLE>
<CAPTION>

                                                     1997              1996
                                                     ----              ----
<S>                                               <C>              <C>
Goodwill in connection with the
 acquisition of Doehler-Jarvis (See Note 13)      $     --         $  136,379

Reorganization value (See Note 2)                    12,339            12,339
                                                  ---------        ----------
                                                     12,339           148,718

Less accumulated amortization                         7,922            21,468
                                                  ---------        ----------

                                                  $   4,417        $  127,250
                                                  =========        ==========
</TABLE>


       Amortization expense related to goodwill and reorganization value
amounted to $8,448, $15,312 and $2,986 in 1997, 1996 and 1995, respectively.
In 1995, the Company reduced reorganization value by $3,529 for the benefit
realized from the utilization of tax loss carryforwards existing when "Fresh
Start Reporting" was implemented. See Note 13 regarding the impairment of
Doehler-Jarvis goodwill.

(8)    OTHER ASSETS

       Other assets at September 30 consist of the following:

<TABLE>
<CAPTION>
                                  Amortization                                       
                                     Period          1997         1996
                                    --------         ----         ----
<S>                             <C>                <C>          <C>       
Deferred financing costs        life of agreement  $    2,200   $   15,506
Deferred tooling                 units produced        10,291       14,339
Pension asset                          N/A             16,094        9,546
Net assets of discontinued 
 operations                            N/A              1,057        1,800
Other                                  N/A              3,241        3,525
                                                   ----------   ----------
                                                       32,883       44,716
Less accumulated amortization                           9,294       11,160
                                                   ----------   ----------
                                                   $   23,589   $   33,556
                                                   ==========   ==========
</TABLE>



                                     F-13



<PAGE>



       Amortization expense related to deferred financing costs amounted to
$1,627, $5,136, and $1,707 in 1997, 1996 and 1995, respectively. Amortization
expense related to deferred tooling amounted to $3,743, $2,578, and $1,354 in
1997, 1996 and 1995, respectively. In addition, in 1997 the Company wrote-off
deferred financing costs of $10,408 related to the senior notes as
reorganization costs and $1,792 relating to the financing agreement as
interest expense upon the refinancing of such debt with DIP financing
described in Note 9.

(9)    DIP FINANCING

       On May 8, 1997, the Company and certain of the Company's subsidiaries
obtained a two-year Post-Petition Loan and Security Agreement ("DIP
financing") to enable it to continue operations during the chapter 11
proceedings. The DIP financing provides for $65,000 of Term Loans and $110,000
of Revolving Credit Loans which includes a $25,000 sub-limit of credit
facility principally for standby letters of credit. As collateral, the Debtors
have pledged substantially all of the assets of the Debtors.

       All of the prepetition indebtedness outstanding at May 8, 1997 under
the financing agreement described in Note 10 amounting to $105,044 was repaid
from borrowing under the DIP financing. At September 30, 1997, the amount
outstanding under the Revolving Credit Loans was $23,436 and outstanding
letters of credit amounted to $12,670 (principally standby).

       The Revolving Credit Loans bear interest at the rate of 1.50% in excess
of the Base Rate (Prime) and the Term Loans bear interest at the rate of 1.75%
in excess of the Base Rate. The prime rate was 8.50% at September 30, 1997. The
DIP Lenders also earn a fee of 2% per annum of the face amount of each standby
letter of credit in addition to passing along to the borrowers all bank charges
imposed on the DIP Lenders by the letter of credit issuing bank. Further, the
DIP Lenders receive a line of credit fee of .5% per annum on the unutilized
portion of the Revolving Line of Credit, together with certain other fees,
including a $1.375 million closing fee. The Term Loans provide for quarterly
payments of $3,250 beginning November 30, 1997 through February 28, 1999, with
a final installment of $45,500 due on May 8, 1999. The lenders also require
availability reserves of (i) $12,000 through November 30, 1997, (ii) $17,000
from and after December 1, 1997 through December 31, 1997 and (iii) $22,000
after December 31, 1997, plus, in each case, such additional amount as the 
Agent, in the exercise of its sole discretion, may from time to time establish.
See Note 28.

       The DIP financing provides that the net proceeds from asset sales, if
any, are to be utilized to prepay principal in respect of the Revolving Credit
Loans to the extent such collateral was sold, and any excess proceeds shall
be applied to the Term Loans. The DIP financing also provides, among other
things, monthly covenants beginning May 8, 1997, with respect to EBITDA,
capital expenditures and a monthly fixed charge ratio beginning October 1,
1997.

       If the DIP financing is terminated by the Company prior to May 8, 1998,
an early termination fee must be paid equal to 1.0% of the aggregate amount of
the DIP financing.

       The Company failed to meet the fixed charge ratio financial covenant
during the months of October and November 1997 and on December 29, 1997
obtained a waiver of such default from its lenders. On December 29, 1997 the
Company entered into Amendment No. 1, Waiver and Consent (the "Amendment")
to Post-Petition Loan and Security Agreement with its lenders whereby the
lenders from December 29, 1997 waived all defaults or events of default which
have occurred prior to such date from the Companies' failure to comply with
the above financial covenants. The lenders also entered into the Amendment
to replace the fixed charge ratio covenant with monthly consolidated EBITDA 
and consolidated tangible net worth covenants commencing calculations at 
December 31, 1997. The Amendment requires the lenders' consent for capital 
expenditures in excess of $30 million for the year ending September 30, 1998.


                                     F-14



<PAGE>



(10)   LONG TERM DEBT AND CREDIT AGREEMENTS 

       Long term debt at September 30 consists of the following:


                                              1997                   1996
                                              ----                   ----

12% Senior Notes Due 2004................  $     --             $   100,000
11 1/8% Senior Notes Due 2005............        --                 200,000
Revolving Credit Agreement...............        --                  38,834
Industrial revenue bonds.................        --                   6,200
Capital lease obligations................    14,087                  15,569
                                           --------             -----------
                                             14,087                 360,603

Less current portion.....................     1,748                   1,487
                                           --------             -----------

Long-term portion........................  $ 12,339             $   359,116
                                           ========             ===========


       On July 26, 1994, the Company consummated a public offering relating to
$100,000 aggregate principal amount of the Company's 12% Senior Notes Due 2004
("12% Notes") and on July 28, 1995, the Company consummated a private placement
offering of $200,000 principal amount of 11 1/8% Senior Notes Due 2005
("11 1/8% Notes") (which were subsequently exchanged for new 11 1/8% Notes 
which are not subject to transfer restrictions). Both Notes were issued pursuant
to indentures by and among the Company and Guarantors, which are subsidiaries of
the Company, and First Union National Bank of North Carolina, as Trustee. See
Note 26 for information concerning the Guarantors and Note 1 for the
classification of such debt which is in default.

       In addition, both Note Indentures require the repayment of the Notes
upon the occurrence of a change in control, as defined, at a repurchase price
of 101% of the principal amount thereof plus accrued and unpaid interest. The
Note Indentures limit the issuance of new debt, preferred stock, as defined,
and restrict the payment of dividends, distributions from subsidiaries and the
sale of assets and subsidiary stock, as defined.

       The Notes are redeemable at the option of the Company, in whole or in
part, at any time after July 15, 1999 for the 12% Notes or August 1, 2000 for
the 11 1/8% Notes at the various redemption prices set forth in the Indentures
relating to the Notes, plus accrued interest to the date of redemption. The
12% Notes mature on July 15, 2004, and the 11 1/8% Notes on August 1, 2005.
Interest on both Notes is payable semiannually. The Company discontinued
accruing interest on both Notes from the date of bankruptcy.

       The net proceeds from the sale of the 12% Notes of $94,300 were used to
prepay all indebtedness outstanding under the Company's then existing bank
credit agreement (approximately $51,100) and to pay certain trade payables
that were incurred by the Company prior to its bankruptcy (approximately
$31,000). The balance of the proceeds from the sale of the 12% Notes was used
for general corporate purposes. The proceeds of $188,196 from the sale of the
11 1/8% Notes were utilized as part of the purchase price of the acquisition
of Doehler-Jarvis, see Note 3.

                                     F-15



<PAGE>




       Contemporaneously with the sale of the 11 1/8% Notes, the Company and
Guarantors (see Note 26) entered into a Revolving Credit Agreement, dated as
of July 28, 1995 ("Chemical Agreement"), by and among the Company and
Guarantors and Chemical Bank, as Agent, providing for up to $100,000 of
working capital loans. Prior to entering into the Chemical Agreement, the
Company terminated its existing revolving credit facility dated as of July 26,
1994. The termination of this agreement resulted in an extraordinary charge of
$2,192, net of $1,200 of tax benefit, or $.32 per share. In view of the
Company's operating performance, new business and cost savings programs
requiring capital expenditures of $28,000 during the first nine months of
1996, and the reduction of the inventory borrowing base by $8,000, the Company
determined that additional short term liquidity was necessary. On August 2,
1996, the Company borrowed $7,000 under a $10,000 short term credit facility
maturing on December 31, 1996, with its then existing banks. The short term
credit facility was collateralized by the Company's machinery and equipment.
The interest rate was 4% over the alternate base rate as defined. The Company
paid a $1,000 facility fee on August 2, 1996. The Company repaid this short
term loan on September 27, 1996.

       The Company and certain of its subsidiaries entered into a financing
agreement dated October 4, 1996 with the CIT Group/Business Credit, Inc. as a
lender and as agent for a group of lenders. On October 4, 1996, the Company
borrowed $38,273, under such financing agreement of which $30,000 was borrowed
as term loans and $8,273 as revolving loans. Contemporaneously with entering
such financing agreement, the Company terminated the Chemical Agreement, dated
as of July 28, 1995. Proceeds from this new financing agreement were used to
repay all outstanding loans under the Chemical Agreement. (See Note 9 for
subsequent refinancing of this Agreement.)

       The Industrial Revenue Bonds in the amount of $6,200 plus accrued
interest were paid pursuant to demand by the holder against a bank letter
of credit during September 1997.

       Machinery and equipment at September 30, 1996 includes equipment held
under capital leases with an acquisition cost of approximately $16,727, which
arose principally through the acquisition of Doehler-Jarvis. The initial lease
terms for such leases end December 2002 and September 2003. The leases are
subject to renewal and the equipment under the leases may be purchased at the
end of the leases at fair market value not to exceed 24% of the original cost.
Substantially all such equipment was written-off as impaired (see Note 13).


                                     F-16



<PAGE>



       Approximate maturities of long-term debt under capital leases are as
follows:

Year ending September 30:
1998..........................................................     $  2,949
1999..........................................................        3,381
2000..........................................................        3,443
2001..........................................................        3,442
2002..........................................................        3,443
Thereafter....................................................        1,363
                                                                   --------
Total.........................................................     $ 18,021
Less amounts representing interest............................        3,934
                                                                   --------
Present value of future minimum lease payments................     $ 14,087
                                                                   ========


(11)   ACCRUED EXPENSES

       Accrued expenses at September 30 are summarized as follows:


                                                   1997            1996
                                                   ----            ----
                                                
Interest......................................  $      713       $    6,353
Salaries and wages............................      13,207           12,252
Pension liabilities...........................       2,000            3,891
Workers' compensation and medical.............      13,521           11,152
Costs related to discontinued operations......       4,822            6,830
Tooling and maintenance costs.................       5,366            4,841
Environmental.................................       2,397            6,075
Post-retirement benefits......................       2,300            3,300
Reorganization costs .........................       2,944               --
Restructuring costs (see Note 13) ............      10,000               --
Other.........................................      14,965           12,255
                                                ----------       ----------
                                                $   72,235       $   66,949
                                                ==========       ==========
                                              

(12)   OTHER LIABILITIES

       Other liabilities at September 30 are summarized as follows:


                                                   1997             1996
                                                   ----             ----
                                                
Pension liabilities (see Note 19).............  $   3,495        $    3,887
Workers' compensation.........................     10,462             7,361
Environmental.................................         78             3,362
Deferred taxes................................      1,262             1,352
Tool and die replacement......................      8,027            10,008
Other.........................................      3,913                --
                                                 --------        ----------
                                                $  27,237        $   25,970
                                                =========        ==========
                                                
                                                
                                                


                                     F-17



<PAGE>



(13)   IMPAIRMENT OF LONG-LIVED ASSETS AND RESTRUCTURING CHARGES

       In 1997, the Company recorded the following charges:

Impairment of Doehler-Jarvis long-lived assets                       $ 266,545
Impairment of long-lived assets at two plants                           12,000
Severance payments related to two facilities scheduled for closing       3,285
Restructuring charges                                                    6,715
                                                                     ---------
                                                                     $ 288,545
                                                                     =========

       In March 1997, the Company wrote off $114,385 unamortized goodwill
related to its 1995 acquisition of Doehler-Jarvis, and in July 1997 the
Company announced its intention to sell this subsidiary. Based on the absence
of acceptable offers to date and the projected future cash flows, in September
1997 the Company recorded an impairment charge of $152,160 related to all other
long-lived Doehler-Jarvis assets.

       In February 1997, the Company announced its plans to sell its Harman
Automotive subsidiary and in March 1997 recorded a charge for the impairment
of Harman's long-lived assets, and certain long-lived assets of the Tiffin 
plant.

       While the Company is continuing its efforts to sell Harman and the
major portion of its Harvard Interiors division, it presently plans to close
these facilities in the second quarter of fiscal 1998 absent a sale. In
September 1997, the Company reflected a restructuring charge for employee
severance and plant closing costs for the Harman and Harvard Interiors
facilities.

(14)   OTHER (INCOME) EXPENSE, NET

       Other (income) expense, net includes the following:


                                            1997        1996          1995
                                            ----        ----          ----
                                         
Write-down and disposal of assets no     
  longer required in operations........   $ 1,931     $ 2,053      $    461
Loss on joint venture..................     2,221          --            --
Interest income........................      (106)       (220)       (2,453)
Other, net.............................     1,484        (295)          203
                                          -------     -------      --------
                                         
                                          $ 5,530     $ 1,538      $ (1,789)
                                          =======     =======      ========
                                       


                                     F-18



<PAGE>



(15)   INCOME TAXES

       Provision for income tax expense for continuing operations consists of
the following:


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

Federal................................   $    --     $    --      $ 6,650 (a)
Puerto Rico............................        --          --          440
Foreign and other......................     1,204       3,196        4,476
                                          -------     -------      -------

                                          $ 1,204     $ 3,196      $11,566
                                          =======     =======      =======


--------
(a) Includes a tax allocation aggregating $6,185 for goodwill, exercise of
    stock options, and extraordinary item.

       Deferred income taxes result from temporary differences in the
recognition of revenue and expense for tax and financial statement purposes.
The tax effects of temporary differences that give rise to the deferred tax
assets and deferred tax liabilities at September 30, 1997 and 1996 are as
follows:

       Deferred tax assets:


<TABLE>
<CAPTION>
                                                                  1997         1996
                                                                  ----         ----
                                                               
<S>                                                            <C>           <C>      
Net operating loss carry forwards............................  $   98,533    $  72,160
Pension and postretirement benefits obligations..............      33,732       37,676
Reorganization items capitalizable for tax purposes..........       4,100        4,100
Reserves and accruals not yet recognized for tax purposes....     115,193       36,078
                                                               ----------    ---------
                                                               
                                                               
Total........................................................     251,558      150,014
Less valuation allowance.....................................     200,780       95,956
                                                               ----------    ---------
                                                               
Total deferred tax assets....................................  $   50,778    $  54,058
                                                               ==========    =========
</TABLE>

       The Company believes it will more likely than not be able to realize
its net deferred tax assets of $50,778 by offsetting it against deferred tax
liabilities related to existing temporary differences that would reverse in
the carry forward period. The Company has established a valuation allowance
for certain of its gross deferred tax assets which exceed such deferred tax
liabilities.

       The change in the valuation allowance in 1997 and 1996 primarily
represents recognition of the deferred tax asset related to reserves and
accruals not yet recognized for tax purposes.

       Deferred tax liabilities:


                                                 1997           1996
                                                 ----           ----

Depreciation.................................  $ 50,322      $  54,794
Other........................................     1,718            616
                                               --------      ---------

Total deferred tax liabilities...............  $ 52,040      $  55,410
                                               ========      =========



                                     F-19



<PAGE>




       The net deferred tax liabilities of $1,262, and $1,352 are included in
other liabilities in the consolidated balance sheets at September 30, 1997 and
1996, respectively.

       The following reconciles the statutory federal income tax expense
(benefit), computed at the applicable federal tax rate, to the effective
income tax expense:

<TABLE>
<CAPTION>

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

<S>                                                            <C>                 <C>              <C>       
Tax (benefit) expense at statutory rate ..................     $ (135,879)         $ (20,305)       $    7,238
State income taxes, net of federal benefit................            549                736               298
Benefit of Puerto Rico tax exemption......................             --                 --              (226)
Permanent differences arising in connection
 with businesses acquired or reorganization...............         42,991              3,737             1,039
Other permanent differences...............................            114                115               467
Amount for which no tax benefit is
 recognized...............................................         93,320             17,837               ---
Foreign taxes in excess of U.S. rates.....................            109                318             2,353
Other.....................................................             --                758               397
                                                               ----------          ---------         ---------

Actual tax expense from continuing operations.............     $    1,204          $   3,196         $  11,566
                                                               ==========          =========         =========
</TABLE>



       At September 30, 1997, the Company had available net operating loss
carry forwards and general business tax credits of approximately $246,000, and
$1,300, respectively, for Federal income tax purposes. These carry forwards
expire in the years 2002 through 2012. Carryforwards of approximately $67,000
are subject to annual utilization limitations under Internal Revenue Code 
Section 382, due to the change in ownership arising from the conversion of 
debentures into stock of the post-confirmation Company and the acquisition of 
Doehler-Jarvis. The utilization of the carry forwards is limited to 
approximately $11,000 and $6,000 per tax year, respectively, until fully
utilized. The unused portion of the Company and Doehler-Jarvis annual 
limitations at September 30, 1997 is approximately $37,000 and $13,000 which 
may be carried forward and utilized in subsequent years.

       The reorganization of the Company may have a significant impact on the
income tax liability of the Company in future years. The Internal Revenue Code
requires certain reductions and/or limitations in the amount of net operating
loss deduction and general business credits available for utilization if a
substantial change in ownership or forgiveness of debt occurs. Due to the
complexity of the tax laws involved and uncertainties relating to a final
plan of reorganization, the actual tax effects will not be known until such
a final plan of reorganization is approved.

(16)   RELATED PARTY TRANSACTIONS

       Pursuant to a Termination, Consulting and Release Agreement, dated as
of February 12, 1997 (the "Agreement"), among the Company, Vincent J. Naimoli
and his affiliated corporation, the parties agreed to terminate Mr. Naimoli's
management services relationship with the Company, and cancel the prior
Management and Option Agreement, as

                                     F-20



<PAGE>



amended, under which Mr. Naimoli's services had been performed as the
Company's then Chairman of the Board and Chief Executive Officer, except for
certain provisions of the Management and Option Agreement relating to options,
registration rights and certain indemnification.

       The Agreement provides for Mr. Naimoli to receive vested benefits which
had accrued prior to termination, and Mr. Naimoli agreed to act as a
consultant to the Company for three years after termination. In the second
quarter of 1997, the Company charged selling, general and administrative
expense in excess of $3,000 for all of the fees and benefits related to the
Agreement.

       On June 19, 1997, the Company applied to the Court for an Order to
authorize the rejection of the Agreement, and on July 16, 1997, Mr. Naimoli
filed an objection to the Company's motion. The matter is currently pending in
the Court.

       Under the Agreement, existing stock options and certain other
retirement benefits would continue to be available.












                                     F-21



<PAGE>



       Mr. Naimoli, beneficially owned, through Anchor Industries International,
Inc., an affiliated corporation of Mr. Namoli, 2,800.28 shares of the
common stock and 413.9987 shares of the preferred stock of Doehler-Jarvis
(representing 13.4% and 2.6%, respectively, of the shares of common stock and
preferred stock of Doehler-Jarvis outstanding immediately prior to the
acquisition). In addition, Mr. Naimoli directly owned $300 principal amount of
11 7/8% Notes and, through Anchor, indirectly owned $500 principal amount of
11 7/8% Notes of Doehler-Jarvis immediately prior to the acquisition. Anchor
then received approximately $11,700 in the aggregate in exchange for its
equity ownership in Doehler-Jarvis. In connection with a tender offer by the
Company for the 11 7/8% Notes of Doehler-Jarvis, Mr. Naimoli and Anchor
received approximately $875 in the aggregate in consideration of their consent
to the amendments to the 11 7/8% Notes Indenture and tender of their 11 7/8%
Notes, plus accrued interest to the date of repurchase.

       As of September 30, 1997, Mr. Naimoli and members of his immediate
family and affiliated entities beneficially own an aggregate of $2,525
principal amount of the Company's 12% Notes due July 15, 2004 and $50 principal
amount of the Company's 11 1/8% Notes due August 1, 2005.

       Mr. Naimoli is a stockholder of Nice and Easy Travel & Co.,
Inc. ("Nice and Easy"), a travel agency, which agreed to act as exclusive
travel agent and to arrange travel services in such capacity for the Company
and its employees and representatives, beginning in December 1994. Nice and
Easy presently occupies approximately 375 square feet of office space on a 
rent-free basis. The Agreement provides that the Company is to utilize the 
services of Nice and Easy for one year following termination, and thereafter so
long as Nice and Easy is competitive. It has been agreed that with respect to 
travel services rendered to the Company by Nice and Easy, the latter rebates 
to the Company five percent through February 10, 1995 and three percent 
thereafter of annual billings to the Company for travel business. During the 
years ended September 30, 1997, 1996 and 1995, Nice and Easy billed the 
Company, $2,100, $1,130, and $994, respectively, for travel services and rebated
$28, $34 and $31 to the Company in 1997, 1996 and 1995, respectively. 
Additionally, Nice and Easy has not paid approximately $30 in rebates for 1997.

       In October 1995, the Board of Directors of the Company approved the
lease of a private suite at the Tropicana Field in St. Petersburg, Florida for
Tampa Bay Devil Rays baseball. Mr. Naimoli is the Managing General Partner of
Tampa Bay Devil Rays, Ltd. It is contemplated that the Company will lease the
suite for the period of five years at an annual rental of $60, plus increases
provided by the Consumer Price Index without premium. In addition, a license
fee of $25 was paid representing a security deposit of $20, and the balance as
an

                                     F-22



<PAGE>



initial non-refundable payment. Any unused portion of the security deposit is
to be returned at the end of the lease term. An additional $25 payment was
made in June 1996. Management has agreed with two other partners to share in
the cost of the suite, thereby reducing the suite cost to $20 per annum. In
connection with the transaction, the Board determined that the transaction was
fair and on terms comparable to those which would be obtained from a third
party in an arm's-length transaction.

       The Company paid in 1997 to The Blackstone Group, L.P., an investment
banking firm of which Mr. Hoffman, a Director of the Company, is a partner,
$54 for expenses and $75 as an upfront fee for additional advice rendered in
structuring alternatives to enhance shareholder value and agreed to pay 
designated success fees in the event such alternatives are effected and 
consummated successfully. The Company also paid $1,941 in 1995 for 
financial advice rendered in developing the Company's bid for Doehler-Jarvis.

       Directors who are not employees of the Company receive compensation at
the rate of $25 per annum plus $1 for attendance at each meeting of the
Company's Board of Directors and $1 for each meeting of the Audit Committee
and Compensation Committee they attend. During 1997, 25% or more of such
amounts was paid in common stock of the Company. The issuance of common stock
for director's services ceased in September 1997. Officers are not separately 
compensated for serving as Directors of the Company.

(17)   COMMITMENTS AND CONTINGENT LIABILITIES

ENVIRONMENTAL MATTERS

       The Company's operations are subject to extensive and rapidly changing
federal and state environmental regulations governing waste water discharges
and solid and hazardous waste management activities. The Company is a party to
a number of matters involving both Federal and State regulatory agencies
relating to environmental protection matters, some of which relate to waste
disposal sites including Superfund sites. The most significant site is the
Alsco-Anaconda Superfund Site (the "Site") (Gnadenhutten, Ohio).

       Under arrangements between the Company and the Atlantic Richfield
Company, ("ARCO"), the current owner of the Site, each has accepted that it is
a Principal Responsible Party ("PRP") with respect to the Site, but the Company 
maintains that under the Comprehensive Environmental Response, Compensation 
and Liability Act of 1980 ("CERCLA" or "Superfund") its responsibility is 
limited to waste actually produced and deposited on the Site during its period 
of ownership (1965-1971). Al71). Although it is not possible to definitively 
determine the Company's ultimate exposure, management believes that the 
Company's obligations will likely be limited to those accepted under the
settlement agreement with ARCO described below. Such settlement was based upon 
an allocated percentage of total anticipated remediation costs, which as 
alleged by ARCO, will aggregate approximately $19,000 to $21,500. On 
January 16, 1995, the Company and ARCO entered into a settlement agreement 
which calls for the Company to pay

                                     F-23



<PAGE>



ARCO $6,250 as its share of up to $25,000 of the cleanup and other
environmental costs at the Site in twenty equal quarterly installments which
commenced January 1, 1995, including interest of 9% beginning on that date.
However, due to the current bankruptcy proceedings, payments have been
suspended pending direction from the Court. In return for this payment, ARCO
has assumed responsibility for cleanup activities at the Site and is obligated
to indemnify the Company for any environmental claims below the cap. If the
cleanup costs exceed $25,000, the parties will be in the same position as if
the litigation was not settled.

       The Company's Harman subsidiary has been named as one of several PRPs
by EPA pursuant to CERCLA concerning environmental contamination at the Vega
Alta, Puerto Rico Superfund site (the "Vega Alta Site"). Other named PRPs
include subsidiaries of General Electric Company ("General Electric"),
Motorola, Inc. ("Motorola"), and The West Company, Inc. ("West Company") and
the Puerto Rico Industrial Development Corporation ("PRIDCO"). PRIDCO owns the
industrial park where the PRPs were operating facilities at the time of
alleged discharges. Another party, Unisys Corporation, was identified by
General Electric as an additional PRP at the Superfund Site as a successor to
the prior operator at one of the General Electric facilities. Unisys
Corporation was not initially designated as a PRP by EPA, although it was
named as a PRP in conjunction with the settlement proceedings and consent
decree discussed below.

       There are currently two phases of administrative proceedings in
progress. The first phase, involves a Unilateral Order by EPA that the named
PRPs implement the Vega Alta Site remedy chosen by EPA, consisting of the
replacement of the drinking water supply to local residents and installation
and operation of a groundwater treatment system to remediate groundwater
contamination. In addition, EPA sought recovery of costs it had expended at
the Vega Alta Site.

       Motorola, West Company and Harman completed construction of the EPA
remedy pursuant to a cost-sharing arrangement. As of September 30, 1997,
Harman's remaining share of costs incurred by the other two PRPs pursuant to
this cost-sharing arrangement is approximately $280, including reimbursement
of the other two PRPs for the construction cost of the treatment system. Due
to the current bankruptcy proceedings payments have been suspended pending
direction from the Court.

       Effective June 30, 1993, the PRPs reached a settlement among
themselves. Harman, together with Motorola and West Company, completed the
agreed-upon work for the first phase of administrative proceedings, as
outlined above, which included final construction and initial testing of the
cleanup system. In addition, Harman, Motorola and West Company each agreed to
pay General Electric the sum of $800 in return for General Electric's
agreement to assume liability for, and indemnify and hold Harman and the
others harmless against, EPA's cost recovery claim, to undertake operation and
maintenance of the cleanup system, to construct, operate and maintain any
other proposed system that may be required by EPA, and to conduct any further
work required concerning further phases

                                     F-24



<PAGE>



of work at the Vega Alta Site. Harman's settlement payment to General Electric
was being made in 20 equal quarterly installments, which commenced in January
1995, with 9% interest per annum. However, due to the current bankruptcy
proceedings, payments have been suspended pending direction from the Court.
Harman, West Company and Motorola retained liability for any cleanup
activities that may in the future be required by EPA at their respective
facilities due to their own actions, for toxic tort claims and for natural
resource damage claims.

       Pursuant to a letter dated January 31, 1994 and subsequent notices
since that date, Harman and the other PRPs have been put on notice of
potential claims for damages, allegedly suffered by the owners and operators
of farms located in the vicinity of the Vega Alta Site. If Harman were to be
found liable in any future lawsuit, some of the alleged damages (e.g.,
personal injury, property and punitive damages) would not be covered by the
settlement agreement with General Electric. In a letter to General Electric's
counsel, counsel for the owners and operators alleged estimated losses of
approximately $400,000 "based primarily on lost income stream," purportedly
based on certain assumptions concerning the value of the property, its
potential for development and groundwater contamination issues. At this time,
however, Harman has no information that would support such unindemnified
claims, and believes the claims to be speculative.

       On August 25, 1997, the Company was notified by the Michigan Department
of Environmental Quality ("MDEQ") that it is a responsible person as defined
in the Michigan Natural Resources and Environmental Protection Act. MDEQ has
orally indicated that it will be seeking reimbursement from Hayes-Albion with
regard to its facility in Jackson, Michigan. The future investigation, 
remediation and oversight costs are unknown at this time.

       By letter dated June 4, 1996, the American Littoral Society ("ALS"), a
public interest group operated through the Environmental Law Clinic of the
Widener University School of Law, sent a notice letter to the Company pursuant
to the Clean Water Act threatening suit based on past and anticipated future
discharges to the Schuykill River in excess of the limits established in the
National Pollutant Discharge Elimination System permit ("NPDES") for the
Pottstown, Pennsylvania plant. Doehler-Jarvis' Pottstown plant has been and is
currently operating under an expired but still effective NPDES permit. The
plant's wastewater treatment system (or use "equipment") is not capable of
achieving routine compliance with certain discharge limitations, including
limits for phenol, oil, grease and total dissolved solids. The Pottstown plant
has been attempting to solve this problem by arranging to convey its effluent
to the Pottstown Public Owned Treatment Works ("Pottstown POTW"). In March
1997, the Company entered into a consent decree with ALS whereby the Pottstown
plant is required to construct a wastewater recycling system by December 31,
1997. In addition, the Company agreed to pay a civil penalty of $1,000 and
$125 penalty from a parallel consent decree. The Company has met its
construction schedule but the $1,125 in penalties has not been paid but are
prepetition liabilities.

                                     F-25



<PAGE>



       As of September 30, 1997, and in addition to the above matters, the
Company has received information requests, or notifications from EPA, state
agencies, and private parties alleging that the Company is a PRP pursuant to
the provisions of CERCLA or analogous state laws; or is currently
participating in the remedial investigation or closure activities at 23 other
sites. In accordance with the Company's policies and based on consultation
with legal counsel, the Company has provided environmental related accruals of
$8,700 as of September 30, 1997, of which approximately $6,000 is reflected in
the caption "Liabilities subject to compromise." Furthermore, the Company does
not expect to use a material amount of funds for capital expenditures related
to currently existing environmental matters. Various environmental matters are
currently being litigated, however, and potential insurance recoveries, other
than those noted, are unknown at this time.

       While it is not feasible to predict the outcome of all pending
environmental suits and claims, based on the most recent review by management
of these matters and after consultation with legal counsel, management is of
the opinion that the ultimate disposition of these matters will not have a
material effect on the financial position or results of operations of the
Company.

LEGAL PROCEEDINGS

       In June 1995, a group of former employees of the Company's subsidiary,
Harman Automotive-Puerto Rico, Inc., commenced an action against the Company
and individual members of management in the Superior Court of the Commonwealth
of Puerto Rico seeking approximately $48,000 in monetary damages and unearned
wages relating to the closure by the Company of the Vega Alta, Puerto Rico
plant previously operated by such subsidiary. Claims made by the plaintiffs in
such action include the following allegations: (i) such employees were
discriminated against on the basis of national origin in violation of the laws
of Puerto Rico in connection with the plant closure and that, as a result
thereof, the Company is alleged to be obligated to pay unearned wages until
reinstatement occurs, or in lieu thereof, damages, including damages for
mental pain and anguish; (ii) during the years of service, plaintiffs were
provided with a one-half hour unpaid meal break, which is alleged to violate
the laws of Puerto Rico, providing for a one-hour unpaid meal break and demand
to be paid damages and penalties and request seniority which they claim was
suspended without jurisdiction; and (iii) plaintiffs were paid pursuant to a
severance formula that was not in accordance with the laws of Puerto Rico,
which payments were conditioned upon the plaintiffs executing releases in
favor of the Company, and that, as a result thereof, they allege that they
were discharged without just cause and are entitled to a statutory severance
formula.

       The Company is also a party to various claims and routine litigation
arising in the normal course of its business. Based on information currently
available, management of the Company believes, after consultation with legal
counsel, that the result of such claims and litigation, except for the
uncertainties related to ESNA discussed in Note 4, will not have a material
effect on the financial position or results of operations of the Company.

                                     F-26



<PAGE>



(18)   LEASES

       Rent expense under operating leases, consists of the following:

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

Rent expense .................   $ 5,624        $ 3,340        $ 2,033


       The following is a schedule of future annual minimum rental payments,
principally for machinery and equipment required under operating leases that
have initial or remaining noncancellable lease terms in excess of one year as
of September 30, 1996.

YEARS ENDING SEPTEMBER 30
-------------------------
1998....................................................       $  6,807
1999....................................................          5,312
2000....................................................          2,176
2001....................................................          1,846
2002....................................................          1,299
Thereafter..............................................            215


(19)   RETIREMENT PLANS

       The Company sponsors various defined benefit pension and savings
(principally 401(k)) plans covering substantially all employees. Expense under
these plans amounted to $3,619 in 1997, $4,355 in 1996, and $4,255 in 1995.
The Company annually contributes to the pension plans amounts that are
actuarially determined to provide the plans with sufficient assets to meet
future benefit payment requirements. The Company contributes to the savings
plans amounts that are directly related to employee contributions.

       The Company sponsors a defined benefit pension plan covering all
non-bargaining unit employees. The annual benefits payable under this plan to
a covered employee at the normal retirement age (age 65) are 1% of the first
$9 of the employee's career average annual earnings, as defined in the plan,
plus 1 1/2% of annual earnings in excess of $9 multiplied by the number of
years of service. Substantially all of the other defined benefit pension plans
the Company sponsors provide benefits of a stated amount for each year of
service.

       In addition, the Company participates in several multi-employer pension
plans for the benefit of certain union members. The Company's contributions to
these plans amounted to $459 in 1997, $500 in 1996, and $588 in 1995. Under
the Multi-Employer Pension Plan Amendments Act of 1980, if the Company were to
withdraw from these plans or if the plans were to be terminated, the Company
would be liable for a portion of any unfunded plan benefits that might exist.
Information with respect to the amount of this potential liability is not
available.


                                     F-27



<PAGE>





       Pension expense for all of the Company's defined benefit pension plans
consists of the following:

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

Benefits earned..............................  $  2,823   $  2,865    $  2,315
Interest on projected benefit obligations....     8,790      8,445       7,068
Actual return on assets......................   (17,378)    (8,315)     (9,025)
Net amortization and deferral................     8,318        557       3,186
                                               --------   --------    --------

                                               $  2,553   $  3,552    $  3,544
                                               ========   ========    ========


       The following summarizes at September 30, the funded status of the
defined benefit plans that the Company sponsors and the related amounts
recognized in the Company's consolidated balance sheets together with the
assumptions utilized.

<TABLE>
<CAPTION>
                                                                  1997                                    1996
                                                    ---------------------------------     ------------------------------------
                                                    Assets Exceed        Accumulated      Assets Exceed           Accumulated
                                                     Accumulated           Benefits        Accumulated              Benefits
                                                       Benefits         Exceed Assets        Benefits            Exceed Assets
                                                       --------         -------------        --------            -------------

<S>                                                <C>                 <C>                <C>                   <C>
Actuarial present value of accumulated 
 benefit obligations:
   Vested...................................        $      92,835        $     15,902      $      74,873         $      22,061
   Non-vested...............................                4,525               2,257              3,482                 3,301
                                                    -------------        ------------      -------------         -------------

   Accumulated benefit obligations..........               97,360              18,159             78,355                25,362
   Effects of salary progression............                3,949                  86              3,113                   104
                                                    -------------        ------------      -------------         -------------

   Projected benefit obligations............              101,309              18,245             81,468                25,466
                                                    -------------        ------------      -------------         -------------
Plan assets:
   Stocks...................................               59,075               5,649             36,284                 8,189
   Bonds....................................               39,195               2,784             34,694                 5,743
   Other....................................               11,185               4,054             12,242                 3,860
                                                    -------------        ------------      -------------         -------------
                                                          109,455              12,487             83,220                17,792
                                                    -------------        ------------      -------------         -------------
Plan assets over (under) projected 
 benefit obligations........................                8,146              (5,758)             1,752                (7,674)
Minimum liability recognized................                   --              (3,684)                --                (1,933)
Net loss not recognized.....................                7,566               3,715              7,456                 1,575
Prior service cost..........................                  362                  55                338                   254
                                                    -------------        ------------      -------------         -------------

Pension assets (liability) recognized.......        $      16,074         $    (5,672)      $      9,546         $      (7,778)
                                                    =============        ============      =============         =============


Assumptions used:
    Discount rate...........................                 8.0%                8.0%               8.5%                  8.5%
    Rate of return on assets................                 9.5%                9.5%               9.5%            8.5 - 9.5%
    Salary progression rate.................                 4.0%                5.0%               4.0%                  5.0%
</TABLE>

       The Company entered into a Settlement Agreement (the "Settlement
Agreement"), dated as of July 26, 1994, with the Pension Benefit Guaranty
Corporation (the "PBGC") pursuant to which the Company agreed to make
contributions to certain of its underfunded pension plans. These contributions
were in addition to the minimum statutory funding requirements with respect to
such plans. Pursuant to the Settlement Agreement, the Company made additional
contributions to its underfunded pension plans in an amount aggregating $6,000
on August 2, 1994 and $1,500 quarterly thereafter through September 30, 1997.
The Settlement Agreement, among other things,


                                     F-28



<PAGE>




includes a covenant restricting the Company's ability to redeem the PIK
Preferred Stock and a covenant not to create or suffer to exist a lien upon
any of its assets to secure both the 12% and 11 1/8% Senior Notes unless
contemporaneously therewith effective provision is made to equally and ratably
secure the Company's potential "unfunded benefit liabilities" (as defined in
Section 4001(a)(18) of the Employee Retirement Income Security Act).

(20)   POSTRETIREMENT BENEFITS OTHER THAN PENSIONS

       Certain of the Company's subsidiaries provide postretirement health
care and life insurance benefits for all salaried and for hourly retirees of
certain of its plants. The obligation, as of September 30, 1997 and 1996 was
determined by utilizing a discount rate of 8.0% and 8.5%, respectively, and a
graded medical trend rate projected at annual rates ranging ratably from 7%
and 10% in 1997 to 4.5% through the year 2000.

       Since the Company does not fund postretirement benefit plans, there are
no plan assets. Net periodic postretirement benefit cost (benefit) at
September 30 is comprised of the following:

<TABLE>
<CAPTION>
                                                              1997               1996          1995
                                                              ----               ----          ----    
<S>                                                        <C>                <C>           <C>       
Service cost..........................................     $   1,593          $    1,595    $    1,009
Interest on accumulated postretirement benefit
 obligation...........................................         6,955               7,196         5,724
Net amortization and deferral.........................          (959)               (493)           --
Curtailment gains.....................................        (8,249)                 --            --
                                                           ---------          ----------     ---------

                                                           $    (660)         $    8,298     $   6,733
                                                           =========          ==========     =========

</TABLE>

         During the fourth quarter of 1997, the Company recorded curtailment
gains to reflect the curtailment of medical benefits at one plant and for all
active salaried employees of Doehler-Jarvis, which was recorded as a reduction
in cost of sales.

       The accumulated postretirement benefit obligation at September 30, 1997
and 1996 consisted of the following:

                                                            1997        1996
                                                            ----        ----

Retirees................................................ $ 44,153     $ 38,547
Fully eligible active plan participants.................   17,056       21,305
Other active plan participants..........................   17,224       30,745
                                                         --------     --------

Accumulated postretirement benefit obligation...........   78,433       90,597
Unrecognized net gain...................................   20,796       13,167
                                                         --------     --------

Accrued postretirement benefit cost.....................   99,229      103,764
Included in accrued expenses............................    2,300        3,300
                                                         --------     --------

Non-current postretirement benefit obligations.......... $ 96,929     $100,464
                                                         ========     ========


       The effect of a 1% annual increase in the assumed cost trend rates
discussed above would increase the accumulated postretirement obligation at
September 30, 1997 by approximately $10,172, and would increase the aggregate
of the service and interest cost components by approximately $1,246.

                              
                                     F-29

<PAGE>


(21)   PAY-IN-KIND EXCHANGEABLE PREFERRED STOCK

       Under its Certificate of Incorporation, the PIK Preferred Stock on
liquidation, winding up and dissolution ranks senior to Common Stock and has a
liquidation preference of $25.00 per share, plus accrued and unpaid dividends,
before any distribution or payment is made to the holders of Common Stock.
There are 12,000,000 shares authorized and 4,609,987 shares issued and
outstanding in both 1997 and 1996, respectively.

       The PIK Preferred Stock holders are entitled to cumulative dividends at
the rate per annum of $3.5625 per share, payable at the Company's option in
cash or in additional shares of PIK Preferred Stock at the rate of 0.1425
share of PIK Preferred Stock for each share of PIK Preferred Stock
outstanding. See Note 9 for restriction on paying cash dividends.

       The Company did not pay the annual dividend on PIK Preferred Stock in
1997 and ceased accruing such dividend effective May 8, 1997 (see Note 1). On
September 30, 1996, the Company paid the annual dividend on PIK Preferred
Stock by issuing 574,987 additional shares of PIK Preferred Stock. The Company
recorded an increase of $14,844 in 1996 in its PIK Preferred Stock and a
corresponding deduction in additional paid-in-capital to recognize such
dividend and the accretion of the related difference between the fair value of
such stock at August 23, 1992 and redemption value. During 1997, the Company
also recorded $10,142 for unpaid dividends and related accretion.

       On September 30, 1994, the Company redeemed an aggregate of $10,000
(400,000 shares) of the PIK Preferred Stock and on June 30, 1995, the Company
redeemed 542,209 shares of PIK Preferred Stock which together with accrued
dividends aggregated $15,000.

       On November 16, 1998, the Company is required to redeem all shares of
PIK Preferred Stock outstanding at the liquidation preference price which is
estimated to be $151,000. If the Company fails to redeem the PIK Preferred
Stock on such date, or otherwise fails to pay a dividend payment, then the
number of directors constituting the Board shall be increased by two (2) and
the outstanding shares of PIK Preferred Stock shall vote as a class, with each
share entitled to one vote, to elect two (2) Directors to fill such newly
created directorships so long as such failure continues. Due to such mandatory
redemption requirements, the PIK Preferred Stock is not reflected as part of
common shareholders' equity. Such stock was valued at fair value as of August
23, 1992, including the fair value of accrued dividends from October 1, 1991.
Such carrying value has been increased by a periodic accretion between fair
value and redemption value. The status of the PIK Preferred Stock and any
redemption requirements under the Company's Chapter 11 filing is presently
unknown.


                                     F-30



<PAGE>



       The Company, at the option of the Board, may redeem, in whole or in
part, shares of PIK Preferred Stock at the liquidation preference per share
price plus all accrued and unpaid dividends on such shares, at any time prior
to the redemption date (subject to PBGC restrictions and Financing Agreement).
So long as shares of PIK Preferred Stock are outstanding, the Company shall
not declare dividends on the Common Stock or any other securities junior to
the PIK Preferred Stock or repurchase any of such shares.

       The Company may, at its option, at any time, exchange for all of its 
issued and outstanding shares of PIK Preferred Stock, the Company's 14 1/4% 
Subordinated Notes due November 16, 1998, if such securities are issued by the 
Company. Holders thereof will be entitled to receive $25 principal amount of 
Notes for each share of PIK Preferred Stock held by them at the time of 
exchange and each share of PIK Preferred Stock accrued as a dividend on such 
shares of PIK Preferred Stock on the date of exchange, up to but not including 
the date of exchange.

       So long as any shares of PIK Preferred Stock are outstanding, the
Company shall not issue any shares of preferred stock which (i) specify a
dividend rate in excess of 14 1/4% of the liquidation preference of such
preferred stock, (ii) may be redeemed or are subject to sinking fund
requirements which must be satisfied prior to the redemption or repurchase of
all outstanding shares of PIK Preferred Stock, (iii) have a mandatory
redemption date prior to January 1, 1999, or (iv) rank senior to the PIK
Preferred Stock or, unless the net proceeds of the issuance of the preferred
stock are used to redeem or repurchase PIK Preferred Stock or Exchange Notes,
rank pari passu with the PIK Preferred Stock, with respect to dividend rights
and rights on liquidation, winding up and dissolution.

(22)   PREFERRED STOCK

       The Board is expressly authorized in the Certificate of Incorporation
(without action by the shareholders), to provide for the issuance of all or
any shares of the preferred stock in one or more classes or series, and to fix
for each such class or series such voting powers, and such designations,
preferences and rights as the Board by resolution shall express and as
permitted by the General Corporation Law of the State of Florida.

       There are no present plans for issuance of any shares of preferred
stock. When and if any shares of preferred stock are issued, certain rights of
the holders thereof may affect the rights of the holders of the Common Stock
and PIK Preferred Stock. See Note 21 for restrictions upon the issuance of
shares of preferred stock so long as shares of PIK Preferred Stock are
outstanding.

       On October 18, 1994, the Board of Directors of the Company adopted a
Shareholder Rights Plan (the "Plan") which contemplates the issuance of 
preferred stock purchase rights to the holders of the Company's Common Stock 
of record as of October 21, 1994. As a result, there are 500,000 shares of 
Series A, Junior Preferred Stock, par value $.01 per share, authorized.


                                     F-31



<PAGE>



       The Plan calls for holders of the Company's Common Stock to receive, in
the form of a dividend, one Right for each share of Common Stock held as of
the above record date. The Plan, which is intended to deter coercive takeover
tactics, prevents a potential acquirer from gaining control of the Company
without offering a fair price to all holders of Common Stock. The Rights
expire on October 31, 2004.

       Each Right issued will, initially, entitle shareholders to buy one
one-hundredth of a share of newly authorized preferred stock of the Company
for $64. However, the Right will be exercisable only if a person or group
(other than shareholders owning at least 10 percent but less than 20 percent
of the Company's Common Stock outstanding on the date the Board of Directors
authorizes the dividend) acquires beneficial ownership or commences a tender
or exchange offer that will result in that person or group becoming a
beneficial owner of 26 percent-or-more of the Company's Common Stock.

       Initially, each Right not owned by a 15-percent-or-more shareholder or
related parties will entitle its holder to purchase one share of the Company's
preferred stock at $64 or whatever is the then-current exercise price of the
Rights.

       Upon the occurrence of certain events, the Right can be used to
purchase shares of the Company's Common Stock, or under certain circumstances
to be determined by the Board of Directors, for cash, other property, or
securities with a value of twice that of the Rights current price.

       In addition, if after any person or group has become a 15
percent-or-more shareholder, the Company is involved in a merger or other
business combination with another person in which the Company does not
survive, or in which the Common Stock is changed or exchanged, or the Company
sells 50 percent or more of its assets or earning power to another person,
each Right will then entitle its holder to purchase, at the Right's then-current
price, common stock of such other person having a value equal to twice the 
Right's price.

       In the event of a tender or exchange offer for all outstanding shares
of the Company that is approved by a majority of the Board's independent
Directors, those not affiliated with any 15 percent-or-more shareholder,
the provision relating to 15 percent-or-more beneficial ownership of the
Company's shares will not apply.

       The Company will, generally, be entitled to redeem the Rights for $0.01
per Right at any time until 10 days, subject to extension, following a
public announcement that a 15 percent position has been acquired. The
Preferred Stock Purchase Rights have been registered with the Securities and
Exchange Commission on Form 8-A.

(23)   COMMON STOCK

       Dividends on the Common Stock are subject to restrictions in the
Company's Financing Agreement and, so long as any PIK Preferred Stock is
outstanding, the Certificate of Incorporation provides that no dividends shall
be

                                     F-32

<PAGE>


declared on Common Stock or any securities junior to the PIK Preferred Stock
or repurchase of any such shares. Such holders have no preemptive or other
right to subscribe for or purchase additional shares of capital stock.

(24)   STOCK OPTIONS

       On January 19, 1994, the Board of Directors approved Stock Option
Plans, and on August 4, 1994 approved certain modifications thereto, which
provides for up to 400,000 shares of the Company's Common Stock to be granted
to members of the Board of Directors (other than the Company's Chairman and
Chief Executive Officer) and key employees. Options under both plans were
granted at the fair market value on the date of grants and have an exercise
period of ten years. Options under the Director's plan vest 100% at the date
of grant while the key employee's plan become exercisable at 25% or 33 1/3%
per year after a one-year waiting period.

       In addition, pursuant to the prior Management and Option Agreement
dated as of August 16, 1993, Anchor was granted options to purchase 652,096
shares of Common Stock, of which 496,278 were exercisable immediately at an
exercise price as set by the Board of Directors on October 27, 1993 of $6.00
per share, and an additional 155,818 became exercisable on August 16, 1994 at
an exercise price of $13.75. The option price per share in respect of the
additional shares was the average market price per shares of Common Stock for
the five most recent days immediately prior to August 16, 1994.

       Additionally on August 4, 1994, the Board of Directors granted to
Anchor options to purchase 17,000 shares of Common Stock which became
exercisable immediately at $13.75 per share and in accordance with such
amendment to the above Management and Option Agreement, granted Anchor an
aggregate of 300,000 additional stock options to purchase 300,000 shares of
Common Stock at $14.00 per share, which become exercisable as follows: 100,000
-- 8/16/95; 100,000 -- 8/16/96; 100,000 -- 8/16/97. Such options are
exercisable if closing price of the Company's Common Stock equals or exceeds
$20.00 per share for 15 of 30 trading days prior to August 16, 1995 for the
first 100,000 options; and $30.00 and $40.00 per share for any 30 trading days
subsequent to August 16, 1995 and 1996, respectively, and prior to August 16,
1996 and August 16, 1997, respectively. On August 16, 1995 such condition was
met and the first 100,000 options became exercisable. No options became
exercisable during 1996 and 1997. On August 16, 2002 any options outstanding
will be exercisable without regard to the per share price of Common Stock if
Anchor is continuing to provide services to the Company at such date.

                                     F-33



<PAGE>



       A summary of the Company's stock option activity is as follows:

                                                            OPTION SHARES

<TABLE>
<CAPTION>

                                    Key                                                               Exercise Price
                                 Employees        Directors          Anchor           Total          Range-Per Share
                                 ---------        ---------          ------           -----          ---------------
<S>                              <C>             <C>                <C>               <C>          <C>      
Balance 9/30/94.............          202,500           20,000           969,096       1,191,596   $6.00 to $16.125
Granted 1995................            1,000            8,000               ---           9,000   $16.00 to $17.25
Exercised...................            1,500              ---           400,000         401,500   $6.00 to $8.00
Cancelled...................              750              ---               ---             750   $8.00
                                  -----------   --------------     -------------   -------------
Balance 9/30/95.............          201,250           28,000           569,096         798,346   $6.00 to $17.25
Granted 1996................           75,800            8,000               ---          83,800   $11.25 to $28.00
Exercised...................           19,450              ---               ---          19,450   $8.00
Cancelled...................           71,250              ---               ---          71,250   $8.00 to $28.00
                                  -----------   --------------     -------------   -------------
Balance 9/30/96.............          186,350           36,000           569,096         791,446   $6.00 to $28.00
Granted 1997................           68,500            8,000               ---          76,500   $.8125 to $8.00
Exercised...................              ---              ---               ---             ---
Cancelled...................           31,375              ---               ---          31,375   $8.00 to $28.00
                                  -----------   --------------     -------------   -------------
Balance 9/30/97.............          223,475           44,000           569,096         836,571   $.8125 to $28.00


Exercisable at
  September 30:
   1995.....................           50,125           28,000           369,096         447,221   $6.00 to $17.25
   1996.....................           77,800           34,000           369,096         480,896   $6.00 to $28.00
   1997.....................          108,200           44,000           369,096         519,296   $6.00 to $28.00
</TABLE>

       The Company has elected to continue to measure compensation cost for
its stock option plans using the intrinsic value based method of accounting.
No pro forma disclosure of net loss is presented since it is immaterial.

(25)   FAIR VALUE OF FINANCIAL STATEMENTS

       The following methods and assumptions were used to estimate the fair
value of each class of financial instruments:

       Cash and Cash Equivalents, Accounts Receivable and Accounts Payable.
The carrying value amount approximates fair value because of the short
maturity of these instruments.

       Long-Term Debt. The fair value of the Company's long-term debt is
estimated based upon the quoted market prices for the same or similar issues
or on the current rates offered to the Company for debt of the same remaining
maturities.

       PIK Preferred Stock. The fair value was determined by quoted market
price.



                                     F-34



<PAGE>



       The estimated fair value of the Company's financial instruments at
September 30, 1997 are as follows:

                                               Carrying           Fair
                                                Amount            Value
                                                ------            -----
Cash and cash equivalents                      $  9,212         $   9,212
Accounts receivable                              76,190            76,190
Accounts payable                                 32,267            32,267
DIP financing (including current portion)        87,471            87,471
Senior notes                                    309,728           114,000
Long-term debt (including current portion)       14,087            14,087
PIK preferred stock                             124,637             6,339


(26)   GUARANTOR SUBSIDIARIES

       Both the 12% Notes and the 11 1/8% Notes are guaranteed on a senior
unsecured basis, pursuant to guaranties (the "Guaranties") by all of the
Company's wholly-owned direct and certain of its wholly-owned indirect
domestic subsidiaries (the "Guarantors"). Both Notes are unconditionally
guarantied, jointly and severally, on a senior unsecured basis, by each of the
Guarantors under such Guarantor's guaranty (a "Guaranty"). Each Guaranty by a
Guarantor is limited in amount to an amount not to exceed the maximum amount
that can be guarantied by that Guarantor without rendering the Guaranty, as it
relates to such Guarantor, voidable under applicable law relating to
fraudulent conveyance or fraudulent transfer. As such, a Guaranty could be
effectively subordinated to all other indebtedness (including guarantees and
other contingent liabilities) of the applicable Guarantor, and, depending on
the amount of such indebtedness, a Guarantor's liability on its Guaranty could
be reduced to zero. The Company conducts all of its automotive business
through and derives virtually all of its income from its subsidiaries.
Therefore, the Company's ability to make required principal and interest
payments with respect to the Company's indebtedness (including the Notes) and
other obligations depends on the earnings of its subsidiaries and on its
ability to receive funds from its subsidiaries through dividends or other
payments. The ability of its subsidiaries to pay such dividends or make
payments on intercompany indebtedness or otherwise will be subject to
applicable state laws.

       Upon the sale or other disposition of a Guarantor or the sale or
disposition of all or substantially all of the assets of a Guarantor (in each
case other than to the Company or an affiliate of the Company) permitted by
the indenture governing the Notes, such Guarantor will be released and
relieved from all of its obligations under its Guaranty.

       The following condensed consolidating information presents:

       1. Condensed balance sheets as of September 30, 1997 and 1996 and
condensed statements of operations and cash flows for the years ended
September 30, 1997, 1996 and 1995.


                                     F-35



<PAGE>



       2. The Parent Company and Combined Guarantor Subsidiaries with their
investments in subsidiaries accounted for on the equity method.

       3. Elimination entries necessary to consolidate the Parent Company and
all of its subsidiaries.

       4. Reorganization items have been included under the Parent Company in
the accompanying condensed consolidating statements of operations and cash
flows.

       5. The Parent Company, pursuant to the terms of an interest bearing
note with Guarantor Subsidiaries, has included in their allocation of
expenses, interest expense of $14,377, $14,078, and $5,679 for the years ended
September 30, 1997, 1996 and 1995, respectively.

       The Company believes that providing the following condensed
consolidating information is of material interest to investors in the Notes
and has not presented separate financial statements for each of the
Guarantors, because it was deemed that such financial statements would not
provide the investor with any material additional information.


                                     F-36



<PAGE>

                           HARVARD INDUSTRIES, INC.
                            (DEBTOR-IN-POSSESSION)
                          CONSOLIDATING BALANCE SHEET
                              SEPTEMBER 30, 1997
                           (IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>

                                                     Combined      Combined
                                       Parent       Guarantor     Non-Guarantor
                                      Company       Subsidiaries  Subsidiaries   Eliminations  Consolidated
                                     ----------     ------------  -------------  ------------  ------------
<S>                                 <C>             <C>            <C>            <C>           <C> 
ASSETS
Current assets:
 Cash and cash equivalents.........  $   3,324       $    5,376     $      512     $      --     $    9,212
 Accounts receivable, net..........      2,795           71,355          2,040            --         76,190
 Inventories.......................      2,475           50,662          1,081            --         54,218
 Prepaid expenses and other current
  assets...........................      1,698            5,904             --            --          7,602
                                     ---------       ----------     ----------     ---------     ----------
  Total current assets.............     10,292          133,297          3,633            --        147,222
Investment in Subsidiaries.........    (48,751)          12,138             --        36,613             --
Property, plant and equipment, net.      3,878          119,164          9,224            --        132,266
Intangible assets, net.............         --            4,417             --            --          4,417
Intercompany receivables...........    240,542          276,424          9,483      (526,449)            --
Other assets.......................     20,164            3,425             --            --         23,589
                                     ---------       ----------     ----------     ---------     ----------
                                     $ 226,125       $  548,865     $   22,340     $(489,836)    $  307,494 
                                     =========       ==========     ==========     =========     ==========
LIABILITIES AND SHAREHOLDERS'
 EQUITY (DEFICIENCY)
Current liabilities:
 Current portion of DIP loans......  $     867       $   35,569     $       --     $      --     $   36,436
 Current portion of long-term debt.         --            1,748             --            --          1,748 
 Accounts payable..................        228           30,214          1,825            --         32,267
 Accrued expenses..................     16,088           55,959            188            --         72,235 
 Income taxes payable..............     (1,751)           1,246          2,945            --          2,440 
                                     ---------       ----------     ----------     ---------     ----------
   Total current liabilities.......     15,432          124,736          4,958            --        145,126 
Liabilities subject to compromise(a)   317,508           79,742             69            --        397,319 
DIP loans..........................        705           50,330             --            --         51,035
Long-term debt.....................                      12,339             --            --         12,339
Postretirement benefits other than 
 pensions..........................         --           96,929             --            --         96,929
Intercompany payables..............    311,955          210,284          4,210      (526,449)            -- 
Other..............................      3,016           23,256            965            --         27,237 
                                     ---------       ----------     ----------     ---------     ----------
   Total liabilities...............    648,616          597,616         10,202      (526,449)       729,985
                                     ---------       ----------     ----------     ---------     ----------
PIK Preferred......................    124,637               --             --            --        124,637
                                     ---------       ----------     ----------     ---------     ----------

Shareholders' equity (deficiency):
 Common stock and additional
  paid-in-capital..................     32,204           73,054             10       (73,064)        32,204 
 Additional minimum pension 
  liability........................     (3,665)          (3,659)            --         3,659         (3,665)
 Foreign currency translation 
  adjustment.......................     (1,930)          (1,930)        (1,930)        3,860         (1,930)
 Retained earnings (deficiency)....   (573,737)        (116,216)        14,058       102,158       (573,737)
                                     ---------       ----------     ----------     ---------     ----------
  Total shareholders' equity 
   (deficiency)....................   (547,128)         (48,751)        12,138        36,613       (547,128)
                                     ---------       ----------     ----------     ---------     ----------
                                     $ 226,125       $  548,865     $   22,340     $(489,836)    $  307,494 
                                     =========       ==========     ==========     =========     ==========
</TABLE>

     (a)  Includes $309,728 senior notes payable and accrued interest which are
          subject to the guaranty of the combined guarantor subsidiaries.



                                     F-37

<PAGE>


                           HARVARD INDUSTRIES, INC.
                          CONSOLIDATING BALANCE SHEET
                              SEPTEMBER 30, 1996
                           (IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
                                                      Combined        Combined
                                        Parent        Guarantor     Non-Guarantor
                                        Company      Subsidiaries   Subsidiaries   Eliminations  Consolidated
                                       ---------     ------------   -------------  ------------  ------------
<S>                                    <C>            <C>            <C>            <C>           <C>                              
ASSETS
Current assets:
 Cash and cash equivalents...........  $  (1,655)     $    4,367     $    (1,605)   $      --     $    1,107                       
 Accounts receivable, net............      5,925          88,124           5,532           --         99,581
 Inventories.........................      5,056          46,312           2,533           --         53,901             
 Prepaid expenses and other current
  assets.............................        372           1,265              --           --          1,637
                                       ---------      ----------     -----------    ---------     ----------
   Total current assets..............      9,698         140,068           6,460           --        156,226  
Investment in Subsidiaries...........    296,822          41,877              --     (338,699)            --
Property, plant and equipment, net...      4,747         286,575           9,351           --        300,673
Intangible assets, net...............         --         127,250              --           --        127,250
Intercompany receivables.............    394,988         222,486          16,134     (633,608)            --        
Other assets.........................     25,428           8,092              36           --         33,556
                                       ---------      ----------     -----------    ---------     ----------
                                       $ 731,683      $  826,348     $    31,981    $(972,307)    $  617,705
                                       =========      ==========     ===========    =========     ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
  (DEFICIENCY)
Current liabilities:
 Current portion of long-term debt...  $      --      $    1,487     $        --    $      --     $    1,487        
 Accounts payable....................      3,711          81,975           3,387           --         89,073
 Accrued expenses....................     19,947          47,002              --           --         66,949
 Income taxes payable................          5           1,169           4,701           --          5,875
                                       ---------      ----------     -----------    ---------     ----------
    Total current liabilities........     23,663         131,633           8,088           --        163,384
Long-term debt.......................    300,445          58,671              --           --        359,116
Postretirement benefits other than 
  pensions...........................         --         101,464              --           --        101,464
Intercompany payables................    435,038         217,523         (18,953)    (633,608)            --
Other................................      3,766          20,235             969           --         24,970
                                       ---------      ----------     -----------    ---------     ----------
    Total liabilities................    762,912         529,526          (9,896)    (633,608)       648,934
                                       ---------      ----------     -----------    ---------     ----------
PIK Preferred........................    114,495              --              --           --        114,495
                                       ---------      ----------     -----------    ---------     ----------

Shareholders' equity (deficiency):
 Common stock and additional
  paid-in-capital....................     42,315          73,054             135      (73,189)        42,315 
 Additional minimum pension liability     (1,767)         (1,767)             --        1,767         (1,767)
 Foreign currency translation 
  adjustment.........................     (1,964)         (1,952)         (1,952)       3,904         (1,964)
 Retained earnings (deficiency)......   (184,308)        227,487          43,694     (271,181)      (184,308)
                                       ---------      ----------     -----------    ---------     ----------

    Total shareholders' equity 
      (deficiency)...................   (145,724)        296,822          41,877     (338,699)      (145,724)
                                       ---------      ----------     -----------    ---------     ----------
                                       $ 731,683      $  826,348     $    31,981    $(972,307)    $  617,705 
                                       =========      ==========     ===========    =========     ==========
</TABLE>























                                     F-38

<PAGE>


                           HARVARD INDUSTRIES, INC.
                            (DEBTOR-IN-POSSESSION)
                 CONSOLIDATING INCOME STATEMENTS OF OPERATIONS
                         YEAR ENDED SEPTEMBER 30, 1997
                           (IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
                                                      Combined        Combined
                                        Parent        Guarantor     Non-Guarantor
                                        Company      Subsidiaries   Subsidiaries   Elimination   Consolidated
                                       ---------     ------------   -------------  -----------   ------------
<S>                                    <C>            <C>            <C>            <C>           <C>                              
Sales................................  $  19,733      $  763,459     $    27,577    $      --     $  810,769                       
                                       ---------      ----------     -----------    ---------     ----------

Costs and expenses:
 Cost of sales.......................     20,380         751,489          25,905           --        797,774             
 Selling, general and administrative.     13,921          31,901              --           --         45,822
 Interest expense....................     24,093          12,378             188           --         36,659  
 Amortization of goodwill............         --           8,448              --           --          8,448
 Other (income) expense, net.........        853           4,656              21           --          5,530
 Impairment of long-lived assets and
  restructuring costs................      1,000         287,545              --           --        288,545        
 Equity in (income) loss of                                                                              
  subsidiaries.......................    354,293             337              --     (354,630)            --        
 Allocated expenses..................    (21,600)         20,160           1,440           --             --
                                       ---------      ----------     -----------    ---------     ----------
    Total costs and expenses.........    392,940       1,116,914          27,554     (354,630)     1,182,778
                                       ---------      ----------     -----------    ---------     ----------

Income (loss) before income taxes and
  reorganization items...............   (373,207)       (353,455)             23      354,630       (372,009)

Reorganization items.................     16,222              (6)             --           --         16,216
                                       ---------      ----------     -----------    ---------     ----------

Income (loss) before income taxes....   (389,429)       (353,449)             23      354,630       (388,225)

Provision for income taxes...........         --             844             360           --          1,204  
                                       ---------      ----------     -----------    ---------     ----------

  Net loss...........................  $(389,429)     $ (354,293)    $      (337)   $ 354,630     $ (389,429)
                                       =========      ==========     ===========    =========     ==========
</TABLE>























                                     F-39

<PAGE>

                           HARVARD INDUSTRIES, INC.
                 CONSOLIDATING INCOME STATEMENTS OF OPERATIONS
                         YEAR ENDED SEPTEMBER 30, 1996
                           (IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
                                                      Combined        Combined
                                        Parent        Guarantor     Non-Guarantor
                                        Company      Subsidiaries   Subsidiaries   Elimination   Consolidated
                                       ---------     ------------   -------------  -----------   ------------
<S>                                    <C>            <C>            <C>            <C>           <C>                              
Sales................................  $  33,360      $  765,455     $    26,022    $      --     $  824,837                       
                                       ---------      ----------     -----------    ---------     ----------

Costs and expenses:
 Cost of sales.......................     20,073         733,510          22,558           --        776,141             
 Selling, general and administrative.     10,668          32,186               4           --         42,858
 Interest expense....................     41,478           5,526              --           --         47,004     
 Amortization of goodwill............         --          15,312              --           --         15,312
 Other (income) expense, net.........      1,536           1,347          (1,345)          --          1,538
 Equity in (income) loss of                                                                              
  subsidiaries.......................     41,137          (2,278)             --      (38,859)            --        
 Allocated expenses..................    (21,078)         19,857           1,221           --             --
                                       ---------      ----------     -----------    ---------     ----------
    Total costs and expenses.........     93,814         805,460          22,438      (38,859)       882,853
                                       ---------      ----------     -----------    ---------     ----------

Income (loss) before provision for   
  income taxes.......................    (60,454)        (40,005)          3,584       38,859        (58,016)
Provision for income taxes...........        758           1,132           1,306           --          3,196  
                                       ---------      ----------     -----------    ---------     ----------
Income (loss) from continuing 
  operations.........................    (61,212)        (41,137)             78       38,859        (61,212)

Loss from discontinued operations....     (7,500)             --              --           --         (7,500)
                                       ---------      ----------     -----------    ---------     ----------

Net income (loss)....................  $ (68,712)     $  (41,137)    $     2,278    $  38,859     $  (68,712)
                                       =========      ==========     ===========    =========     ==========
</TABLE>






























                                     F-40

<PAGE>


                           HARVARD INDUSTRIES, INC.
                 CONSOLIDATING INCOME STATEMENTS OF OPERATIONS
                         YEAR ENDED SEPTEMBER 30, 1995
                           (IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
                                                       Combined      Combined
                                        Parent         Guarantor   Non-Guarantor
                                        Company      Subsidiaries  Subsidiaries   Elimination   Consolidated
                                       ---------     ------------  -------------  -----------   ------------

<S>                                    <C>            <C>           <C>             <C>          <C>                              
Sales................................  $  31,796      $  568,264    $    31,772     $     --     $  631,832                       
Intercompany sales...................         --              --          8,570       (8,570)            --
                                       ---------      ----------    -----------     --------     ----------
    Total sales......................     31,796         568,264         40,342       (8,570)       631,832   
                                       ---------      ----------    -----------     --------     ----------

Costs and expenses:
 Cost of sales.......................     28,342         504,655         32,913       (8,570)       557,340            
 Selling, general and administrative.     11,811          21,226             --           --         33,037
 Interest expense....................     17,473           2,097              9           --         19,579  
 Amortization of goodwill............         --           2,986             --           --          2,986
 Other (income) expense, net.........     (1,630)            238           (397)          --         (1,789)
 Equity in (income) loss of 
  subsidiaries.......................    (15,981)         (1,864)            --       17,845             --      
 Allocated expenses..................    (14,332)         12,879          1,453           --             --
                                       ---------      ----------    -----------     --------     ----------
   Total costs and expenses..........     25,683         542,217         33,978        9,275        611,153
                                       ---------      ----------    -----------     --------     ----------

Income (loss) before income taxes....      6,113          26,047          6,364      (17,845)        20,679
Provision for income taxes...........     (3,000)         10,066          4,500           --         11,566  
                                       ---------      ----------    -----------     --------     ----------
Income (loss) from continuing 
  operations before extraordinary 
  item...............................      9,113          15,981          1,864      (17,845)         9,113

Loss from discontinued operations....         --              --             28          (28)            --
                                       ---------      ----------    -----------     --------     ----------

Income (loss) before extraordinary 
  item...............................      9,113          15,981          1,892      (17,873)         9,113

Extraordinary item - early 
  extinguishnent of debt (net of 
  income tax benefit of $1,200)......     (2,192)             --             --           --         (2,192)
                                       ---------      ----------     ----------     --------     ----------

  Net income (loss)..................  $   6,921      $   15,981     $    1,892     $(17,873)    $    6,921
                                       ==========     ==========     ==========     ========     ==========
</TABLE>

















                                     F-41

<PAGE>


                           HARVARD INDUSTRIES, INC.
                            (DEBTOR-IN-POSSESSION)
                     CONSOLIDATING STATEMENT OF CASH FLOWS
                         YEAR ENDED SEPTEMBER 30, 1997
                           (IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
                                                                    Combined        Combined
                                                       Parent       Guarantor     Non-Guarantor
                                                      Company      Subsidiaries   Subsidiaries    Elimination   Consolidated
                                                     ---------     ------------   -------------   -----------   ------------
<S>                                                 <C>            <C>            <C>            <C>            <C> 
Cash flows related to operating activities:
  Loss from continuing operations before 
    reorganization items............................ $(373,207)     $ (354,299)    $      (337)   $   354,630    $ (373,213)
  Add back (deduct) items not affecting
   cash and cash equivalents:
    Equity in (income) loss of subsidiaries.........   354,293             337              --       (354,630)           -- 
    Depreciation and amortization...................     2,595          56,144           1,447             --        60,186 
    Impairment of long-lived assets and restructuring 
     costs..........................................     1,000         287,545              --             --       288,545 
    Loss on disposition of property, plant and
     equipment and property held for sale...........        48           1,883              --             --         1,931
    Postretirement benefits.........................        --          (4,138)             --             --        (4,138)
    Write-off of deferred debt expense..............     1,792              --              --             --         1,792
    Senior notes interest accrued prior to chapter 11, 
     not paid.......................................     9,728              --              --             --         9,728
Changes in operating assets and liabilities:
    Accounts receivable.............................     3,130          16,176           3,492             --        22,798 
    Inventories.....................................     2,581         (11,258)          1,452             --        (7,225)
    Other current assets............................    (1,326)         (4,639)             --             --        (5,965)
    Accounts payable................................    (3,483)        (51,761)         (1,562)            --       (56,806)
    Accounts payable prepetition....................     1,618          79,742              69             --        81,429 
    Accrued expenses and income taxes payable.......    (6,229)         (2,457)         (1,568)            --       (10,254)
    Other noncurrent liabilities....................     3,775           3,158              --             --         6,933
                                                     ---------      ----------     -----------    -----------    ----------

Net cash provided by (used in) continuing operations 
   before reorganization items......................    (3,685)         16,433           2,993             --        15,741

Net cash used by reorganization items...............    (2,870)              6              --             --        (2,864)
                                                     ---------      ----------     -----------    -----------    ----------

Net cash provided by (used in) continuing operations    (6,555)         16,439           2,993             --        12,877
                                                     ---------      ----------     -----------    -----------    ----------

Cash flows related to investing activities:
  Acquisition of property, plant and equipment......      (147)        (35,116)         (1,309)            --       (36,572)
  Cash flows related to net assets of discountinued 
   operations.......................................       713              --              --             --           713
  Proceeds from disposition of property,
   plant and equipment..............................        --           1,703              --             --         1,703
  Net change in other noncurrent accounts...........    (1,716)           (159)             43             --        (1,832)       
                                                     ---------      ----------     -----------    -----------    ----------

Net cash used in investing activities...............    (1,150)        (33,572)         (1,266)            --       (35,988)
                                                     ---------      ----------     -----------    -----------    ----------

Cash flows related to financing activities:
  Deferred DIP financing costs......................    (2,200)             --              --             --        (2,200)
  Net payments under financing / credit agreement...      (445)        (38,389)             --             --       (38,834)
  Net borrowings under DIP financing agreement......     1,572          85,899              --             --        87,471
  Proceeds from sale of stock / exercise of stock 
   options..........................................        31              --              --             --            31
  Repayments of long-term debt......................        --          (7,682)             --             --        (7,682)
  Pension fund payment pursuant to PBGC settlement 
   agreement........................................    (6,000)             --              --             --        (6,000)
  Payment of EPA settlements........................    (1,053)           (517)             --             --        (1,570)
  Net changes in intercompany balances..............    20,779         (21,169)            390             --            --
                                                     ---------      ----------     -----------    -----------    ----------

Net cash provided by financing activities...........    12,684          18,142             390             --        31,216
                                                     ---------      ----------     -----------    -----------    ----------

Net increase (decrease) in cash and cash equivalents     4,979           1,009           2,117             --         8,105

Cash and cash equivalents:
  Beginning of period...............................    (1,655)          4,367          (1,605)            --         1,107
                                                     ---------      ----------     -----------    -----------    ----------

  End of period..................................... $   3,324      $    5,376     $       512    $        --    $    9,212
                                                     =========      ==========     ===========    ===========    ==========
</TABLE>




                                     F-42

<PAGE>


                           HARVARD INDUSTRIES, INC.
                     CONSOLIDATING STATEMENT OF CASH FLOWS
                         YEAR ENDED SEPTEMBER 30, 1996
                           (IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
                                                                    Combined        Combined
                                                       Parent       Guarantor     Non-Guarantor
                                                      Company      Subsidiaries   Subsidiaries    Elimination   Consolidated
                                                     ---------     ------------   -------------   -----------   ------------
<S>                                                 <C>            <C>            <C>            <C>            <C> 
Cash flows related to operating activities:
  Income (loss) from continuing operations ......... $ (61,212)     $  (41,137)    $     2,278    $    38,859    $  (61,212)
  Add back (deduct) items not affecting
   cash and cash equivalents:
    Equity in (income) loss of subsidiaries.........    41,137          (2,278)             --        (38,859)           -- 
    Depreciation and amortization...................     6,204          58,446           1,008             --        65,658 
    Loss on disposition of property, plant and
     equipment and property held for sale...........        --           2,053              --             --         2,053
    Postretirement benefits.........................        --           5,822              --             --         5,822 
Changes in operating assets and liabilities:
    Accounts receivable.............................       213           1,465           1,455             --         3,133 
    Inventories.....................................       248           8,245          (1,381)            --         7,112 
    Other current assets............................       (31)           (192)              1             --          (222)
    Accounts payable................................       438           9,886            (953)            --         9,371 
    Accrued expenses and income taxes payable.......    (6,103)        (25,714)          1,362             11       (30,444)
    Other noncurrent liabilities....................        --             819              --             --           819
                                                     ---------      ----------     -----------    -----------    ----------

Net cash provided by (used in) operations...........   (19,106)         17,415           3,770             11         2,090
                                                     ---------      ----------     -----------    -----------    ----------

Cash flows related to investing activities:
  Acquisition of property, plant and equipment......      (291)        (35,474)         (4,813)            --       (40,578)
  Cash flows related to discontinued operations.....    (3,332)             --              --             --        (3,332)
  Proceeds from disposition of property,
   plant and equipment..............................        --             909              --             --           909
  Net change in other noncurrent accounts...........    (5,802)          3,260          (2,857)           176        (5,223)       
                                                     ---------      ----------     -----------    -----------    ----------

Net cash provided by (used in) investing activities.    (9,425)        (31,305)         (7,670)           176       (48,224)
                                                     ---------      ----------     -----------    -----------    ----------

Cash flows related to financing activities:
  Proceeds from exercise of stock options...........       190              --              --             --           190 
  Net borrowings under credit agreement.............       445          38,389              --             --        38,834
  Repayments of long-term debt......................       (31)         (3,001)             --             --        (3,032)
  Pension fund payments pursuant to PBGC settlement 
   agreement........................................    (6,000)             --              --             --        (6,000)
  Payment of EPA settlements........................    (2,090)           (586)             --             --        (2,676)
  Intercompany dividends............................        --           5,683          (5,683)            --            --
  Net changes in intercompany balances..............    15,717         (20,048)          4,487           (156)           --
                                                     ---------      ----------     -----------    -----------    ----------

Net cash provided by (used in) financing activities.     8,231          20,437          (1,196)          (156)       27,316
                                                     ---------      ----------     -----------    -----------    ----------

Net increase (decrease) in cash and cash equivalents   (20,300)          6,547          (5,096)            31       (18,818)

Cash and cash equivalents:
  Beginning of period...............................    18,645          (2,180)          3,491            (31)       19,925
                                                     ---------      ----------     -----------    -----------    ----------

  End of period..................................... $  (1,655)     $    4,367     $    (1,605)   $        --    $    1,107
                                                     =========      ==========     ===========    ===========    ==========
</TABLE>




                                     F-43

<PAGE>


                           HARVARD INDUSTRIES, INC.
                     CONSOLIDATING STATEMENT OF CASH FLOWS
                         YEAR ENDED SEPTEMBER 30, 1995
                           (IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
                                                                    Combined        Combined
                                                       Parent       Guarantor     Non-Guarantor
                                                      Company      Subsidiaries   Subsidiaries    Elimination   Consolidated
                                                     ---------     ------------   -------------   -----------   ------------
<S>                                                 <C>            <C>            <C>            <C>            <C> 
Cash flows related to operating activities:
  Net income (loss) from continuing operations 
   before extraordinary item........................ $   9,113      $   15,981     $     1,864    $   (17,845)   $    9,113 
  Add back (deduct) items not affecting
   cash and cash equivalents:
    Income tax allocation charge....................     2,722           3,529              --             --         6,251 
    Equity in (income) loss of subsidiaries.........   (15,981)         (1,864)             --         17,845            -- 
    Depreciation and amortization...................     2,698          31,114           1,044             --        34,856
    Disposition of property, plant and
     equipment and property held for sale...........        (1)            419              43             --           461
    Postretirement benefits.........................        --           4,373              --             --         4,373 
Changes in operating assets and liabilities:
    Accounts receivable.............................    (1,883)         (8,830)            848             --        (9,865)
    Inventories.....................................      (502)            450             932             --           880 
    Other current assets............................     1,430             283              (1)            --         1,712 
    Accounts payable................................     1,341           2,535          (2,180)            --         1,696 
    Accrued expenses and income taxes payable.......   (11,315)         (4,186)         (6,467)            14       (21,954)
    Other noncurrent liabilities....................      (331)           (271)         (1,870)            --        (2,472)
                                                     ---------      ----------     -----------    -----------    ----------

Net cash provided by (used in) operations...........   (12,709)         43,533          (5,787)            14        25,051
                                                     ---------      ----------     -----------    -----------    ----------

Cash flows related to investing activities:
  Acquisition of property, plant and equipment......      (232)        (20,996)           (852)            --       (22,080)
  Proceeds to date from sale of discontinued 
   operations.......................................     5,029              --             602           (602)        5,029 
  Proceeds from disposition of property,
   plant and equipment..............................         2           1,178              79             --         1,259
  Acquisition of Doehler-Jarvis, including 
   refinancing, net of cash acquired................  (210,231)             --              --             --      (210,231)
  Net change in other noncurrent accounts...........     6,289          (8,988)          1,282            671          (746)       
                                                     ---------      ----------     -----------    -----------    ----------

Net cash provided by (used in) investing activities.  (199,143)        (28,806)          1,111             69      (226,769)
                                                     ---------      ----------     -----------    -----------    ----------

Cash flows related to financing activities:
  Proceeds from Senior Notes Offering...............   200,000              --              --             --       200,000 
  Issuance cost of Senior Notes and Revolving
   Credit Facility..................................   (11,804)             --              --             --       (11,804)
  Redemption of PIK preferred stock.................   (15,000)             --              --             --       (15,000)
  Proceeds from exercise of stock options...........     2,419              --                                        2,419 
  Repayments of long-term debt......................    (1,147)         (4,673)             --             --        (5,820)
  Pension fund payment pursuant to PBGC settlement
   agreement........................................        --          (6,000)             --             --        (6,000)
  Payment of EPA settlements........................    (1,884)           (535)            (93)            --        (2,512)
  Net changes in intercompany balances..............    53,695         (60,116)          6,421             --            --
                                                     ---------      ----------     -----------    -----------    ----------

Net cash provided by (used in) financing activities.   226,279         (71,324)          6,328             --       161,283
                                                     ---------      ----------     -----------    -----------    ----------

Net increase (decrease) in cash and cash equivalents    14,427         (56,597)          1,652             83       (40,435)

Cash and cash equivalents:
  Beginning of period...............................     4,218          54,417           1,839           (114)       60,360
                                                     ---------      ----------     -----------    -----------    ----------

  End of period..................................... $  18,645      $   (2,180)    $     3,491    $       (31)   $   19,925
                                                     =========      ==========     ===========    ===========    ==========
</TABLE>




                                     F-44



<PAGE>


(27)   QUARTERLY FINANCIAL DATA (UNAUDITED)
       (IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>

Fiscal 1997
Quarters ended                                             Dec. 31             Mar. 31            June 30          Sept. 30
--------------                                             -------             -------            -------          --------
<S>                                                      <C>                 <C>                <C>               <C>       
Sales..............................................      $  187,261          $  209,226         $ 217,914         $  196,368
Gross (loss) profit ...............................          (3,201)               (746)            6,305             10,637
                                                         ----------          ----------         ---------         ----------

       Net loss....................................      $  (30,168)         $ (168,154)        $ (28,291)        $ (162,816) (b)
                                                         ==========          ==========         =========         ==========

Primary per common and common
 equivalent share (c)


       Net Loss....................................      $    (4.90)         $   (24.57) (d)    $   (4.27)        $   (23.17) (e)
                                                         ==========          ==========         =========         ==========


Cash dividends paid................................      $       --          $       --         $      --         $       --
                                                         ==========          ==========         =========         ==========

Fiscal 1996
Quarters ended
--------------

Sales..............................................      $  210,536          $  200,821      $   222,300          $  191,180
Gross profit.......................................          22,186               4,395           14,025               8,090
(Loss) income 
  Continuing operations............................          (1,724)            (20,962)         (11,097)            (27,429) (g)
  Discontinued operations..........................             ---                  --               --              (7,500)
                                                         ----------          ----------      -----------          ----------


      Net (loss) income ...........................      $   (1,724)         $  (20,962)     $   (11,097)         $  (34,929)
                                                         ==========          ==========      ===========          ==========

Primary per common and common
 equivalent share (a)
(Loss) income from continuing operations...........      $    (0.78)         $   ( 3.53)     $     (2.12)         $    (4.45)
(Loss) income from discontinued
  operations.......................................              --                  --               --               (1.07)
                                                         ----------          ----------      -----------          ----------

      Net (loss) income ...........................      $    (0.78)         $    (3.53)     $     (2.12)         $    (5.52)
                                                         ==========          ==========      ===========          ==========

Cash dividends paid................................      $       --          $       --      $        --          $       --
                                                         ==========          ==========      ===========          ==========
</TABLE>

------------
(a)    Year-to-date earnings per share do not equal the sum of the quarterly 
       earnings per share.
(b)    Includes curtailment gains of $8,249.
(c)    Fully diluted earnings per share are the same as primary earnings per 
       share.
(d)    Includes an impairment charge of $134,987.  See Note 13.
(e)    Includes an impairment and restructuring charge of $153,558.  See 
       Note 13.
(f)    Includes a charge of $4,636 of additional amortization of goodwill 
       related to Doehler-Jarvis. See Note 2.



                                     F-45



<PAGE>



(28)   SUBSEQUENT EVENTS (UNAUDITED)

       In November 1997, the Company sold the Material Handling division of
its Kingston-Warren subsidiary for approximately $18,000 of gross proceeds.
Proceeds of $7,840 were applied to the scheduled quarterly payments of $3,250
(November 30, 1997 and February 28, 1998 and $1,340 was applied to the May 31,
1998 payment), and $7,840 was applied to the final installment due May 1999.
The balance of the proceeds were used for working capital purposes. The
transaction resulted in a gain on sale of approximately $11,400 in the first
quarter of 1998.

       In November 1997, the Company entered into an agreement to sell its 
land and building related to the Harvard Interiors Furniture Division located 
in St. Louis, Missouri, for $2,700. A closing is anticipated by early 
January 1998. Of the proceeds, $1,910 will be applied to the May 31, 1998
quarterly term principal payment and the balance to the August 1998 quarterly
term loan payment. 

       Subsequent to September 30, 1997, management plans to wind down existing
operations at its Doehler-Jarvis Toledo, Inc. subsidiary or otherwise sell or
dispose of that facility and to maintain the operations of its remaining
Doehler-Jarvis facilities located at Greeneville, Tennessee and Pottstown,
Pennsylvania. Both Ford and General Motors are negotiating with the Company to
defray certain expenses and assume certain obligations in connection with the
wind down of the Toledo facility. The Company is unable to estimate its costs
associated with this wind down.

       Condensed operating data of Harman, Interiors, Material Handling and 
Toledo being wound down or disposed of are as follows:




                                        1997      1996
                                        ----      ----
Sales                                $215,868   $251,442
Gross profit (loss)                   (14,952)    12,312
Impairment of long-lived assets       101,025       --

       The Company has been in negotiations with certain of its creditors to 
obtain a $25,000 subordinated term loan, for a period maturing not later 
than the date on which there is consummated a plan of reorganization for the 
Company under Chapter 11. The proceeds of the term loan are intended to be 
applied to reduce outstanding indebtedness under the Company's revolving credit
loan pursuant to the DIP Financing Agreement, thereby permitting the Company to 
increase its liquidity under the revolving credit loan. Although the term loan
plan remains in negotiations, there has been an agreement in principle to pay
$2,500 of facility and funding fees, and for the loan to bear interest at a rate
per annum equal to the greater of 13% or the highest per annum interest rate
for term and revolving credit loans under the DIP Financing Agreement plus 3%.
The new term loan obligation will be subordinate to the liens under the DIP 
Financing Agreement and will be collateralized by all assets previously pledged
to the lender under the DIP Financing Agreement. Also see Note 9.

      In December 1997, the Company announced the appointment of Roger Pollazzi
as Chief Operating Officer and the relocation of its corporate headquarters
from Tampa, Florida to Lebanon, New Jersey. The Company currently estimates 
that relocation costs will approximate $1,500, related primarily to severance 
and lease termination fees. Such costs will be reflected in the first quarter 
of fiscal 1998.

                                     F-46