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

                                   FORM 10-K

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

    For the fiscal year ended December 31, 1996

                                      OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
    EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

For the transition period from                   to

                          Commission file number 2-66564

                             SPINNAKER INDUSTRIES, INC.
             ------------------------------------------------------
             (Exact name of Registrant as specified in its charter)

         DELAWARE                                       06-0544125
-------------------------------                      ------------------
(State or other jurisdiction of                       (I.R.S. Employer
 incorporation or organization)                      Identification No.)

600 N. PEARL ST.  SUITE 2160, DALLAS, TX                   75201
----------------------------------------                   -----
(Address of principal executive offices)                 (Zip Code)

Registrant's telephone number, including area code       214-855-0322
                                                         ------------

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

        Common Stock................................ no par value
                              Title of Class
        Class A Common Stock........................ no par value
                              Title of Class

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 Regulations S-K is not contained herein, and will not be contained to, the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K. [ ]

The total aggregate market value of the 1,256,118 shares of voting stock held by
non-affiliates of the Registrant (628,059 shares of Common Stock and 628,059
shares of Class A Common Stock ) was $66,260,225 (based upon the closing bid of
the Registrant's Common Stock and Class A Common Stock in the NASDAQ on March
12, 1997 of $42.50 per share of Common Stock and $63 per share of Class A Common
Stock). The term affiliates is deemed, for this purpose only, to refer only to
directors, officers and principal stockholders of the Registrant.

Indicate the number of shares outstanding of each of the Registrant's classes of
common stock, as of the latest practicable date.

The number of outstanding shares of the Registrant's Common Stock and Class A
Common Stock was 3,084,211 and 3,074,598, respectively, as of March 12, 1997,
for a total of 6,158,809.

                     DOCUMENTS INCORPORATED BY REFERENCE
                     -----------------------------------

Parts III: Proxy Statement for the 1997 Annual Meeting of Stockholders to be
held May 29, 1997.

<PAGE>

                                        PART I

ITEM 1.  BUSINESS

    Spinnaker Industries, Inc. (the "Registrant" or the "Company") owns 100% of
the outstanding capital stock of Central Products Company, a Delaware
corporation ("Central Products"), Brown-Bridge Industries, Inc., a Delaware
corporation ("Brown-Bridge") and Entoleter, Inc., a Delaware corporation
("Entoleter").  The Registrant competes in the adhesive-backed materials
industry, which consists of sealing tape and adhesive-backed label stock.  The
Registrant is a leading manufacturer and marketer of adhesive carton sealing
tape and adhesive-backed label stock, primarily for the carton sealing tape and
pressure sensitive label stock markets. The Registrant's strategy is to focus on
the growing pressure sensitive markets for carton sealing tape and label stock
applications, while pursuing acquisitions within the adhesive-backed materials
industry that complement its existing businesses.  The Registrant's 1996 net
sales are generally divided equally between carton sealing tape and pressure
sensitive label stock.

    In 1987, Lynch Corporation, an Indiana corporation listed on the American
Stock Exchange, purchased from a group of investors approximately 82% of the
Common Stock of the Registrant.  As of December 31, 1996, Lynch Manufacturing
Corporation, a wholly-owned subsidiary of Lynch Corporation, owned 2,237,203 and
2,239,063 shares, or 72.6% and 73.5%, respectively, of the Common Stock and
Class A Common Stock of the Registrant.  Prior to June 1994, the Company's
principal business activity consisted of the operations of Entoleter.  In June
1994, the Company entered into a management agreement with Boyle, Fleming & Co.,
Inc. ("BF"), pursuant to which BF would provide operations management, strategic
planning, acquisition analysis and implementation, investment banking and
financial advisory services and the supervision of the Company's financial
reporting and regulatory obligations.  Subsequent to the creation of its
management relationship with BF, the Company redirected its strategic plan and
consummated the acquisitions of Brown-Bridge Industries, Inc. and Central
Products Company, as described below.  Although the management agreement between
BF and the Company was terminated in August 1996, the principals of BF have been
employed as Chairman of the Board and Chief Executive Officer, and President of
the Company.

    Central Products, founded in 1917, was acquired from Alco Standard
Corporation ("Alco") in October 1995 (the "Central Products Acquisition") and is
a leading manufacturer of carton sealing tape and offers the broadest line of
such products in the United States. According to Company estimates, Central
Products' share of the water sensitive carton sealing tape market is
approximately 50%, and its revenues are significantly greater than its next
largest competitor. In the pressure sensitive carton sealing tape market,
Central Products is one of the three largest manufacturers for carton sealing
tape applications, and the Company believes that Central Products is the only
manufacturer of all pressure sensitive technologies (acrylic, hot melt and
natural rubber), which provides the Company with a competitive advantage by
allowing it to meet the broadest range of application requirements of its
customers. Its branded and private label products are used primarily for
commercial packaging applications and are sold through its national sales force
to over 1,500

                                     2

<PAGE>

paper and office products distributors nationwide, including the largest
national distributors of paper products, for resale to over 20,000 end users.
In 1995, Central Products entered into a private label supply agreement with
Unisource Worldwide, Inc. ("Unisource"), the largest United States
distributor of office paper products, to supply a complete line of private
label carton sealing tape products, and also became a major vendor to
ResourceNet International ("ResourceNet"), the second largest distributor of
paper products in the United States, to supply a full line of private label
water sensitive and pressure sensitive carton sealing tape products.
Unisource is a subsidiary of Alco, the former owner of the Central Products
Operations prior to the Central Products Acquisition. Central Products also
became a major vendor to ResourceNet, the second largest distributor of
paper products in the United States, to supply a full line of private label
water sensitive and pressure sensitive carton sealing tape products.

    Brown-Bridge was founded in 1928 and was acquired from Kimberly Clark
Corporation in September 1994 (the "Brown-Bridge Acquisition").  The Registrant
estimates that Brown-Bridge is the fifth largest manufacturer of adhesive-backed
label stock and is the only manufacturer of all adhesive-backed paper
technologies (pressure, water and heat sensitive), which enables the Company to
provide a broad range of standard and custom adhesive-backed label stock
products that meet the design specifications of its customers. Brown-Bridge
offers a full line of more than 1,500 variations of adhesive-backed label stock
and sells its products in roll and sheet form to over 1,000 printers, paper
merchants and industrial users. Customers convert its label stock into labels
used for a broad range of end use applications, including bar-coding, mailing
and shipping, packaging for pharmaceutical, food and other consumer products,
office identification and business forms, postage stamp stock, decorative labels
and other specialty industrial uses. Brown-Bridge is the largest supplier of
pressure sensitive postage stamp stock for use by the Postal Service.

CENTRAL PRODUCTS

    Central Products' carton sealing tape is used for the packaging of goods
for shipment by manufacturing, retail or distribution companies. Central
Products manufactures pressure sensitive tape with all three primary adhesive
technologies: acrylic, hot melt and natural rubber. It also offers three types
of water sensitive tape: paper tape, fiberglass reinforced tape and box tape.
Central Products believes it is the only United States supplier to manufacture
both pressure sensitive tape and water sensitive tape, and is the only company
to produce pressure sensitive tape utilizing all three pressure sensitive
adhesive technologies.

    PRESSURE SENSITIVE TAPE.  Pressure sensitive tape is manufactured primarily
through the coating of plastic film with a thin layer of acrylic, hot melt or
natural rubber adhesive. The adhesive is applied to various grades of
high-quality, low-stretch polypropylene film for use in most applications as
well as PVC and polyester films which are used for certain specialized
applications. Acrylic adhesives, which are noted for their clarity,
non-yellowing properties, good temperature resistance and low application cost,
are best suited for manual applications on light and medium carton sealing
situations. Hot melt adhesives, noted for their quiet release and easy unwind
during application, are the most widely used pressure sensitive adhesives
because they satisfy 90% of all carton sealing requirements. Natural rubber
adhesives are unique because of their aggressive adhesion properties and,
although they are ideal for recycled content cartons and cartons requiring

                                     3
<PAGE>

hot, humid or cold packing, transportation and storage, they can be used for a
wide variety of surface conditions and extreme temperature tolerances. Central
Products' pressure sensitive tapes are sold under the trade names
Alltac-Registered Trademark- and Central-Registered Trademark-.

    WATER SENSITIVE TAPE.  Water sensitive tape is generally manufactured
through the application of a thin layer of water sensitive adhesive to gumming
kraft paper. It is offered as either non-reinforced (paper) tape or fiberglass
reinforced tape. Non-reinforced tape is made by applying an adhesive to a single
layer of high tensile strength kraft paper coated with Central Products'
patented starch-based adhesive. Non-reinforced tapes are totally biodegradable
and are used in light to medium carton sealing applications. Fiberglass
reinforced tape contains a layer of fiberglass yarn placed between two layers of
kraft paper, and is typically used to seal heavy packages or on cartons that
will be subject to a high level of abuse during shipping and is also favored in
shipping high value goods due to its strong sealing qualities. Both
non-reinforced tape and fiberglass reinforced tape are available in light,
medium and heavy grades. Central Products' water sensitive carton sealing tapes
are sold under the trade names Glasseal-Registered Trademark-,
Central-Registered Trademark-, Green Core-TM- and Tru-Seal-TM-.

    TAPE DISPENSING MACHINES.  Tape dispensing machines are provided through
Central Products to more fully service and satisfy the customer's needs.
Central Products currently offers a broad line of carton sealing equipment,
manufactured by third parties, for pressure sensitive tape, which ranges from
hand held dispensers to automatic random sizing equipment. Central Products also
offers two types of table top dispensers for water sensitive tape -- a manual
dispenser and an automated (electric) dispenser.

BROWN-BRIDGE

    Brown-Bridge develops, manufactures and markets adhesive-backed label stock
that is converted by printers and industrial users into products that are
utilized for marking, identifying, labeling and decorating applications and
products. Brown-Bridge's products are offered in three primary adhesive
categories: pressure sensitive, water sensitive and heat sensitive.

    PRESSURE SENSITIVE.  Pressure sensitive products, which are activated by
the application of pressure, are manufactured with a three element construction
consisting of face stock, adhesive coating and silicone coated release liner.
The adhesive product is sold in roll or sheet form for further conversion into
products used primarily for marking, identification and promotional labeling.
Brown-Bridge's pressure sensitive products are sold under the trade names Strip
Tac-Registered Trademark- and Strip Tac Plus-Registered Trademark-. Roll
pressure sensitive products are generally sold to label printers that produce
products used primarily for informational labels (shipping labels, price labels,
warning labels, etc.), product identification and postage stamps. Sheet pressure
sensitive products are sold to commercial sheet printers, who provide
information labels and other products (such as laser printer stock). During
fiscal 1996, pressure sensitive products constituted approximately 87% of
Brown-Bridge's net sales.

    WATER SENSITIVE.  Water sensitive products, which are activated by the
application of water, include a broad range of paper and cloth materials, coated
with a variety of adhesives. The adhesive coated products are sold in roll or
sheet form for further conversion to postage and promotional stamps, container
labels, inventory control labels, shipping labels and splicing, binding and
stripping

                                     4

<PAGE>

tapes. The water sensitive line is sold under the trade name
Pancake-Registered Trademark- and consists of three product groups: dry
process, conventional gummed and industrial. Dry process is sold primarily
for label and business form uses. Conventional gum products serve many of the
same end uses for hand applied labels as dry process stock. A major portion
of these products is sold for government postage and promotional stamp uses.
Industrial products are sold in several niche markets, such as electrical and
other specialty markets.

    HEAT SENSITIVE.  Heat sensitive products, which are activated by the
application of heat, are manufactured by coating a face stock with either a hot
melt coating or an emulsion process adhesive. The heat sensitive product line is
sold primarily for labeling end uses, such as pharmaceutical bottles, meat and
cheese packages, supermarket scales, cassettes and bakery packages. The adhesive
coated product is sold in roll or sheet form for further conversion.
Brown-Bridge's heat sensitive products are sold under the trade name Heat Seal.

MARKETING AND CUSTOMERS

    The Company's marketing strategy focuses not only on products, but also
customer service.  The Company's primary subsidiaries have conducted business
with its top ten customers for over ten years on the average.  The Company's
relationships with customers focus on customer service and its ability to
research and develop custom solutions for unique end user applications.  The
Company's marketing and customer service provides the Company with new growth
opportunities to increase market share.  The Company believes that the breadth
of its product line, commitment to product quality and reputation for innovation
will enable it to increase its market share through introduction of new
products.  The Company markets its broad range of products to a variety of
customers. During 1996, no single customer accounted for more than 10% of the
Company's net sales.

    Central Products' marketing emphasizes supplying a full line of both water
sensitive and pressure sensitive tape products to the carton sealing tape
industry.  Central Products sells its products directly to over 1,500 paper
distributors (customers), who in turn resell these tape products to the end user
markets. In addition, Central Products sells private-brand carton closure tapes
direct to large customers who in turn distribute the products under their name
to end users. Central Products provides its distributor customers with a high
level of product education to enable them to better sell the Company's products.
Central Products maintains a training center at its Menasha facility, where it
conducts a "Tape School" five times yearly for educating customers about its
products. Central Products also provides on-site training and gives its
distributors in-depth product literature and technical materials.

    Brown-Bridge markets its products through its own sales representatives to
regional and national printers, converters and merchants. The majority of sales
represent product sold and shipped from Brown-Bridge's facilities in Troy, Ohio.
However, to broaden its market penetration, Brown-Bridge also contracts with
seven regional processors throughout the United States, with whom Brown-Bridge
stores product until sold. Generally, these processors perform both slitting and
distribution services for Brown-Bridge.

                                     5
<PAGE>

MANUFACTURING AND RAW MATERIALS

    The Company produces all adhesive technologies for carton sealing tape and
adhesive-backed label stock. The Company's operations utilize advanced
manufacturing methods and sophisticated equipment to produce carton sealing
tapes and label stock for a variety of standard and custom applications
requiring water, pressure and heat sensitive technologies. The Company believes
its strong manufacturing capabilities enable it to maintain high product quality
and low operating costs and respond to customers' needs quickly and efficiently.

    The Company is continually investing in cost reduction programs or capital
projects to improve productivity and operating efficiencies.  One such project
is the new silicone coating capacity expansion at Brown-Bridge, which is
expected to reduce costs connected with outsourcing silicone coated liner
approximately $2.3 million on an annual basis.

    Raw materials are the most significant cost component in the Company's
production process. The material component accounts for approximately 65% of the
total cost of its products, with the most important raw materials being paper
(gumming kraft and face stock), adhesive materials, fiberglass, and
polypropylene resin. These materials are currently readily available and are
procured from numerous suppliers.

    Among the Company's manufacturing strengths at its Central Products water
sensitive tape operation are fully integrated, computerized coating and
laminating machines, fully automated slitting, rewinding and packaging machines
and a state of the art print shop. At its pressure sensitive tape operation,
they include an in-house film line for production of polypropylene film and an
advanced computerized coating machine for each of the three adhesive
technologies.

COMPETITION

    The adhesive-backed materials industry is highly competitive, and the
Company competes with both national and regional suppliers. As a result of
the competitive environment in the markets in which the Company operates, the
Company faces (and will continue to face) pressure on sales prices of its
products. For this reason, the Company continues to invest resources to
improve operating efficiencies and reduce operating costs.  However, as a
result of such pricing pressures, the Company may in the future experience
reductions in the profit margins on its sales, or may be unable to pass
future raw material price increases to its customers (which would also reduce
profit margins). The Company operates in markets characterized by a few large
diversified companies selling products under recognized trade names and a
number of smaller public and privately-held companies selling to the market.
In addition to branded products, some companies in the industry produce
private-label products to enhance supply relationships with large buyers.

    The Company competes with other manufacturers of carton sealing tape
products as well as manufacturers of alternative carton closure products.
Competition in the carton sealing market is based primarily on quality, delivery
and price, although other factors may enhance a company's competitive position,
including product performance characteristics, technical support, product

                                     6
<PAGE>

literature and customer support. There are a wide range of participants in the
carton sealing industry, including large diversified corporations (principally
in pressure sensitive) and small private companies (principally in water
sensitive tape). Central Products is one of the leading manufactures of water
sensitive tape. 3M Corporation is the largest manufacturer of pressure sensitive
tape in the carton sealing market in the United States.

    The adhesive-backed label stock market is fragmented. The Company competes
with several national manufacturers, including Avery-Dennison, Bemis, 3M
Corporation and a number of smaller regional manufacturers. The Company believes
that Avery-Dennison, Bemis and 3M Corporation are the only competitors with
national production facilities and Avery-Dennison and 3M Corporation are the
only competitors with nationally recognized brand names.

ENVIRONMENTAL REGULATIONS

    The Company is subject to environmental laws and regulations governing
emissions to the air, discharges to waterways, and generation, handling,
storage, transportation, treatment and disposal of waste materials. The Company
is also subject to other federal and state laws and regulations regarding health
and safety matters. Environmental laws and regulations are constantly evolving
and it is impossible to predict the effect that these laws and regulations will
have on the Company in the future. The Company periodically conducts evaluations
of its environmental compliance and while the Company believes it is currently
in substantial compliance with all such environmental laws and regulations,
there can be no assurance that it will at all times be in complete compliance
with all such requirements. In addition, although the Company believes that any
noncompliance is unlikely to have a material adverse effect on the Company, it
is possible that such noncompliance could have a material adverse effect on the
Company. The Company has made and will continue to make capital expenditures to
comply with environmental requirements. As is the case with manufacturers in
general, if a release of hazardous substances occurs on or from the Company's
properties or any associated offsite disposal location, or if contamination from
prior activities is discovered at any of the Company's properties, the Company
may be held liable and the amount of such liability could be material.

PATENTS AND TRADEMARKS

    Patents are held by the Company with respect to the manufacture of certain
of its products, but management does not consider such patents to be important
to the Company's operations. The patents expire over various lengths of time
with the last patent expiring in about 10 years. The Company has registered
several of its trade names and trademarks for adhesive-backed materials.

INTERNATIONAL SALES

    The Company's foreign sales were $11.5 million, $10.4 million and
$3.9 million in 1996, 1995 and 1994, respectively. Of the $11.5 million in 1996
foreign sales, approximately 85% were represented by exports of Brown-Bridge and
Central Products adhesive-backed materials.  The substantial majority of these
sales were to Canadian customers and, consequently, the Company believes that
the risks commonly associated with doing business in foreign countries are
minimal.

                                     7

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The profitability of foreign sales is substantially equivalent to that
of domestic sales. Because foreign sales are transacted in United States
dollars, payments in many cases are secured by irrevocable letters of credit,
and sales are spread over a number of customers in several countries, the
Company believes that the risks commonly associated with doing business in
foreign countries are minimized.

LITIGATION

    The Company from time to time is involved in various legal proceedings
arising in the ordinary course of business operations, such as employment
matters, contractual disputes and personal injury claims. There are no
proceedings currently pending for which the Company's potential liability would
be material to its financial condition or results of operations.

BACKLOG

    Backlog is a function of firm orders and future shipping dates, and has
fluctuated on a month-to-month basis.  The Company's backlog believed to be firm
was $9.2 million at December 31, 1996, as compared to $10.7 million at
December 31, 1995. Of the $9.2 million backlog of firm orders at such date,
approximately $3.1 million was represented by Brown-Bridge's customers, and
approximately $4.5 million was represented by Central Products' customers with
the remainder related to Entoleter. The Company believes that all such orders
will be shipped in 1997.

INDUSTRIAL PROCESS EQUIPMENT BUSINESS

    Entoleter engineers, manufactures and markets a vertically integrated line
of size reduction equipment complemented by a line of air pollution control
equipment.  Entoleter's products primarily consist of: (a) Centrimil Milling
Equipment for particle size reduction; (b) Central granulators for the plastics
molding industry and precision cutters for the film and non-woven industry; and
(c) Centrifield Scrubbers for the removal of impurities from air, gases and
liquids, and for heat recovery, gas absorption, and other mass transfer
functions.

EMPLOYEES

    As of December 31, 1996, the Company employed approximately 1,000 persons,
of which 380 were Brown-Bridge employees, 570 were Central Products employees
and 40 were Entoleter employees. All employees other than management are paid on
an hourly basis. A majority of its hourly employees are not represented by
unions. Central Products has a labor agreement expiring in 1998 with the United
Paperworkers International Union AFL-CIO covering approximately 200 hourly
employees at the Menasha, Wisconsin plant. Entoleter's approximately 20
hourly-paid production employees are members of the United Electrical, Radio and
Machine Workers of America Union. The current collective bargaining agreement
expires on April 30, 1999. The Company believes that its relations with its
employees are good; however, there can be no assurance that the Company will not
experience work stoppages or slowdowns in the future.

                                     8
<PAGE>

FORWARD LOOKING INFORMATION

    This Form 10-K contains certain forward looking information, including
without limitation, "Management's Discussion and Analysis of Financial
Condition and Results of Operation" (Item 7 below) and Notes to Financial
Statements (Item 14(a) below).  It should be recognized that such information
are estimates or forecasts based upon various assumptions, including the matters
referred to therein, as well as meeting the Registrant's internal performance
assumptions regarding expected operating performance and the expected
performance of the economy as it impacts Registrant's businesses.  As a result,
such information is subject to uncertainties and risks.

ITEM 2.  PROPERTIES

    The Company's principal executive offices are located in Dallas, Texas,
where it shares office space with an affiliate of its principal executive
officers. The following table sets forth certain information with respect to the
principal operating and administrative facilities used by the Company:


                                     APPROXIMATE  OWNED OR   EXPIRATION
 LOCATION                            SQUARE FEET   LEASED     OF LEASE
 --------                            -----------  --------   ----------

 CENTRAL PRODUCTS
    Menasha, Wisconsin.............     160,000    Owned     N/A
    Menasha, Wisconsin.............      20,000    Owned     N/A
    Neenah, Wisconsin..............      90,000    Leased    April 25, 1998
    Brighton, Colorado.............     211,000    Leased    2014
    Denver, Colorado...............     100,000    Owned     N/A
 BROWN-BRIDGE
    Troy, Ohio (Plant One).........     200,000    Owned     N/A
    Troy, Ohio (Plant Two) (1).....      98,000    Owned     N/A
    Waco, Ohio.....................      20,600    Leased    Month-to-Month
 ENTOLETER
    Hamden, Connecticut............      72,000    Owned     N/A

 (1)  Brown-Bridge also owns a five-acre tract adjacent to this tract that is
available for expansion.

ITEM 3.  LEGAL PROCEEDINGS

    None.

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

    None.

                                     9
<PAGE>

                                       PART II

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

    The Registrant's Common Stock and Class A Common Stock trade on the NASDAQ
Small-Cap Market under the symbols "SPNI" and "SPNIA", respectively, and are
quoted in the National Association of Securities Dealers Automated Quotations
System (NASDAQ).  The following table shows the 1996 and 1995 range of high and
low bid prices of the Registrant's stock reported through NASDAQ, adjusted to
give retroactive effect to a stock dividend, an effective 2-for-1 stock split,
on August 16, 1996.  Pursuant to such dividend, holders of Common Stock
received, in respect of each share of Common Stock, one share of newly created
class of Common Stock.  In connection with such dividend, the existing class of
Common Stock was renamed Class A Common Stock.  The newly issued Common Stock
has a 1/10th vote per share, compared to one vote per share for Class A Common
Stock.  These quotations represent prices between dealers and without retail
markup, markdown or commissions and may not necessarily represent actual
transactions.

                                    1996 QUARTERS
                        -------------------------------------
                          1ST        2ND      3RD       4TH
                        -------    -------   ------    ------
Class A Common Stock
   High                 $25-1/2    $58-1/2     $53     $59
   Low                   14         22          37      39-3/4

Common Stock
   High                   N/A        N/A       $42     $38
   Low                    N/A        N/A        23      24

                                    1995 QUARTERS
                        -------------------------------------
                          1ST        2ND      3RD       4TH
                        -------    -------   ------    ------
Class A Common Stock
   High                  $6-1/2    $15-1/3   $21-2/3   $26-1/3
   Low                    2-1/2      6        16-1/2    15-4/5

    At March 7, 1997, there were approximately 460 shareholders of record of
the Registrant's Common Stock and Class A Common Stock and the closing bid price
was $41.50 and $58, respectively.

    The Registrant did not declare a dividend in 1996 or 1995.  The Registrant
presently intends to retain any earnings for use in its business and, therefore,
does not anticipate paying any cash dividends in the foreseeable future.
Agreements with its lenders impose restrictions on the ability of Brown-Bridge,
Central Products and Entoleter to pay dividends to the Registrant.  See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

                                     10

<PAGE>

ITEM 6.  SELECTED FINANCIAL DATA


<TABLE>
                                     (dollars in thousands, except per share amounts)
                                   ---------------------------------------------------
                                     1996        1995(1)    1994(2)     1993      1992
                                     ----        -------    ------      ----      ----
<S>                                <C>          <C>         <C>        <C>       <C>
Net sales                          $246,536     $135,289    $33,632    $6,371    $4,533

Operating profit (loss)(3)           10,222        5,789        722        56       (99)

Income (loss) before income
  taxes, minority interest and
  extraordinary charge, net of tax     (363)         953         78       119         3

Income (loss) before
  extraordinary charge                 (625)         561       (90)       119         3

Extraordinary charge net of tax      (1,843)           -          -         -         -

Net income (loss)                    (2,468)         561        (90)      119         3

Income (loss) per share
  before extraordinary charge         (0.11)        0.08       (.02)      .02         -

Net income (loss) per share (4)       (0.42)        0.08       (.02)      .02         -

Dividends per share                       -            -          -         -         -

Total assets                        157,176      137,584     41,329     8,209     8,150

Long-term obligations including
  related party notes               115,113       71,225      9,149     1,015     1,033

Shareholders' equity                 11,236        7,062      6,501     6,591     6,472

Weighted average common and
  common equivalent shares
  outstanding(4)                      5,931        6,702      5,626     5,432     5,432
</TABLE>

See Management's Discussion and Analysis of Financial Condition and Results of
Operation for additional information concerning the Registrant's financial
performance.

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

     (1)  Includes the October 4, 1995 acquisition of Central Products Company
- See Note 2 - Notes to Consolidated Financial Statements.

     (2)  Includes the September 19, 1994 acquisition of Brown-Bridge
Industries, Inc. - see Note 2 - Notes to Consolidated Financial Statements.

     (3)  Operating profit (loss) is net sales less operating expenses which
exclude other income-net (investment income and interest expense) and income
taxes and includes restructuring and litigation expense in 1994.

     (4)  Adjusted to reflect a stock dividend, an effective 2-for-1 stock
split, effective August 16, 1996 and 3-for-2 stock splits effective December
29, 1995 and December 30, 1994.


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

DOLLARS IN THOUSANDS (000'S), EXCEPT PER SHARE AMOUNTS

GENERAL

    The Company considers the adhesive-backed materials industry to be over
$5.0 billion, consisting of the $3.3 billion total tape market and the $2.0
billion adhesive-backed label stock market.  The Company is one of the leading
manufacturers and marketers of carton sealing tape and adhesive-backed label
stock products in the United States. Central Products' branded and private label
carton sealing tape products are used primarily for commercial packaging
applications, including the packaging of goods for shipment by manufacturing,
retail and distribution companies, and are sold through its national sales force
to over 1,500 paper and office products distributors nationwide. Brown-Bridge
offers a full line of more than 1,500 variations of label stock and sells its
products in roll or sheet form to over 1,000 printers, paper merchants and
industrial users, who convert the label stock into labels used for a broad range
of end use applications, including bar-coding, mailing and shipping, packaging
for pharmaceutical, food and other consumer products, office identification and
business forms, postage stamp stock, decorative labels and other specialty
industrial uses. The Company also manufactures and markets industrial process
equipment and air pollution control scrubbers through Entoleter.

    The Company has experienced rapid growth which has been accomplished
through internal growth and the acquisitions of Central Products and
Brown-Bridge.  The internal growth is a result of refocused sales and
marketing strategy at all subsidiaries. Management believes that at the time
of the respective acquisitions, each of the companies acquired was an
underperforming operation. With the Brown-Bridge Acquisition, the Company
entered the adhesive-backed materials industry. The Central Products
Acquisition provided the Company with a leading position in the carton
sealing tape market of the adhesive-backed materials industry. As a result of
the acquisitions of Brown-Bridge and Central Products, the Company became a
manufacturer of the broadest line of adhesive-backed label stock and carton
sealing tape products in the adhesive-backed materials industry.

    Subsequent to each of the foregoing acquisitions, the Company implemented
cost reduction measures, including more effective management, rationalization of
raw materials and component purchasing, improved materials flow and improved
management information systems. The Company believes such measures will
contribute to improved operating profits at Central Products and Brown-Bridge
during 1997.

    The Company has historically operated at a high level of capacity
utilization and has increased capacity of the acquired plant facilities through
operating efficiency improvements.  For example, in order to meet production
capacity requirements under the postage stamp stock agreements awarded to
Brown-Bridge in 1995 and 1996, Brown-Bridge invested approximately $4,000 to add
a production line to manufacture silicone liner, a portion of which was
outsourced in 1996.  The Company incurred higher cost of sales (approximately
$2,300) for the year ended


                                     12

<PAGE>

December 31, 1996 as a result of outsourcing a portion of its production
requirements. The installation of the additional production line was
completed by the end of the fourth quarter of 1996 and is now fully
operational, which will enable it to meet its future silicone liner
production requirements and substantially reduce costs associated with its
current level of outsourcing silicone liner.

    The cost of the Company's principal raw materials, polypropylene resin and
paper, have generally remained stable over the past several years. During fiscal
1995, however, raw material cost increases resulted in the Company instituting
higher prices, consistent with the increases instituted by its competitors,
during 1995 for its carton sealing tape and adhesive-backed label stock
products. The increases in raw material costs during fiscal 1995 on the
Company's products did not materially impact the Company's gross profit because
the Company was generally able to pass along its raw material cost increases
without negatively impacting sales of its products.

    During fiscal 1996, the Company's principal raw material costs generally
remained stable or declined. The Company is not aware of any significant cost
increases planned by its raw material suppliers for fiscal 1997. The Company's
supply agreement with the Postal Service provides that the Postal Service will
absorb limited price increases in the Company's raw materials. Consequently,
to protect against raw material price increases in excess of those permitted
under the Postal Service contract, the Company has entered into supply
agreements with its raw materials suppliers that have ceilings on future price
increases.  Other agreements under which the Company's carton sealing tape
products and a portion of its adhesive-backed label stock products are sold do
not contain adjustment mechanisms for fluctuations in the cost of raw
materials, although the Company has generally passed along raw material price
changes for products sold under such agreements, as well as for products sold
to other customers.

    The future impact of a change in raw material costs on the Company's
profitability is based in part on pricing from the Company's competitors.
Although historically the Company has generally been able to pass through raw
material cost fluctuations, the Company cannot be assured that future raw
material cost increases can be passed through to its customers and that such
cost increases will not negatively impact the Company's gross profit.

FISCAL 1996 COMPARED TO FISCAL 1995

INTRODUCTION

    Fiscal 1996 was highlighted by several transactions unique to operations
as compared to previous fiscal years.  During 1996, the Registrant completed a
financial reorganization to improve the Registrant's capital structure and
provide a source of long-term financing.

    In the fourth quarter of 1996 the Registrant issued $115,000 of 10-3/4%
senior secured notes ("Notes" or "Senior Notes").  The Notes require semi-annual
interest payments and mature October 2006.  Proceeds from the sale of the Notes
were used to extinguish certain term obligations and all working capital
revolver obligations then outstanding.  In addition, the Registrant established
a $40,000 asset-backed senior secured revolving credit facility ("revolving
credit facility"), of which


                                     13

<PAGE>

all but approximately $700 is currently available. A portion of the revolving
credit facility may be used to fund acquisitions.

    In the same quarter, concurrent with the issuance of the Senior Notes, the
Registrant acquired the minority interest in its Brown-Bridge subsidiary.  The
terms of the acquisition involved a cash payment, issuance of Registrant Common
Stock and a right to a contingent payment.

    Fiscal 1996 is the first full year of operations to include Central
Products, as on October 4, 1995, the Registrant, through its wholly-owned
subsidiary, purchased the stock and assets of Alco Standard Corporation's
Central Products operation, which manufactures a variety of carton sealing
tapes.  Therefore, 1996 includes twelve months of operations at Central
Products compared to three months in 1995.

    SALES.  The Registrant's 1996 net sales were $246,536, an increase of 82%
when compared with net sales in 1995.  The increase in net sales was the result
of the Central Products Acquisition, improved marketing efforts at Central
Products and the growth at Brown-Bridge, the Registrant's other adhesive-backed
materials subsidiary. Brown-Bridge's units increased approximately 12% on the
strength of a refocused sales and marketing strategy inclusive of two long-term
contracts for the supply of US postage stamp paper stock.  Central Products'
improved marketing efforts and relationships with its national accounts,  in an
extremely competitive pricing market, increased pressure sensitive tape units
approximately 13%.  The Central Products Acquisition accounts for approximately
$91,269 of the year on year increase based on historical 1995 pro forma
operating data.

    COST OF SALES.  As a percentage of net sales, cost of sales decreased from
87% in 1995 to 86.8% in 1996, increasing the Registrant's gross profit
percentage.  These favorable results were despite the negative impact to gross
profit of approximately $2,300 of outsourcing penalties associated with the
capacity constraints at Brown-Bridge attributable to its overall growth, in
particular, the growth from two pressure-sensitive U.S. postage contracts.  In
the future, these capacity constraints should be eliminated through the
installation of a new silicone coater, which became fully operational at the
close of 1996.  The Registrant believes that the new silicone coater will enable
it to substantially reduce costs associated with its current level of
outsourcing silicone liner.  In addition, 1996 results include in excess of $600
of costs associated with changes and improvements in management personnel and
reductions of personnel in certain manufacturing functions as the Registrant
continues to focus on internal efficiencies.

    SELLING, GENERAL AND ADMINISTRATIVE ("SG&A").  As a result of the inclusion
of Central Products for a full year SG&A expense for 1996 increased by
approximately $9,700.  SG&A expenses for 1996 were $22,372 compared to $11,763
in 1995.  In addition, Brown-Bridge SG&A expenses include approximately $136 of
costs associated with changes and improvements in management personnel.
Included in corporate office expenses are charges from the Registrant's
corporate parent, Lynch Corporation, for certain management fees and other
direct services.


                                     14

<PAGE>

The 1995 SG&A expense at Brown-Bridge included a cost of $562 for fees paid to
a consulting firm assisting Brown-Bridge to improve its operations and
manufacturing processes. This consulting engagement began in 1994 and was
completed in 1995.

     INTEREST (EXPENSE).  Interest expense for 1996 totaled $9,872, of which
$158 relates to amortization of deferred financing costs capitalized in
connection with the Registrant's $115,000 Senior Notes and $40,000 revolving
credit facility.  The Senior Notes require semi-annual interest payments each
April 15 and October 15 through maturity in October 2006.  As a result of the
acquisition of Central Products and a full year's interest accrued on the debt
incurred, and higher average working capital needs from the growth of the
Registrant's businesses, total interest expense for 1996 increased by $5,404,
versus 1995. These obligations were extinguished with the proceeds generated
from the Senior Note issuance.  See "Liquidity and Capital Resources."

    GUARANTEE FEES.  In the first quarter of 1996, the Registrant accrued a
$375 charge for guarantee fees due to Lynch Corporation in connection with debt
incurred in the Acquisition.  This fee is .5% per month of the principal amount
of certain indebtedness ($25,000 at March 31, 1996) of the Registrant.  The
indebtedness was extinguished with the proceeds generated from the Senior Note
issuance.  See Note 4 of Notes to Consolidated Financial Statements.

    OTHER (EXPENSE) INCOME - NET.  In the fourth quarter of 1996, the
Registrant donated land held in "other assets" to a charity in Atlanta,
Georgia.  The book value of the land was $248.

    INCOME TAXES.  The 1996 income tax benefit for federal and state income
taxes is at an effective rate of 10%.  The Registrant's tax rate is impacted by
permanent tax differences, primarily non-deductible goodwill amortization
associated with the Central Products acquisition (amortized over 25 years).
The 1995 income tax provision has been reduced by $279 due to the reversal of
the Registrant's valuation allowance related to net deferred taxes.  See Note 8
of Notes to Consolidated Financial Statements.

    EXTRAORDINARY CHARGE.  The Registrant recorded a fourth quarter
extraordinary charge of $1,843, net of income taxes, or a $0.31 loss per share.
The charge was attributable to the extinguishment of the Registrant's previously
existing credit facilities and the write-off of related deferred financing
costs.

    NET INCOME.  The Registrant recorded a net loss of $2,468, or $0.42 per
share for 1996, versus net income of $561, or $0.08 per share  in 1995.  The
earnings per share have been adjusted to reflect a stock dividend, an effective
two for one stock split, on August 16, 1996.


                                     15

<PAGE>

FISCAL 1995 COMPARED TO FISCAL 1994

    SALES.  The Registrant's 1995 net sales were $135,289, an increase of over
300%, compared with net sales of $33,632 in 1994.  The increase in net sales
were largely the result of the Central Products acquisition and a full years
results from Brown-Bridge, which was purchased in September 1994.  Central
Products accounted for $30,581 of the increase, with the balance coming from
Brown-Bridge ($70,324) and Entoleter ($752).

    COST OF SALES.  Total cost of sales increased over 300% to $117,737 in 1995
when compared to 1994.  This increase was attributable to the inclusion of
Brown-Bridge for a full year and the acquisition of Central Products.  Included
in the 1995 cost of sales is $86,394 for Brown-Bridge and $26,187 for Central
Products.

    SELLING, GENERAL AND ADMINISTRATIVE ("SG&A").  SG&A expense for 1995 was
$11,763, an increase of 167% over 1994.  The increase was attributable primarily
to Brown-Bridge ($4,418) and the addition of Central Products ($2,591) with the
remainder of the increase attributable to the Registrant's corporate office.
The 1995 SG&A expense at Brown-Bridge included a charge of $562 for fees paid to
a consulting firm assisting Brown-Bridge to improve its operations and
manufacturing processes.  This consulting engagement began in 1994 and was
completed in 1995.

    INTEREST (EXPENSE).  Interest expense for 1995 totaled $4,468, of which
$2,189, $1,326 and $143 relates to debt at Brown-Bridge, Central Products and
Entoleter, respectively.  The remainder of the interest expense ($810) relates
to debt at the corporate level incurred in the acquisition of Brown-Bridge and
Central Products.  Total interest expense for 1995 increased by $3,700, versus
1994 and relates to debt incurred in the acquisition of Central Products and a
full year of interest accrued on the debt incurred to acquire Brown-Bridge.

    GUARANTEE FEES.  The Registrant accrued a $375 charge for guarantee fees
due to Lynch Corporation in connection with debt incurred in the acquisition of
Central Products.  This fee is .5% of the principal amount of certain
indebtedness ($25,000 at December 31, 1995) of the Registrant.  See Note 4 of
Notes to Consolidated Financial Statements.

    INCOME TAXES.  The 1995 income tax provision provides for federal and state
income taxes at an effective rate of 41%.  The 1995 income tax provision has
been reduced by $279 due to the reversal of the Registrant's valuation allowance
related to net deferred taxes.

    NET INCOME.  The Registrant recorded net income of $561, or $.17 per share
for 1995, versus a net loss of $90, or $(.03) per share  in 1994.  The earnings
per share have been adjusted to reflect two three for two stock splits effected
on December 29, 1995 and December 30, 1994.

LIQUIDITY AND CAPITAL RESOURCES

    The Registrant's cash balance at December 31, 1996 is approximately $9,700.
The cash balance represents an increase of $6,700 from December 1995.
Additionally, the Registrant's $40,000 revolving credit facility has less than
$700 outstanding at the close of 1996 and the

                                     16

<PAGE>

remaining facility balance is available for borrowing.  The Registrant's
current capital structure and cash availability provide sources of funds to
support the continued growth of the Registrant both internally and through
potential acquisitions.

    The Registrant's cash provided by operating activities for 1996 was $6,227
compared to $9,192 in 1995.  The difference is largely attributable to year to
year changes in operating assets and liabilities, primarily in inventories which
increased $5,700.  The $5,700 increase was caused by uneven ordering patterns of
certain customers and anticipated first quarter 1997 demands.

    Net cash used in investing activities was $12,248 in 1996 compared to
$81,813 in 1995.  The year on year change is primarily attributable to
approximately $80,000 paid for the acquisition of Central Products in October
1995.  In 1996, the primary use of cash in investing activities was for
purchases of machinery and building improvements, the largest being the
construction and installation of the new silicone coater at Brown-Bridge.

    Net cash provided by financing activities was $12,672 in 1996 compared to
$75,185 in 1995.  The 1995 financing activities related to debt transactions
associated with the Central Products acquisition.  The financing activities of
1996 principally relate to the extinguishment of existing debt obligations and
the issuance of the Senior Notes.

    On April 5, 1996, the Registrant issued approximately 187,000 shares of
Class A Common Stock upon the exercise of Class A Warrants held by Boyle,
Fleming & Co., Inc. ("BF") at a price of $2.67 per share.  Richard J. Boyle and
Ned N. Fleming, III, the Registrant's Chairman and Chief Executive Officer, and
President, respectively, are shareholders, directors and officers of BF.

    In connection with the Central Products Acquisition, the Company incurred
approximately $30,000 of indebtedness (the "Alco Debt").  On April 5, 1996, the
Company refinanced approximately $25,000 principal amount of the Alco Debt with
(i) $19,500 of the proceeds from the issuance to Alco by the Company of a series
of new subordinated convertible promissory notes (the "Convertible Also Notes")
and (ii) $5,500 from a portion of the proceeds of the issuance of the Alco
Refinancing Debt (as defined).  In May 1996, approximately $6,000 principal
amount of the Convertible Alco Notes was converted into approximately 171,000
shares of common stock of the Company at the price of approximately $35 per
share) (the "Initial Conversion Shares).  Furthermore, approximately $1,750 was
incurred by Spinnaker for the purchase from Alco of a distribution facility in
Denver, Colorado, approximately $1,000 of which was repaid with a portion of the
proceeds from the Alco Refinancing Debt and approximately $750 of which was
refinanced with a portion of the proceeds from the issuance of the Convertible
Alco Notes (which, when added to the $19,500 of Convertible Alco Notes, issued
as described above, resulted in the aggregate outstanding principal amount of
the Convertible Alco Notes of $20,300).

    In August 1996, the Registrant's Board of Director declared a stock
dividend, an effective split if its common stock.  The Registrant issued one
share of  new common stock, no par value ("Common Stock"), no par value for each
outstanding share of its existing common stock.  In

                                     17
<PAGE>

connection with such dividend, the existing shares of Common Stock were
renamed Class A Common Stock ("Class A Common Stock").  The Common Stock has
a 1/10th vote per share, compared to one vote per share for Class A Common
Stock.

    As previously discussed, in October 1996, the Registrant issued $115,000 of
10-3/4% Senior Secured Notes due 2006.  The notes were issued in a private
placement under Rule 144A and subsequently such Notes were exchanged for
substantially identical notes in a transaction registered under the Securities
Act of 1933. Proceeds from the sale of the note were used to extinguish certain
term obligations and all working capital revolver obligations then outstanding.
The Notes are unconditionally guaranteed, jointly and severally, by the
subsidiaries of the Registrant.

    The Notes are redeemable, in whole or in part, at the option of the
Registrant on or after October 15, 2001, at various redemption prices beginning
at 105.375% of the principal amount plus accrued and unpaid interest.  In
addition, at any time or from time to time on or prior to October 31, 1999, the
Registrant, at its option, may redeem up to 33-1/3% of the aggregate principal
amount of the Notes with net cash proceeds from public equity offerings at a
redemption price equal to 110.75% of the principal amount plus accrued and
unpaid interest.

    On October 23, 1996, concurrent with the issuance of the Senior Notes, the
Registrant acquired the approximately 25% minority interest in its Brown-Bridge
subsidiary.  The terms of the acquisition provided that the minority
stockholders of Brown-Bridge would receive an aggregate cash payment of
approximately $2.3 million, issuance of  9,613 shares of Registrant Common Stock
and a right to a contingent payment.  The contingent payment is exercisable at
any time from October 1, 1998 through September 30, 2000.  The value of the
contingent payment is equal to the percentage of the capital stock of the former
Brown-Bridge entity owned by such shareholder at the time of the merger
multiplied by 75% of the fair value of the capital stock of Brown-Bridge, as
determined in accordance with certain economic assumptions, as of the date such
right is exercised, less the consideration received at closing.  The contingent
price is payable through the issuance of Common Stock of the Registrant, unless
the Registrant elects to pay the contingent price in cash.  If such payments are
made in cash, they could give rise to a default under the Senior Notes, unless
there is sufficient availability under provisions regarding restricted payments
contained in the Senior Notes.

    The Registrant's subsidiaries have unused credit facilities available for
future use, including  revolving credit agreements with a maximum aggregate
availability of $40,000 expiring October 2001.  Borrowings under these credit
lines totaled $686 at December 31, 1996.  The Registrant is charged an unused
line of credit fee every month of 0.375% per annum.  Certain agreements with the
Registrant's lenders  impose restrictions on the ability of the Registrant or
the Registrant's subsidiaries to pay dividends.  The Registrant is required to
comply with various covenants including limitations on capital expenditures,
interest coverage, and minimum levels of net worth, as well as various other
financial covenants.

    The Registrant has identified possible environmental issues related to
portions of its land in Hamden, Connecticut.  The appropriate regulatory
agencies have been notified, but to date no action has been required by any
regulatory agency.

                                     18
<PAGE>

    The Registrant is in discussions with potential underwriters concerning the
possible offering of Registrant common stock, although there can be no assurance
that an offering will be accomplished on terms satisfactory to the Registrant.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     See Item 14(a).

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

     Not Applicable.

                                       PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

    The information required by this Item 10 is included under the caption
"Election of Directors"  of the Registrant's Proxy Statement for its Annual
Meeting of Stockholders to be held on May 29, 1997, which information is
incorporated herein by reference.

ITEM 11.  EXECUTIVE COMPENSATION

    The information required by this Item 11 is included under the captions
"Executive Compensation", "Compensation of Directors", and "Certain
Transactions", of  the Registrant's Proxy Statement for its Annual Meeting of
Stockholders to be held on May 29, 1997, which information is incorporated
herein by reference.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
          MANAGEMENT

    The information required by this Item 12 is included under the captions
"Security Ownership of Certain Beneficial Owners" and "Security Ownership of
Management," of the Registrant's Proxy Statement for its Annual Meeting of
Stockholders to be held on May 29, 1997, which information is incorporated
herein by reference.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

    The information required by this Item 13 is included under the caption
"Certain Transactions" of the Registrant's Proxy Statement for its Annual
Meeting of Stockholders to be held on May 29, 1997, which information is
incorporated herein by reference.

                                     19

<PAGE>

                                PART IV

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

(a) The following documents are filed as part of this Form 10-K Annual Report:

    (1)  Financial Statements:

    The Report of Independent Auditors and the following consolidated Financial
Statements of the Registrant are included herein:

    Consolidated Balance Sheets--December 31, 1996 and 1995

    Consolidated Statements of Operations--Years ended December 31, 1996, 1995,
and 1994.

    Consolidated Statements of Stockholders' Equity--Years ended December 31,
1996, 1995 and 1994.

    Consolidated Statements of Cash Flows--Years ended December 31, 1996, 1995
and 1994

    Notes to Consolidated Financial Statements

    (2)  Financial Statement Schedules:

    Schedule I  - Condensed Financial Information of Registrant

    Schedule II - Valuation and Qualifying Accounts

    All other schedules to the Consolidated Financial Statements are omitted
because the required information is inapplicable or has been presented in the
Financial Statements or Related Notes thereto.

    (3)  Exhibits:

  3.1    Certificate of Incorporation of the Registrant, as amended (filed as
         Exhibit 3.2 to the Registrant's Report on Form 8-A dated August 13,
         1996).

  3.2    Bylaws of the Registrant (filed as Exhibit 3(ii) to the Registrant's
         Annual Report on Form 10-K for the fiscal year ended December 31,
         1994).

  4.1    Purchase Agreement dated October 18, 1996, among the Registrant,
         Brown-Bridge Industries, Inc., Central Products Company, and
         Entoleter, Inc., and BT Securities Corporation (filed as Exhibit 4.1
         to the Registrant's Current Report on Form 8-K dated November 7,
         1996).


                                     20
<PAGE>

  4.2    Registration Rights Agreement dated October 18, 1996, among the
         Registrant, Brown-Bridge Industries, Inc., Central Products Company,
         and Entoleter, Inc., and BT Securities Corporation (filed as
         Exhibit 4.2 to the Registrant's Current Report on Form 8-K dated
         November 7, 1996).

  4.3    Indenture dated October 23, 1996, among the Registrant, Brown-Bridge
         Industries, Inc., Central Products Company, and Entoleter, Inc., and
         The Chase Manhattan Bank, as Trustee (filed as Exhibit 4.3 to the
         Registrant's Current Report on Form 8-K dated November 7, 1996).

  4.4    A Warrant, dated as of June 10, 1994, executed by Safety Railway
         Service Corporation (filed as Exhibit 7.4 to the Registrant's Current
         Report on Form 8-K dated June 13, 1994).

 10.1    Commercial Loan Open End Mortgage Deed and Security Agreement and
         Commercial Mortgage Note dated July 1, 1988 in the amount of
         $1,100,000 to Centerbank (formerly Connecticut Savings Bank)(filed as
         Exhibit 10.1 to the Registrant's Annual Report on Form 10-K for the
         fiscal year ended December 31, 1994).

 10.5    Warrant Purchase Agreement, dated as of June 10, 1994, by and among
         Boyle, Fleming, George & Co., Inc. and Safety Railway Service
         Corporation (filed as Exhibit 7.3 to the Registrant's Current Report
         on Form 8-K dated June 13, 1994).

 10.10   Agreement for the Allocation of Income Tax Liability between Lynch
         Corporation and its Consolidated Subsidiaries, dated December 18,
         1988, between Lynch Corporation and Safety Railway Service Corporation
         (filed as Exhibit 10.10 to the Registrant's Annual Report on Form 10-K
         for the fiscal year ended December 31, 1994).

 10.14   Stock and Asset Purchase Agreement, dated as of September 27, 1995, by
         and among Central Products Acquisition Corp., Unisource Worldwide,
         Inc. and Alco Standard Corporation (filed as Exhibit 7.1 to the
         Registrant's Current Report on Form 8-K dated October 18, 1995).

 10.15   Credit Agreement, dated as of September 29, 1995, by and among Central
         Products Acquisition Corp., as Borrower, Spinnaker Industries, Inc.,
         as Pledgor, and Heller Financial, Inc., as Agent and a Lender (filed
         as Exhibit 7.2 to the Registrant's Current Report on Form 8-K dated
         October 18, 1995).

 10.16   Term Note A, dated October 4, 1995, from Central Products Acquisition
         Corp. payable to the order of Heller Financial, Inc. in the original
         principal amount of $20 million (filed as Exhibit 7.3 to the
         Registrant's Current Report on Form 8-K dated October 18, 1995).

 10.17   Term Note B, dated October 4, 1995, from Central Products Acquisition
         Corp. payable to the order of Heller Financial, Inc. in the original
         principal amount of $16 million (filed as Exhibit 7.4 to the
         Registrant's Current Report on Form 8-K dated October 18, 1995).

 10.18   Revolving Note, dated September 29, 1995, from Central Products
         Acquisition Corp. payable to the order of Heller Financial, Inc. in
         the maximum principal amount of $24 million (filed as Exhibit 7.5 to
         the Registrant's Current Report on Form 8-K dated October 18, 1995).

                                     21
<PAGE>

 10.19   Subordinated Promissory Note, dated September 29, 1995, from Spinnaker
         Industries, Inc. payable to Alco Standard Corporation in the original
         principal amount of $25 million (filed as Exhibit 7.6 to the
         Registrant's Current Report on Form 8-K dated October 18, 1995).

 10.20   Subordinated Promissory Note, dated September 29, 1995, from Central
         Products Acquisition Corp. payable to Alco Standard Corporation in the
         original principal amount of $5 million (filed as Exhibit 7.7 to the
         Registrant's Current Report on Form 8-K dated October 18, 1995).

 10.21   Agreement, dated October 3, 1995, between Spinnaker Industries, Inc.
         and Lynch Corporation (filed as Exhibit 7.8 to the Registrant's
         Current Report on Form 8-K dated October 18, 1995).

 10.22   Credit Agreement among Central Products Company, Brown-Bridge
         Industries, Inc. and Entoleter, Inc. as Borrowers, the Registrant, as
         Guarantor, each of the financial institutions listed on Schedule 1
         thereto, BT Commercial Corporation, as Agent, Transamerica Business
         Credit Corporation, as Collateral Agent, and Bankers Trust Company, as
         Issuing Bank (filed as Exhibit 99.1 to the Registrant's Current Report
         on Form 8-K dated November 7, 1996).

 10.23   Agreement and Plan of Merger (Brown-Bridge Minority Interest), by and
         among the Registrant, BB Merger Corp., Brown-Bridge Industries, Inc.,
         and the stockholders of Brown-Bridge Industries, Inc. listed on
         Exhibit A thereto (filed as Exhibit 99.2 to the Registrant's Current
         Report on Form 8-K dated November 7, 1996).

 11.1*   Computation of Per Share Earnings.

 21.1*   Subsidiaries of the Registrant.

 23.3    Consent of Crouch & Hallett, L.L.P. (included in Exhibit 5.1).

 99.1    Form of Letter of Transmittal filed as Exhibit 99.1 to Registrant's
         Registration Statement on Form S-4 (No. 333-18789).

 99.2    Form of Notice of Guaranteed Delivery filed as Exhibit 99.2 to
         Registrant's Registration Statement on Form S-4 (No. 333-18789).

 99.3    Form of Letter to Brokers filed as Exhibit 99.3 to Registrant's
         Registration Statement on Form S-4 (No. 333-18789).

 99.4    Form of Letter to Clients filed as Exhibit 99.4 to Registrant's
         Registration Statement on Form S-4 (No. 333-18789).

 99.5    Instruction to Registered Holder and/or Book-Entry Transfer
         Participant from Beneficial Owner filed as Exhibit 99.5 to
         Registrant's Registration Statement on Form S-4 (No. 333-18789).

 99.6    Guidelines for Certification of Taxpayer Identification Number on
         substitute Form W-9 filed as Exhibit 99.6 to Registrant's Registration
         Statement on Form S-4 (No. 333-18789).

___________

    *Previously Filed

(3)  Reports on Form 8-K.

                                     22
<PAGE>

    The Registrant filed a Current Report on Form 8-K, dated November 7, 1996,
which disclosed the consummation of the Registrant's private placement of
$115,000,000 of its Senior Secured Notes due 2006.

    The Registrant will furnish copies of these Exhibits upon request and the
payment of $.20 per page.  Requests should be addressed to Carol Allen, c/o
Spinnaker Industries, Inc., 600 N. Pearl Street, Suite 2160, Dallas, Texas
75201.




                                     23
<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.


Spinnaker Industries, Inc.


By: /s/ Richard J. Boyle
   --------------------------
      Richard J. Boyle
Title: Chairman of the Board and Chief Executive Officer

Date: March 28, 1997

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

        SIGNATURE                     TITLE                  DATE
        ---------                     -----                  ----

/s/ Richard J. Boyle
-------------------------   Chief Executive Officer       March 28, 1997
Richard J. Boyle             and Chairman of the Board

/s/ Ned N. Fleming, III
-------------------------   President and Director        March 28, 1997
Ned N. Fleming, III

/s/ James W. Toman
-------------------------   Controller                    March 28, 1997
James W. Toman               (chief financial and
                             accounting officer)

/s/ Anthonie C. van Ekris
-------------------------   Director                      March 28, 1997
Anthonie C. van Ekris


-------------------------   Director                      March   , 1997
Joseph P. Rhein

                                     24
<PAGE>

/s/ Robert E. Dolan
------------------------    Director                      March 28, 1997
Robert E. Dolan


------------------------    Director                      March   , 1997
Phillip W. Colburn

/s/ Frank E. Grzelecki
------------------------    Director                      March 28, 1997
Frank E. Grzelecki




                                     25
<PAGE>

                        Report of Independent Auditors

The Board of Directors and Shareholders
Spinnaker Industries, Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheets of Spinnaker
Industries, Inc. and subsidiaries as of December 31, 1996 and 1995, and the
related consolidated statements of operations, shareholders equity, and cash
flows for each of the three years in the period ended December 31, 1996.  Our
audits also included the financial statement schedules listed in the Index at
Item 14(a).  These financial statements and schedules are the responsibility
of the Company's management.  Our responsibility is to express an opinion on
these financial statements and schedules based on our audits.  We did not
audit the financial statements of Central Products Company, a wholly-owned
subsidiary, which statements reflect total assets of $97,300,000 and
$94,492,000 as of December 31, 1996 and 1995, respectively, and total
revenues of $126,383,000 and $30,581,000 for the year ended December 31, 1996
and the three month period ended December 31, 1995, respectively.  Those
statements were audited by other auditors whose report has been furnished to
us, and our opinion, insofar as it relates to data included for Central
Products Company, is based solely on the report of the other auditors.

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

In our opinion, based on our audits and the report of other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the consolidated financial position of Spinnaker
Industries, Inc. and subsidiaries at December 31, 1996 and December 31, 1995,
and the consolidated results of their operations and their cash flows for
each of the three years in the period ended December 31, 1996, in conformity
with generally accepted accounting principles.  Also, in our opinion, the
related financial statement schedules, when considered in relation to the
basic financial statements taken as a whole, present fairly in all material
respects the information set forth therein.


                                       ERNST & YOUNG LLP


Dallas, Texas
March 12, 1997


                                     F-1

<PAGE>

                             INDEPENDENT AUDITORS' REPORT


To the Board of Directors of
   Spinnaker Industries, Inc.:

     We have audited the balance sheets of Central Products Company (a
wholly-owned subsidiary of Spinnaker Industries, Inc.) as of December 31,
1996 and 1995 and the related statements of operations and retained earnings
(accumulated deficit) and cash flows for the year ended December 31, 1996 and
the three months ended December 31, 1995.  These financial statements (not
presented separately herein) are the responsibility of the Company's
management.  Our responsibility is to express an opinion on these financial
statements based on our audits.

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

     In our opinion, such financial statements present fairly, in all material
respects, the financial position of Central Products Company as of December 31,
1996 and 1995 and the results of its operations and its cash flows for the year
ended December 31, 1996 and three months ended December 31, 1995 in conformity
with generally accepted accounting principles.



Deloitte & Touche LLP
Milwaukee, Wisconsin
February 21, 1997


                                     F-2

<PAGE>

                   Spinnaker Industries, Inc. and Subsidiaries

                          Consolidated Balance Sheets


<TABLE>
                                                                        DECEMBER 31
                                                                   1996              1995
                                                                ---------          ---------
                                                              (IN THOUSANDS, EXCEPT SHARE DATA)
<S>                                                            <C>                  <C>
ASSETS
Current assets:

  Cash and cash equivalents                                     $   9,699          $   3,048
  Accounts receivable, less allowance for doubtful accounts
   and cash discounts of $979 in 1996 and $1,234 in 1995           21,995             24,789
  Inventories                                                      32,638             27,041
  Prepaid expenses and other                                        2,266              2,318
  Deferred income taxes                                             1,590              1,234
                                                                ---------          ---------
Total current assets                                               68,188             58,430


Property, plant and equipment:
  Land                                                                583                583
  Buildings and improvements                                       12,606              9,451
  Machinery and equipment                                          53,261             45,553
  Accumulated depreciation                                         (9,155)            (4,639)
                                                                ---------          ---------
                                                                   57,295             50,948

Goodwill, net                                                      25,062             25,793
Other assets                                                        6,631              2,413
                                                                ---------          ---------
Total assets                                                    $ 157,176          $ 137,584
                                                                ---------          ---------
                                                                ---------          ---------

SEE ACCOMPANYING NOTES, WHICH ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
</TABLE>

                                      F-3

<PAGE>

                Spinnaker Industries, Inc. and Subsidiaries

                       Consolidated Balance Sheets

                                                         DECEMBER 31
                                                      1996         1995
                                                    ---------------------
                                                       (IN THOUSANDS,
LIABILITIES AND SHAREHOLDERS' EQUITY                  EXCEPT SHARE DATA)
Current liabilities:
  Accounts payable                                  $ 13,356     $ 12,699
  Accrued liabilities                                  7,524        6,353
  Current portion of long-term debt                    1,049        3,666
  Working capital revolver                               686       27,149
  Accrued interest                                     2,301          575
                                                    ---------------------
Total current liabilities                             24,916       50,442

Long-term debt, less current portion                 115,113       69,642
Notes payable to related parties                           -        1,583
Deferred income taxes                                  5,911        7,164
Minority interest                                          -        1,691

Shareholders' equity:
  Class A Common Stock, no par or stated
   value, authorized 10,000,000 shares;
   issued 3,074,598 shares in 1996 and
   2,811,026 shares in 1995 and Common
   Stock, no par or stated value,
   authorized 15,000,000 shares; issued
   3,084,211 in 1996 (at designated value)             3,124        3,124
  Additional paid-in capital                          10,631        3,709
  Retained earnings (accumulated deficit)             (2,127)         341
  Adjustment for minimum pension liability              (280)           -
  Less cost of common stock in treasury,
   95,332 shares each of Class A Common
   Stock and Common Stock in 1996 and
   95,332 shares of Class A Common Stock
   in 1995                                              (112)        (112)
                                                    ---------------------
Total shareholders' equity                            11,236        7,062
                                                    ---------------------
Total liabilities and shareholders' equity          $157,176     $137,584
                                                    ---------------------
                                                    ---------------------

                 SEE ACCOMPANYING NOTES, WHICH ARE AN INTEGRAL
                     PART OF THESE FINANCIAL STATEMENTS.

                                     F-4
<PAGE>

                  Spinnaker Industries, Inc. and Subsidiaries

                     Consolidated Statements of Operations

                                                  YEAR ENDED DECEMBER 31
                                                  1996       1995       1994
                                              --------------------------------
                                                   (IN THOUSANDS, EXCEPT
                                                     PER SHARE AMOUNTS)

Net sales                                     $ 246,536   $ 135,289   $ 33,632
Cost of sales                                  (213,942)   (117,737)   (28,506)
                                              ---------   ---------   --------
Gross profit                                     32,594      17,552      5,126
Selling, general and administrative expenses    (22,372)    (11,763)    (4,404)
                                              ---------   ---------   --------
Operating profit                                 10,222       5,789        722
Interest expense                                 (9,872)     (4,468)      (768)
Guarantee fee to parent                            (375)       (375)         -
Other (expense) income-net                         (338)          7        124
                                              ---------   ---------   --------
Income (loss) before income taxes, minority
 interest and extraordinary charge, net of tax     (363)        953         78
Income tax (provision) benefit                       37        (112)       (70)
Minority interest                                  (299)       (280)       (98)
                                              ---------   ---------   --------
Income (loss) before extraordinary charge          (625)  $     561   $    (90)
Extraordinary charge on early extinguishment
 of debt, net of income tax benefit of $953      (1,843)          -          -
                                              ---------   ---------   --------
Net income (loss)                             $  (2,468)  $     561   $    (90)
                                              ---------   ---------   --------
                                              ---------   ---------   --------
Weighted average common and common
 equivalent shares outstanding                    5,931       6,702      5,626
Income (loss) per share before
 extraordinary charge                            $(0.11)      $0.08     $(0.02)
Extraordinary charge per share                   $(0.31)          -          -
Net income (loss) per share                      $(0.42)      $0.08     $(0.02)

               SEE ACCOMPANYING NOTES, WHICH ARE AN INTEGRAL
                   PART OF THESE FINANCIAL STATEMENTS.

                                     F-5

<PAGE>
<TABLE>
                                           Spinnaker Industries, Inc. and Subsidiaries

                                         Consolidated Statements of Shareholders' Equity

                                    Class A                                                   Adjustment
                                    Common         Common             Additional  Retained   for Minimum
                                     Stock          Stock     Common    Paid-in   Earnings     Pension     Treasury
(IN THOUSANDS, EXCEPT SHARE DATA)  Outstanding   Outstanding   Stock    Capital   (deficit)   Liability      Stock      Total
                                   -----------   -----------  ------  ----------  ---------  ------------  --------     -----
<S>                                <C>           <C>           <C>      <C>       <C>         <C>          <C>         <C>
Balance at January 1, 1994         2,715,694              -    $3,124   $ 3,709   $  (130)                  $(112)     $ 6,591
  Net loss                                 -              -         -        -        (90)                      -          (90)
                                   ---------      ---------    ------   -------   --------      -----       ------     -------
Balance at December 31, 1994       2,715,694              -     3,124     3,709      (220)                   (112)       6,501
  Net income                               -              -         -         -       561                       -          561
                                   ---------      ---------    ------   -------   --------      -----       ------     -------
Balance at December 31, 1995       2,715,694              -     3,124     3,709       341                    (112)       7,062
  Exercise of warrants               187,476              -         -       500         -                       -          500
  Conversion of debt                 171,428              -         -     6,000         -                       -        6,000
  Stock dividend                           -      3,074,598         -         -         -                       -            -
  Tax benefit from exercise of
   subsidiary stock options                -              -         -        86         -                       -           86

  Stock issued for acquisition of
   Brown Bridge minority
   interest                                -          9,613         -       336         -                       -          336
  Adjustment for minimum
   pension liability                                                                            (280)                     (280)
  Net loss                                 -              -         -         -    (2,468)                      -       (2,468)
                                   ---------      ---------    ------   -------   --------      -----       ------     -------
Balance at December 31, 1996       3,074,598      3,084,211    $3,124   $10,631   $(2,127)      $(280)      $(112)     $11,236
                                   ---------      ---------    ------   -------   --------      -----       ------     -------
                                   ---------      ---------    ------   -------   --------      -----       ------     -------

SEE ACCOMPANYING NOTES, WHICH ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
</TABLE>

                                       F-6

<PAGE>


                 Spinnaker Industries, Inc. and Subsidiaries

                    Consolidated Statements of Cash Flows

<TABLE>
                                                                             YEAR ENDED DECEMBER 31
                                                                       ---------------------------------
                                                                         1996        1995         1994
                                                                       --------    --------     --------
                                                                                  (IN THOUSANDS)
<S>                                                                      <C>          <C>          <C>
OPERATING ACTIVITIES
Net income (loss)                                                      $ (2,468)   $    561     $    (90)
Adjustments to reconcile net income (loss) to net cash used in
operating activities:
  Extraordinary charge on early extinguishment of debt, net of tax        1,843           -            -
  Depreciation                                                            4,631       1,745          395
  Amortization of deferred financing costs and goodwill                   1,639         406           16
  Contribution of other assets to charitable organization                   248           -            -
  Sales of short term investments, net                                        -           4        1,988
  Minority interest                                                         299         280           98
  Deferred income taxes                                                    (556)       (312)           -
  Accrued interest on notes payable to related parties                      168         231           67
  Changes in operating assets and liabilities:
    Accounts receivable                                                   2,794         241       (1,075)
    Inventories                                                          (5,697)      2,959          178
    Income taxes due from Parent                                              -          70            -
    Prepaid expenses and other                                               52        (989)         102
    Accounts payable and accrued liabilities                              3,274       3,996          824
                                                                       --------    --------     --------
Net cash provided by operating activities                                 6,227       9,192        2,503

INVESTING ACTIVITIES
  Acquisition of Brown-Bridge                                            (2,295)          -      (29,073)
  Acquisition of Central Products Company, net of cash acquired               -     (79,550)           -
  Purchases of property, plant, and equipment                            (8,979)     (1,620)        (450)
  Additions to other assets                                                (974)       (643)           -
                                                                       --------    --------     --------
Net cash used in investing activities                                   (12,248)    (81,813)     (29,523)

FINANCING ACTIVITIES
  Proceeds (payments) from working capital revolvers, net               (26,463)     (2,015)      13,180
  Proceeds from long-term debt                                          123,500      81,984        9,000
  Principal payments on long-term debt                                  (76,645)     (2,706)         (19)
  Deferred financing costs                                               (7,139)     (2,078)           -
  Exercise of stock warrants and subsidiary options                       1,170           -            -
  Proceeds (payments) from notes payable to related parties              (1,751)          -        1,285
  Sale of minority interest                                                   -           -        1,313
                                                                       --------    --------     --------
Net cash provided by financing activities                                12,672      75,185       24,759
Increase (decrease) in cash and cash equivalents                          6,651       2,564       (2,261)
                                                                       --------    --------     --------
Cash and cash equivalents at beginning of year                            3,048         484        2,745
                                                                       --------    --------     --------
Cash and cash equivalents at end of year                               $  9,699    $  3,048     $    484
                                                                       --------    --------     --------
                                                                       --------    --------     --------
</TABLE>

SEE ACCOMPANYING NOTES, WHICH ARE AN INTEGRAL PART OF THESE FINANCIAL
STATEMENTS.



                                       F-7

<PAGE>

                  Spinnaker Industries, Inc. and Subsidiaries

                   Notes to Consolidated Financial Statements

                                 December 31, 1996


1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

OWNERSHIP

Spinnaker Industries, Inc., ("Spinnaker") is a 73% owned subsidiary of Lynch
Manufacturing Corporation, which is a wholly-owned subsidiary of Lynch
Corporation ("Parent").

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of Spinnaker and
its wholly-owned subsidiaries, Brown-Bridge Industries, Inc. ("Brown-Bridge"),
Central Products Company ("CPC"), and Entoleter, Inc. ("Entoleter"),
(collectively referred to hereinafter as the "Company"). All significant
intercompany accounts and transactions have been eliminated in consolidation.

NATURE OF OPERATIONS

Spinnaker's operations include the adhesive backed materials and industrial
processing equipment industries.  The Company competes in the carton sealing
tape and adhesive coated label markets within the adhesive-backed materials
industry.  Brown-Bridge and CPC operate in the adhesive coated materials
industry where Brown-Bridge develops, manufactures, and markets a broad line
of adhesive coated materials, which are further converted by printers and
industrial users into a variety of products for marking, labeling, promoting,
decorating, and identifying applications.  CPC manufactures and sells
water-activated and pressure-sensitive carton sealing tapes. Entoleter
designs, manufactures, and sells industrial processing, and air pollution
equipment.  The Company's operations are primarily in the U.S., however,
$11.5 million, $10.4 million, and $3.9 million of the Company's sales were
export sales for the years ended December 31, 1996, 1995, and 1994,
respectively.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the amounts reported in the financial statements and accompanying
notes.  Actual results could differ from those estimates.

EARNINGS PER SHARE

Earnings per share is based on the weighted average number of common and
dilutive common equivalent shares outstanding during each year, after giving
effect to the stock splits (see Shareholders' Equity below). Common equivalent
shares are comprised of options and warrants to acquire common stock.  In
1996 and 1994, common equivalent shares were excluded because of their
anti-dilutive effect on loss per share.  Fully diluted earnings per share did
not differ significantly from primary earnings per share in any year
presented.

CASH EQUIVALENTS

Cash equivalents consist of highly liquid investments with a maturity of less
than three months when purchased.


                                     F-8

<PAGE>


                  Spinnaker Industries, Inc. and Subsidiaries

           Notes to Consolidated Financial Statements (continued)


1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

ACCOUNTS RECEIVABLE

Accounts receivable of Brown-Bridge consist principally of amounts due from
companies who convert the adhesive coated materials into end products and
comprise 45% of total accounts receivable. Accounts receivable of CPC
comprise 50% of total accounts receivable and consist principally of amounts
due from paper distributors.  Accounts receivable of Entoleter, which
comprise the remaining 5% of total accounts receivable consist principally of
amounts due from foreign and domestic food processing companies.  Credit is
extended based on an evaluation of the customer's financial condition and
collateral is not generally required.  The Company considers concentrations
of credit risk to be minimal due to the Company's diverse customer base.  In
1996, 1995, and 1994, no customer exceeded 10% of the Company's net sales.  In
relation to export sales, the Company requires letters of credit supporting a
significant portion of the sales price prior to production to limit exposure
to credit risk. The Company maintains an allowance for doubtful accounts at a
level that management believes is sufficient to cover potential credit losses.

INVENTORIES

All inventory is stated at the lower of cost or market.  Brown-Bridge's
inventory, which comprises 48% of total inventory is valued using the
specific identification method.  CPC's inventory, which comprises 47% of
total inventory is valued using the last-in, first-out (LIFO) method.
Entoleter's inventory, which comprises 5% of total inventory is valued using
the first-in, first-out (FIFO) method.  The FIFO cost and LIFO cost of CPC's
inventory were materially the same at December 31, 1996.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment is stated on the basis of cost. Depreciation is
computed on the straight-line or declining balance method over the estimated
service lives of the related assets, which range from five to thirty-five
years for buildings and improvements and three to twenty years for machinery
and equipment.

GOODWILL

Goodwill represents the excess of cost over the fair value of the net assets
acquired and is generally amortized on a straight-line basis over 25 years.
Accumulated amortization at December 31, 1996 and 1995 totaled $1,344,000 and
$279,000, respectively.  The carrying value of goodwill is reviewed if the
facts and circumstances suggest it may be impaired.  If this review indicates
that goodwill may not be recoverable, as determined based on the estimated
future undiscounted cash flows of the entity acquired, the Company's carrying
value of the goodwill is reduced.

REVENUE RECOGNITION

The Company recognizes revenues at the time of shipment.


                                     F-9

<PAGE>


                  Spinnaker Industries, Inc. and Subsidiaries

           Notes to Consolidated Financial Statements (continued)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

INCOME TAXES

The Company utilizes the liability method to account for income taxes as
required by Statement of Financial Accounting Standards ("SFAS") No. 109,
ACCOUNTING FOR INCOME TAXES.  The income tax provision differs from amounts
currently payable or receivable because certain items of income and expense
are reported for income tax purposes in periods different from those in which
they are reported in the financial statements. The tax effects of these
temporary differences are recorded as deferred income taxes.

Prior to April 5, 1996, the accounts of the Company were included in the
consolidated federal and certain state income tax returns filed by its
Parent. Under the terms of an agreement for the allocation of tax liabilities
among the Parent and its operating units, the Company provides amounts in
lieu of income taxes for financial reporting purposes on a separate return
basis. Amounts in lieu of income taxes currently payable or receivable are
due to or from the Parent.

During 1996, the Parent's ownership of the Company became less than 80%, thus
the Company is required to file a separate consolidated return from April 5,
1996 forward.

RESEARCH AND DEVELOPMENT

Research and development expenses were $838,000, $603,000, and $259,000, in
1996, 1995, and 1994, respectively.

SHAREHOLDERS' EQUITY

On July 19, 1996, the Company's board of directors adopted a resolution to
amend the articles of incorporation to increase the number of authorized
shares to 25 million shares.  The new authorized shares are designated as 15
million shares of Common Stock and 10 million shares of Class A Common Stock
which replaced the existing common stock.  The Common Stock has a 1/10 per
share voting right compared to one vote per share for the Class A Common
Stock.

The Directors of the Company declared a dividend on the Class A Common Stock
payable in Common Stock on the basis of one share of Common Stock for each
share of Class A Common Stock outstanding.  The distribution was essentially
a two-for-one stock split.  The record date for the distribution was August 5,
1996, with a distribution date of August 16, 1996.

On November 14, 1995, the Directors of the Company declared a three-for-two
stock split of the Company's common shares, paid on December 29, 1995 to
shareholders of record as of the close of business on December 15, 1995.

On November 17, 1994, the Directors of the Company declared a three-for-two
stock split of the Company's common shares, paid on December 30, 1994 to
shareholders of record as of the close of business on December 16, 1994.

All presentations of shares outstanding and amounts per share, except those
appearing in the Consolidated Statements of Shareholder's Equity, have been
restated to reflect the stock splits.


                                     F-10

<PAGE>


                  Spinnaker Industries, Inc. and Subsidiaries

           Notes to Consolidated Financial Statements (continued)


1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

FAIR VALUE OF FINANCIAL INSTRUMENTS

Cash and cash equivalents, accounts receivable, accounts payable, accrued
liabilities, and short-term borrowings are carried at cost which approximates
fair value due to the short-term maturity of these instruments. The fair
value of the Company's long-term debt is estimated based on the quoted market
prices for the same or similar issues or on the current rates offered to the
Company for similar debt of the same maturities. The carrying value of the
Company's long-term debt approximates its fair value at December 31, 1996 and
1995.

STOCK BASED COMPENSATION

The Company has adopted the required provisions of SFAS No. 123, ACCOUNTING
FOR STOCK BASED COMPENSATION. SFAS No. 123 establishes a fair value method of
accounting and reporting standards for stock based compensation plans.
However as permitted by SFAS No. 123, the Company has elected to continue to
apply the provisions of Accounting Principles Board Opinion ("APB") No. 25,
ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES and related interpretations.  Under
APB No. 25, because the exercise price of the Company's employee stock options
were not less than the market price of the underlying stock on the date of
grant, no compensation expense is recognized.  The Company is required to
disclose the pro forma net income (loss) and net income (loss) per share as
if the fair value method defined in SFAS No. 123 had been applied.  See Note
10 for pro forma disclosures.

LONG-LIVED ASSETS

Effective January 1, 1996, the Company adopted SFAS No. 121, ACCOUNTING FOR
THE IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED
OF.  The adoption of this new accounting standard did not have a material
effect on the Company's Consolidated Statements of Operations.

RECLASSIFICATIONS

Certain reclassifications have been made to the prior year financial
statements to conform with the current year's presentation.


                                     F-11

<PAGE>


                  Spinnaker Industries, Inc. and Subsidiaries

           Notes to Consolidated Financial Statements (continued)


2. ACQUISITIONS

ACQUISITION OF BROWN-BRIDGE MINORITY INTEREST

In October 1996, concurrent with the issuance of the $115 million senior
notes (see Note 4), the Company acquired the approximately 25% minority
interest in its Brown-Bridge subsidiary.  The terms of the acquisition
involved a cash payment of approximately $2.3 million and the issuance of
9,613 shares of Spinnaker Common Stock.  In addition, as part of the
consideration for the shares of capital stock of Brown-Bridge, the minority
shareholders received the right to a contingent payment, which is
exerciseable at any time during the period beginning October 1, 1998 and
ending September 30, 2000.  The value of the contingent payment is equal to
the percentage of the capital stock of the former Brown-Bridge entity owned
by such stockholder at the time of the merger multiplied by 75% of the fair
value of the capital stock of Brown-Bridge, as determined in accordance with
certain economic assumptions, as of the date such right is exercised, less
the consideration received at closing.  The contingent price is payable
through the issuance of Common Stock of the Company, unless the Company elects
to pay the contingent price in cash. If such payments are made in cash, they
could give rise to a default under the senior notes, unless there is
sufficient availability under provisions regarding restricted payments
contained in the senior notes.

The purchase of the Brown-Bridge minority interest was recording using the
purchase method of accounting.  In accordance with APB No. 16, the
acquisition was "pushed-down" to the subsidiary level.  The fair value of the
minority interest approximated book value at the date of acquisition, as a
result no significant purchase accounting adjustments were recorded.  Any
contingent consideration paid in the future will be allocated to goodwill.

In connection with the acquisition of the Brown-Bridge minority interest, all
the Brown-Bridge options were accelerated and in turn certain key executives
of Brown-Bridge management exercised those options to purchase 71,065 shares
of Brown-Bridge common stock at various prices between $7.16 and $14.69 per
share, for a total of approximately $670,000.  The options were originally
granted in 1994 and were issued at exercise prices not less than the fair
market value of the common stock at the date of grant.

ACQUISITION OF CENTRAL PRODUCTS

Effective October 4, 1995, Central Products Acquisition Corporation entered
into a Stock and Asset Purchase Agreement with Unisource Worldwide, Inc. and
Alco Standard Corporation ("Alco"), which is Unisource's parent.  Central
Products Acquisition Corporation is a wholly-owned subsidiary of Spinnaker
Industries, Inc. and was formed to acquire Central Products Company ("CPC"),
which manufactures and sells water-activated and pressure-sensitive carton
sealing tapes.  The purchase price under the agreement was approximately $80
million.

The acquisition was accounted for as a purchase with the purchase allocated
to the assets acquired and the liabilities assumed as follows (in thousands):

               Current assets                    $ 30,109
               Property, plant and equipment       37,212
               Goodwill                            26,072
               Other assets                         2,182
               Current liabilities                (15,575)
                                                 --------
                                                 $ 80,000
                                                 --------
                                                 --------

Goodwill arising from the CPC acquisition is amortized using the straight
line method over a period of 25 years.


                                    F-12

<PAGE>

                 Spinnaker Industries, Inc. and Subsidiaries

           Notes to Consolidated Financial Statements (continued)

2.  ACQUISITIONS (CONTINUED)

PRO FORMA INFORMATION

Brown-Bridges and Central Products results are included in the consolidated
statements of operations from their respective acquisition dates.  The
following unaudited combined pro forma information shows the results of the
Company's operations as though both acquisitions had occurred at the beginning
of 1994.

                                                      DECEMBER 31
                                                    1995      1994
                                                 -------------------
                                                    (IN THOUSANDS)

Net sales                                        $226,558   $206,944
Net income (loss)                                     512        (28)
Net income (loss) per share                           .08          -
Number of shares used in per share computation      6,702      5,626

3. INVENTORIES

Inventories are comprised of the following:

                                                      DECEMBER 31
                                                    1995      1994
                                                  ------------------
                                                    (IN THOUSANDS)

Finished goods                                    $10,351    $ 9,291
Work-in-process                                     3,518      9,459
Raw materials and supplies                         18,769      8,291
                                                  -------    -------
                                                  $32,638    $27,041
                                                  -------    -------
                                                  -------    -------

4. LONG-TERM DEBT AND WORKING CAPITAL REVOLVERS

On October 23, 1996, the Company issued $115,000,000 of 10-3/4% Senior
Secured Notes ("Notes or Senior Notes") due 2006.  The Notes were issued in
a private placement under Rule 144A and subsequently registered under the
Securities Act of 1933 in February 1997.  The Note proceeds were used to
retire the outstanding term and revolver obligations described below, except
the $969,000 mortgage note at Entoleter and various capital lease
obligations.  The early extinguishment of debt resulted in an extraordinary
charge to fourth quarter earnings of $1,843,000, net of applicable income tax
related to the write off of related existing deferred financing costs.

The Notes are redeemable, in whole or in part, at the option of the Company
on or after October 15, 2001, at the redemption prices beginning at 105.375%
of the principal amount declining to 100% of the principal amount on October
15, 2005, plus accrued and unpaid interest.  In addition, at any time or from
time to time on or prior to October 15, 1999, the Company, at its option, may
redeem up to 33-1/3% of the aggregate principal amount of the Notes with net
cash proceeds from public equity offerings at a redemption price equal to
110.75% of the principal amount plus accrued and unpaid interest.  The Notes
are unconditionally guaranteed, jointly and severally, by Brown-Bridge, CPC
and Entoleter.

On April 5, 1996, the Company refinanced the $25 and $5 million subordinated
notes, issued to Alco Standard Company as part of the Spinnaker acquisition
of CPC, and in connection with the refinancing borrowed $8,500,000 ("Bridge
Loan") from a bank.  Concurrently with the closing of the Bridge Loan, the
Company paid Alco a total of $7.5 million, which represented $5.5 million of
principal reduction, $1.0 million of accrued interest and $1.0 million
towards the purchase of a warehouse facility.  The unpaid balance of the $25
million subordinated note, together with a $750,000 balance owed on a
warehouse facility acquired from Alco was restructured into a series of new
convertible

                                     F-13
<PAGE>

                 Spinnaker Industries, Inc. and Subsidiaries

           Notes to Consolidated Financial Statements (continued)

4.  LONG-TERM DEBT AND WORKING CAPITAL REVOLVERS (CONTINUED)

subordinated notes aggregating $20.25 million (Convertible Notes).  In May
1996, $6.0 million of the Convertible Notes was converted into 171,428 shares
of the Company's common stock at a conversion price of approximately $35 per
share.  The Bridge Loan, Convertible Notes and the $5 million subordinated
note were retired with the proceeds from the Senior Notes.

Long-term debt at December 31, 1996 and 1995 consisted of the following:

                                                         1996       1995
                                                        ------------------
                                                          (IN THOUSANDS)
10-3/4% Senior Secured Notes, due 2006 with interest
 payable semi-annually each April 15 and October 15     $115,000   $     -

8% convertible subordinated note to Alco, due March
 31, 2003 with interest payable semi-annually each
 March 31 and September 30                                     -    15,000

11% convertible subordinated note to Alco, due
 March 31, 2003 with interest payable quarterly.
 Principal payments of $2.5 million each September
 30, 2002 through 2005, inclusive                              -    10,000

8% subordinated note to Alco, interest free through
 September 30, 1996, and thereafter at 8%.  Interest
 payable semi-annually beginning March 31, 1997.
 Principal payment of $1,000,000 due December
 1998 and $4,000,000 due December 1999                         -     5,000

Term loan A at CPC at variable interest payable
 quarterly beginning January 1996.  Principal
 payments ranging from $375,000 to $1.5 million due
 quarterly beginning December 31, 1995 through
 September 29, 2002                                            -    19,625

Term loan B at CPC at variable interest payable
 quarterly beginning January 1996.  Principal
 payments of $2.0 million due quarterly beginning
 December 31, 2000 through September 29, 2002                  -    16,000

Term loan secured by assets of Brown Bridge at an
 interest rate of 1.25% over lender's prime rate,
 payable over five years maturing in 1999                      -     6,691

9-1/4% mortgage note from bank, payable on demand
 July 1, 1997.  Secured by certain property of
 Entoleter                                                   969       992

Capital lease obligations                                    193         -
                                                        ------------------
                                                         116,162    73,308
Less current maturities                                   (1,049)   (3,666)
                                                        ------------------
                                                        $115,113   $69,642
                                                        ------------------
                                                        ------------------



                                     F-14
<PAGE>

                 Spinnaker Industries, Inc. and Subsidiaries

           Notes to Consolidated Financial Statements (continued)

4. LONG-TERM DEBT AND WORKING CAPITAL REVOLVERS (CONTINUED)

Scheduled principal payments on the long-term debt and capital leases
obligations over the next five years are as follows (in thousands):

               1997                 $  1,049
               1998                       87
               1999                       26
               2000                        -
               2001                        -
               Thereafter            115,000
                                    --------
                                    $116,162
                                    --------
                                    --------


The Company also maintains short-term lines of credit with banks for working
capital needs at each subsidiary that aggregate $40 million.  The Company had
cash advances of approximately $686,000 outstanding under the lines of credit
and available borrowings of approximately $39.3 million as of December 31,
1996.  The Company is charged an unused line of credit fee every month based
on an annual rate of 0.375%.  Interest on all outstanding borrowings bear
interest at variable rates related to the prime interest rate or the lenders
base rate.  At December 31, 1996, the interest rate in effect was 10.0 %.  At
December 31, 1995, the Company had cash advances outstanding of approximately
$27 million under the previously existing lines of credit at interest rates
ranging from 8.5% to 11.0%.

Credit availability under the lines of credit are subject to certain
variables, such as the amount of inventory and receivables eligible to be
included in the borrowing base.  These lines are secured by the operating
assets of the Company's subsidiaries.

The Company is required to comply with various covenants including a
limitation on capital expenditures, and minimum levels of current ratio,
interest coverage, and net worth, as well as various other financial
covenants.  Certain of the lines of credit allow for the issuance of letters
of credit and require the payment of a fee based upon the face amount of each
letter of credit issued.  The Company's line of credit agreement expires in
2001.

Certain agreements with its lenders impose restrictions on the ability of the
Company or the Company's subsidiaries to pay dividends. At December 31, 1996
and 1995, there were no amounts available for the payment of dividends to
Spinnaker or Spinnakers shareholders.

Financing costs were incurred by the Company in conjunction with issuance of
the 10-3/4% Senior Secured Notes.  These financing costs are deferred and
amortized over the term of the related debt.  Unamortized financing costs of
approximately $6,200,000 at December 31, 1996 are included in other assets.

Interest paid in 1996, 1995, and 1994 on all outstanding borrowings amounted
to approximately $8 million, $ 3.6 million, and $520,000, respectively.

The Company capitalized approximately $300,000 of interest expense in 1996.

5. NOTES PAYABLE TO RELATED PARTIES

Notes payable to related parties were comprised of two promissory notes, the
first in the amount of $965,000 was payable to the Parent and the second in
the amount of $320,000 was payable to an entity affiliated with BF. The notes
payable plus accrued interest of $367,000 and $99,000 to the Parent and BF,
respectively were paid in full from a portion of the proceeds from the Senior
Notes issued in October 1996 (See Note 4).

                                     F-15
<PAGE>

                 Spinnaker Industries, Inc. and Subsidiaries

           Notes to Consolidated Financial Statements (continued)

6. ACCRUED EXPENSES

Accrued expenses consist of the following at December 31:

                                                  1996      1995
                                                 ------    ------
                                                  (IN THOUSANDS)

Vacation                                         $1,585    $1,651
Salaries, wages, and bonus                          796       192
Commissions                                         533       532
Accrued pension plan liability                    1,241         -
Worker's compensation and health insurance          662       591
Guarantee fee payable to parent                       -       375
Real estate and property taxes payable              718       697
Promotion allowance                                 441       324
Warranty allowance                                  376       158
Other                                             1,172     1,833
                                                 ------    ------
                                                 $7,524    $6,353
                                                 ------    ------
                                                 ------    ------

7. EMPLOYEE BENEFIT PLANS

CENTRAL PRODUCTS COMPANY

Pursuant to the CPC acquisition agreement, CPC assumed sponsorship of a
defined benefit pension plan for union employees per their collective
bargaining agreement and also agreed to establish a new defined benefit plan
for non-union employees hired by CPC.  The seller retained the defined
benefit pension obligation for non-union retirees as of September 30, 1995
and any non-union employees not hired by CPC.

The acquisition agreement required the seller to transfer assets to the CPC
plans equal to the present value of accrued benefits as of September 30, 1995
as defined in the agreement plus a defined rate of interest to the transfer
date.  The assets were transferred by the seller to the CPC union and
non-union plans in January 1997.

In January 1997, CPC established a plan for non-union employees.  Pursuant to
the acquisition agreement, CPC granted credit to the employees for all
service with the seller through September 30, 1995, plus the benefits they
accrue under the new plan from October 1, 1995 through their retirement or
termination.  The benefit obligation and the net periodic pension cost
information as of and for the year ended December 31, 1996 and as of and for
the three months ended December 31, 1995 have been calculated assuming the
new plan had been established on October 1, 1995.

                                     F-16

<PAGE>
                 Spinnaker Industries, Inc. and Subsidiaries

           Notes to Consolidated Financial Statements (continued)

7. EMPLOYEE BENEFIT PLANS (CONTINUED)

The following table sets forth the salaried and hourly plans funded status as
of December 31, 1996 and 1995:

<TABLE>
                                                            DECEMBER 31,
                                                       1996               1995
                                                -------------------------------------
                                                UNION  NON-UNION    UNION   NON-UNION
                                                -------------------------------------
                                                           (IN THOUSANDS)
<S>                                             <C>       <C>       <C>       <C>
Actuarial present value of accumulated benefit
 obligation, including vested benefits of
 $4,291 and $2,294 for 1996 and $3,974 and
 $1,835 for 1995                                $4,837    $2,562    $4,479    $2,050
                                                ------------------------------------
                                                ------------------------------------
Projected benefit obligation                     4,837     3,817     4,479     3,185
Plan assets at fair value                        4,490     2,847     4,498     2,705
                                                ------------------------------------
Plan assets less (greater) than projected
 benefit obligation                                347       970       (19)      480
Unrecognized net loss                             (280)      (76)      (52)      (15)
Adjustment to recognize minimum liability          280         -         -         -
                                                ------------------------------------
Pension (asset) liability                       $  347    $  894    $  (71)   $  465
                                                ------------------------------------
                                                ------------------------------------
</TABLE>

The fair value of assets for the union plan is based on the actual plan
assets as of December 31, 1996 and 1995.  The fair value of the assets for
the non-union plan is based on a calculation of assets, to be transferred per
the acquisition agreement, as of December 31, 1996 and 1995.

The net periodic pension cost for the year ended December 31, 1996, and the
three months ended December 31, 1995 included the following components:

<TABLE>
                                                            DECEMBER 31,
                                                       1996               1995
                                                -------------------------------------
                                                UNION  NON-UNION    UNION   NON-UNION
                                                -------------------------------------
                                                           (IN THOUSANDS)
<S>                                             <C>       <C>        <C>      <C>
Service cost--benefits earned during the
 period                                         $ 151     $ 398      $ 35     $ 93
Interest cost on projected benefit obligation     342       246        85       59
Actual return on plan assets                     (145)     (142)      (34)     (35)
Net amortization and deferral                    (210)      (73)      (55)     (19)
                                                -------------------------------------
Net periodic pension cost                       $ 138     $ 429      $ 31     $ 98
                                                -------------------------------------
                                                -------------------------------------
</TABLE>

The weighted average discount rate and rate of increase in future
compensation levels for both plans were 7.75% and 4%, respectively, at
December 31, 1996 and 1995.  The expected long-term rate of return on plan
assets for both plans was 8% in 1996 and 1995.

Pursuant to the acquisition agreement, CPC assumed sponsorship of a 401(k) plan
for union employees.  On January 1, 1996, CPC established a 401(k) plan for
non-union employees.  CPC is not required to match employee contributions
under the union plan, however the non-union plan provides matching up to 50%
of employee contributions not exceeding 8% of the employees compensation.
CPC recorded expense for its contributions under the non-union plan of
approximately $398,000 during 1996.

                                       F-17
<PAGE>

                 Spinnaker Industries, Inc. and Subsidiaries

           Notes to Consolidated Financial Statements (continued)


ENTOLETER

Entoleter has a defined-benefit pension plan for all salaried and full-time
hourly employees.  Benefits for the plan are based on compensation and years
of service with Entoleter. Entoleters funding policy is to contribute funds
necessary to meet future benefit obligations.  The Salaried pension plan was
frozen and merged with the hourly pension plan during 1996.

The following table sets forth the salaried and hourly plans funded status as
of December 31, 1996 and 1995:

                                                      DECEMBER 31
                                              1996               1995
                                          ----------------------------------
                                          PENSION PLAN   SALARIED     HOURLY
                                          ----------------------------------
                                                    (IN THOUSANDS)

Actuarial present value of accumulated
 benefit obligation, including vested
 benefits of $938 in 1996 and $842 and
 $98 in 1995, respectively                   $1,004      $  845        $128
                                             ------------------------------
                                             ------------------------------
Projected benefit obligation for service
 rendered to date                             1,035         876         146
Plan assets at fair value                     1,229       1,116          61
                                             ------------------------------
Plan assets in excess of (less than)
 projected benefit obligation                   194         240         (85)
Unrecognized net actuarial (gain) loss           22         (40)         28
Unrecognized net asset                          (41)        (49)          -
Adjustment to recognize minimum liability         -           -         (10)
                                             ------------------------------
Net pension asset (liability) included in
 other assets                                $  175      $  151        $(67)
                                             ------------------------------
                                             ------------------------------

At December 31, 1996 and 1995, plan assets consist primarily of bank money
market funds, guaranteed investment contracts, and government securities.

Net pension cost included the following components:

                                                YEAR ENDED DECEMBER 31
                                                ----------------------
                                                1996     1995     1994
                                                ----------------------
                                                   (IN THOUSANDS)

          Service cost--benefits earned
           during the period                    $ 39    $  40    $  32
          Interest cost on projected benefit
           obligation                             71       70       67
          Actual return on plan assets           (88)    (112)      11
          Net amortization and deferral          (13)      17     (110)
                                                -----------------------
          Net periodic pension cost             $  9    $  15    $   -
                                                -----------------------
                                                -----------------------

The weighted average discount rate and rate of increase in future
compensation levels used in determining the actuarial present value of the
projected benefit obligation for the plans were 7.25% and 4.0%, at December
31, 1996 and 1995.  The expected long-term rate of return on plan assets for
the plans was 8% in 1996 and 1995.

                                      F-18
<PAGE>

                 Spinnaker Industries, Inc. and Subsidiaries

           Notes to Consolidated Financial Statements (continued)


7. EMPLOYEE BENEFIT PLANS (CONTINUED)

BROWN-BRIDGE

Brown-Bridge has a defined contribution plan that covers substantially all of
its employees. Under the plan, Brown-Bridge can match, at its discretion, up
to 50% of employee contributions not exceeding 8% of the employees
compensation. Amounts contributed to the plan by Brown-Bridge are 20% vested
each year for five years. On the acquisition date, employees of Brown-Bridge
who were previously employed by Kimberly-Clark Corporation received vesting
rights based on the years of credited service with Kimberly-Clark
Corporation. Brown-Bridge recorded expense for its contributions under the
plan of approximately $470,000 and $417,000, in 1996 and 1995, respectively.

8. INCOME TAXES

In prior years, the Company was included in the consolidated income tax
return filed by its Parent. Under the terms of a tax sharing agreement with
its Parent, Spinnaker can only utilize its net operating loss carryforwards
to the extent it has taxable income. Accordingly, a valuation allowance was
recorded in conjunction with the adoption of Statement 109 as of January 1,
1993 to offset the deferred tax asset. In 1995, the Company eliminated the
$279,000 valuation allowance related to the deferred tax asset because it
generated sufficient taxable income to utilize the deductible temporary
differences.  During 1994 the Company utilized approximately $257,000 of tax
operating loss carryforwards.

In April 1996, the Parents ownership of the Company became less than 80%,
thus the Company is required to file a separate consolidated return from
April 5, 1996 forward.

During 1996, the Company generated approximately $5,888,000 of net operating
loss carryforwards which are available to offset future taxable income.
These carryforwards, which are expected to be fully utilized, expire in the
year 2011.

Deferred income taxes are provided for the temporary differences between the
financial statement and tax basis of the Companys assets and liabilities.
Temporary differences consist primarily of differences in tax and book
depreciation methods and lives and the timing of the deductibility of certain
expenses.  Cumulative differences at December 31, 1996 and 1995 are as
follows:

                                   DEFERRED TAX                 DEFERRED TAX
                               ASSET      LIABILITY         ASSET     LIABILITY
                                       1996                         1995
                              ----------------------        --------------------
                                                (IN THOUSANDS)
Inventory reserve             $  367       $    -             $   25     $    -
Tax over book depreciation         -        8,533                  -      7,164
Assets deducted for tax
 purposes                          -          268                  -          -
Compensation accruals            550            -                579          -
Liabilities not deducted
 for tax purposes                  -            -                174          -
Other reserves and accruals      673            -                456          -
Other                            653            -                  -          -
Net operating loss
 carryforwards                 2,237            -                  -          -
                              ----------------------        --------------------
Total deferred income taxes   $4,480       $8,801             $1,234     $7,164
                              ----------------------        --------------------
                              ----------------------        --------------------

                                       F-19
<PAGE>

                 Spinnaker Industries, Inc. and Subsidiaries

           Notes to Consolidated Financial Statements (continued)


8.  INCOME TAXES (CONTINUED)

Significant components of the provision for income taxes are as follows:


                                           YEAR ENDED DECEMBER 31
                                          1996      1995      1994
                                          ------------------------
                                               (IN THOUSANDS)

Current:
 Federal                                  $   -   $ (347)    $   -
 State                                     (219)     (77)      (70)
                                          ------------------------
Total current                              (219)    (424)      (70)

Deferred:
 Federal                                    226      312         -
 State                                       30        -         -
                                          ------------------------
                                            256      312         -
                                          ------------------------
Income tax (provision) benefit            $  37   $ (112)    $ (70)
                                          ------------------------
                                          ------------------------

Reconciliation of the statutory federal income tax rate to the effective
income tax rate follows:

                                             YEAR ENDED DECEMBER 31
                                          ----------------------------
                                           1996       1995       1994
                                          ----------------------------
Statutory federal rate                     34.0%      34.0%      34.0%
Increase (decrease) resulting from:
  Goodwill                                (22.1)         -          -
  Meals and entertainment                  (9.7)         -          -
  Change in valuation allowance               -      (29.3)         -
  State income taxes (net of federal
   tax benefit)                             8.7        5.3       59.2
 Other                                     (0.8)       1.7       (3.5)
                                          ----------------------------
Effective income tax rate                  10.1%      11.7%      89.7%
                                          ----------------------------
                                          ----------------------------

Cash paid for income taxes was $585,000, $703,000, and $23,000 in 1996,
1995, and 1994, respectively.

                                       F-20
<PAGE>

                 Spinnaker Industries, Inc. and Subsidiaries

           Notes to Consolidated Financial Statements (continued)


9. RELATED PARTY TRANSACTIONS

Lynch Corporation provides the Company with certain management services,
which include executive, financial and accounting, planning, budgeting, tax,
legal, and insurance services. In connection therewith, the Company incurred
management service costs of $100,000 in 1996 and 1995, and $72,000 in 1994.
In addition, Lynch Corporation has from time to time allocated additional
charges to the Company for other direct services.

As part of the CPC acquisition, Lynch Corporation agreed to guarantee the
subordinate notes due Alco.  Lynch charged the Company a guarantee fee of
0.5% per month, or $125,000.  Total fees charged by Lynch in 1996 and 1995 was
$750,000.

On June 13, 1994, the Company and BF entered into a management agreement (the
Management Agreement) pursuant to which BF agreed to provide management
services to the Company. The Management Agreement had an initial term of one
year, and was automatically renewable for a term of one additional year
unless either party gives notice of termination.  Effective August 31, 1996,
the Management Agreement was terminated at which time, Messrs. Boyle, and
Fleming became employees of the Company and continued to be Chairman and
Chief Executive Officer and President, respectively, of the Company.  BF
received management fees of $295,000, $200,000, and $112,000 in 1996, 1995,
and 1994, respectively, plus reimbursement of expenses.  The Company and BF
also entered into a Warrant Purchase Agreement in 1994, pursuant to which BF
received warrants to purchase common stock of the Company at any time on or
before June 10, 1999, subject to certain restrictions.  On April 5, 1996, BF
were issued approximately 187,000 shares of Class A Common Stock upon the
exercise of the warrants at a price of $2.67 per share.  As of December 31,
1996, there were approximately 490,000 warrants outstanding to purchase one
share each of Class A Common Stock and Common Stock at a total price of $2.67
per warrant exercise (adjusted for the 3 for 2 stock splits in December 1995
and 1994, and a stock dividend in August 1996).

During 1994, Brown-Bridge granted certain of its key executives options to
purchase up to 71,065 shares of Brown-Bridges common stock at various prices
between $7.16 and $14.69 per share. These options were exercised and the
resulting common stock was immediately purchased as part of the Brown-Bridge
minority interest acquisition in October 1996 (See Note 2).

In 1994, Brown-Bridge retained the services of a consulting firm to assist in
improving its operations and manufacturing processes. The fees for such
services totaled $39,000, $872,000, and $387,000 in 1996, 1995, and 1994. The
owner of the consulting firm was a 1% shareholder of Brown-Bridge, prior to
the minority purchase.

                                      F-21
<PAGE>

                 Spinnaker Industries, Inc. and Subsidiaries

           Notes to Consolidated Financial Statements (continued)


10.  STOCK OPTION PLANS

In accordance with the Companys directors stock option plan, the Company may
grant stock options to directors who are not employees of the Company.
Effective February 15, 1996, the Company granted 30,000 stock options for the
purchase of one share each of Class A Common Stock and Common Stock at a
total price of $40 per option exercise (adjusted for the stock dividend in
August 1996) to qualifying directors.  The options vest over a two year
period with 15,000 options becoming exerciseable one year after the grant
date and the remaining 15,000 options becoming exerciseable two years after
the grant date.  The options expire on the fifth anniversary after the grant
date or 30 days after the director ceases to be a director.  As permitted by
SFAS No. 123, the Company elected to account for these options under APB No.
25 and as such no compensation expense was recorded because the option
exercise price was not less than the market price at the date of grant.

Pro forma information regarding net income and earnings per share is required
by SFAS No. 123, and has been determined as if the Company had accounted for
its employee stock options under the fair value method of that Statement. The
fair value for these options was estimated at the date of grant using a
Black-Scholes option pricing model with the following weighted-average
assumptions: risk-free interest rates of 5.58%; dividend yields of 0%;
volatility factors of the expected market price of the Company's common stock
of .50; and a weighted-average expected life of the options of 3 years.  For
purposes of pro forma disclosures, the estimated fair value of the options is
amortized to expense over the options vesting period.  The estimated
weighted-average fair value per option is approximately $5.20.  The Companys
pro forma effect on 1996 operations is as follows:

                                       NET LOSS     NET LOSS PER SHARE
                                    -------------------------------------
                                               (IN THOUSANDS)

            As reported                $ 2,468             $ 0.42
            Pro forma                  $ 2,595             $ 0.44


11. OTHER INCOME (EXPENSE)-NET

During 1996, the Company contributed land with a net book value of $248,000
to a qualified charitable organization.  The expense for this contribution is
included in other income (expense)-net.



                                      F-22
<PAGE>

                 Spinnaker Industries, Inc. and Subsidiaries

           Notes to Consolidated Financial Statements (continued)


12. SEGMENT INFORMATION

The Company competes in two business segments, adhesive coated materials and
industrial processing equipment.  Operating profit (loss) is revenues less
operating expenses, excluding unallocated general corporate expenses,
interest and income taxes. Identifiable assets of each industry segment are
the assets used by the segment in its operations, excluding general corporate
assets.

                                         YEAR ENDED DECEMBER 31
                                       1996       1995       1994
                                      ----------------------------
                                            (IN THOUSANDS)

REVENUES
 Adhesive coated materials           $238,652   $127,754   $26,849
 Industrial processing equipment        7,884      7,535     6,783
                                     -----------------------------
                                     $246,536   $135,289   $33,632
                                     -----------------------------
                                     -----------------------------

OPERATING PROFIT (LOSSES)
 Adhesive coated materials           $ 12,238   $  6,364   $ 1,408
 Industrial processing equipment           64        509       (13)
 Unallocated corporate expenses        (2,080)    (1,084)     (673)
                                     -----------------------------
                                     $ 10,222   $  5,789   $   722
                                     -----------------------------
                                     -----------------------------

CAPITAL EXPENDITURES
 Adhesive coated materials           $  8,573   $  1,411   $   264
 Industrial processing equipment          399        143       186
 General corporate                          7         66         -
                                     -----------------------------
                                     $  8,979   $  1,620   $   450
                                     -----------------------------
                                     -----------------------------

DEPRECIATION/AMORTIZATION
 Adhesive coated materials           $  5,773   $  1,993   $   250
 Industrial processing equipment          180        151       161
 General corporate                        317          7         -
                                     -----------------------------
                                     $  6,270   $  2,151   $   411
                                     -----------------------------
                                     -----------------------------

ASSETS
 Adhesive coated materials           $143,884   $132,026   $37,496
 Industrial processing equipment        4,409      3,676     3,264
 General corporate                      8,883      1,882       569
                                     -----------------------------
                                     $157,176   $137,584   $41,329
                                     -----------------------------
                                     -----------------------------

                                      F-23
<PAGE>
                 Spinnaker Industries, Inc. and Subsidiaries

           Notes to Consolidated Financial Statements (continued)


13. LEASES

Future minimum rental payments under long-term non cancelable operating
leases are as follows at December 31, 1996 (in thousands):

            1997                  $1,340
            1998                     978
            1999                     779
            2000                     639
            2001                     604
            Thereafter             4,215
                                  ------
                                  $8,555
                                  ------
                                  ------

Rental payments under operating leases were $1,743,000, $419,000, and $21,000
for the years ended December 31, 1996, 1995, and 1994.

14. CONTINGENCIES

Entoleter has identified possible environmental issues related to portions of
its land in Hamden, Connecticut. The appropriate regulatory agencies have
been notified, but to date no action has been required by any regulatory
agency.

The Company is involved in various claims, including those related to
environmental matters and litigation arising in the normal course of
business.  In the opinion of management, the resolution of these claims will
not have a material adverse effect on the liquidity, financial position, or
results of operations of the Company.



                                       F-24
<PAGE>

            SCHEDULE I  CONDENSED FINANCIAL INFORMATION OF REGISTRANT

                           SPINNAKER INDUSTRIES, INC.
                                (PARENT COMPANY)

                            CONDENSED BALANCE SHEETS


                                           December 31
                                         1996       1995
                                      --------------------
                                         (IN THOUSANDS)

ASSETS

Current assets
  Cash and cash equivalents           $    282    $   722
  Accounts receivable                        -         11
  Subsidiary receivable, current
   portion                               2,777        184
  Other current assets                     942      1,580
                                      --------    -------
     Total current assets                4,001      2,497

Office equipment (net of
 depreciation)                              52         62
Subsidiary receivable                   81,859        736
Investment in subsidiaries              37,037     32,507
Other assets                             7,607        333
                                      --------    -------
     Total assets                     $130,556    $36,135
                                      --------    -------
                                      --------    -------

LIABILITIES AND SHAREHOLDERS EQUITY

Accounts payable and accrued
 liabilities                            $2,945    $ 2,490
Notes payable, current                       -     25,000
Notes payable to related parties         1,375      1,583
Notes payable, long term               115,000          -
Total shareholders equity               11,236      7,062
                                      --------    -------
    Total liabilities and
      shareholders equity             $130,556    $36,135
                                      --------    -------
                                      --------    -------

                                      F-25
<PAGE>

         SCHEDULE I  CONDENSED FINANCIAL INFORMATION OF REGISTRANT

                         SPINNAKER INDUSTRIES, INC.
                              (PARENT COMPANY)

                     CONDENSED STATEMENTS OF OPERATIONS





                                                Year Ended December 31
                                                1996      1995     1994
                                             -----------------------------
                                                    (IN THOUSANDS)

Interest and dividends                       $    11    $   47     $ 90

Management fees and interest income from
 subsidiaries                                    695       101      227
                                             -----------------------------

      Total income                               706       148      317

Cost and Expenses:
  Guarantee fee to parent                        375       375        -
  Unallocated corporate administrative
   expense                                     2,080     1,084      673
  Interest expense and other                   2,227       826       64
                                             -----------------------------
      Total cost and expenses                  4,682     2,285      737
                                             -----------------------------

Loss before income taxes, extraordinary
 charge and equity in net income of
 subsidiaries                                 (3,976)   (2,137)    (420)

Income tax benefit                             1,669     1,083      291

Extraordinary charge on early extinguishment
 of debt, net of tax                            (546)        -        -

Equity in net income of subsidiaries             385     1,615       39
                                             -----------------------------
Net income (loss)                            $(2,468)   $  561    $ (90)
                                             -----------------------------
                                             -----------------------------


                                    F-26
<PAGE>

         SCHEDULE I  CONDENSED FINANCIAL INFORMATION OF REGISTRANT

                         SPINNAKER INDUSTRIES, INC.
                              (PARENT COMPANY)

                     CONDENSED STATEMENTS OF OPERATIONS





                                                Year Ended December 31
                                                 1996      1995     1994
                                           ---------------------------------
                                                      (IN THOUSANDS)

Cash provided by (used in) operating
 activities                                   $(4,666)   $   778      $2,134
                                           ---------------------------------
Investing activities:
    Acquisition of Brown-Bridge minority
     interest                                  (2,295)         -           -
    Investment in Brown-Bridge                      -          -      (5,287)
    Investment in Central Products
     Corporation                                    -    (25,000)          -
    Advances to subsidiaries                  (81,307)         -           -
    Purchases of office equipment                  (2)       (59)          -
                                           ---------------------------------
Net cash used in investing activities         (83,604)   (25,059)     (5,287)
                                           ---------------------------------

Financing activities:
    Advances from subsidiaries                  1,375          -           -
    Proceeds from notes payable to related
     parties                                        -          -       1,352
    Proceeds from notes payable               123,500     25,000           -
    Payments on notes payable                 (30,962)         -           -
    Deferred financing costs                   (6,872)         -           -
    Exercise of warrants                          500          -           -
    Other                                         289          -           -
                                           ---------------------------------

Net cash provided by financing activities      87,830     25,000       1,352
                                           ---------------------------------
Total increase (decrease) in cash and cash
 equivalents                                     (440)       719      (1,801)

Cash and cash equivalents at beginning
 of year                                          722          3       1,804
                                           ---------------------------------
Cash and cash equivalents at end of year     $    282   $    722     $     3
                                           ---------------------------------
                                           ---------------------------------


                                      F-27

<PAGE>

                   SCHEDULE I  SPINNAKER INDUSTRIES, INC.
                               (PARENT COMPANY)

                  NOTES TO CONDENSED FINANCIAL STATEMENTS

Note A - Basis of presentation

In the parent company-only financial statements, the Company's investment in
subsidiaries is stated at cost plus equity in undistributed earnings of
subsidiaries since the date of acquisition.  The Company's share of net
income of its unconsolidated subsidiaries is included in consolidated income
using the equity method.  The parent company-only financial statements should
be read in conjunction with the Company's consolidated financial statements.

                                       F-28

<PAGE>

                SCHEDULE II  VALUATION AND QUALIFYING ACCOUNTS

                 SPINNAKER INDUSTRIES, INC. and SUBSIDIARIES
                               December 31, 1996

                                                     Year Ended December 31
                                                     1996      1995    1994
                                                    -----------------------
                                                         (IN THOUSANDS)
Allowance for doubtful accounts/cash discounts:
Balance at beginning of period                      $ 1,234   $  378   $  61
Additions charged to expense                          1,334      627     385
Additions due to acquisitions (a)                         -    1,187     197
Deductions, net of recoveries (b)                    (1,589)    (958)   (265)
                                                    -----------------------
Balance at end of period                            $   979   $1,234   $ 378
                                                    -----------------------
                                                    -----------------------

(a) Includes Brown-Bridge beginning balance (9-19-94) of $197,000 and the
    Central Products beginning balance (10-1-95) of $1,160,000.  Also includes
    a $27,000 purchase price adjustment relating to Brown Bridge in 1995.
(b) Accounts written-off.

                                       F-29

<PAGE>
                                 INDEX TO EXHIBITS

Exhibit
Number                             Description
-------                            -----------
  3.1    Certificate of Incorporation of the Registrant, as amended (filed as
         Exhibit 3.2 to the Registrant's Report on Form 8-A dated August 13,
         1996).
  3.2    Bylaws of the Registrant (filed as Exhibit 3(ii) to the Registrant's
         Annual Report on Form 10-K for the fiscal year ended December 31,
         1994).
  4.1    Purchase Agreement dated October 18, 1996, among the Registrant,
         Brown-Bridge Industries, Inc., Central Products Company, and
         Entoleter, Inc., and BT Securities Corporation (filed as Exhibit 4.1
         to the Registrant's Current Report on Form 8-K dated November 7,
         1996).
  4.2    Registration Rights Agreement dated October 18, 1996, among the
         Registrant, Brown-Bridge Industries, Inc., Central Products Company,
         and Entoleter, Inc., and BT Securities Corporation (filed as
         Exhibit 4.2 to the Registrant's Current Report on Form 8-K dated
         November 7, 1996).
  4.3    Indenture dated October 23, 1996, among the Registrant, Brown-Bridge
         Industries, Inc., Central Products Company, and Entoleter, Inc., and
         The Chase Manhattan Bank, as Trustee (filed as Exhibit 4.3 to the
         Registrant's Current Report on Form 8-K dated November 7, 1996).
  4.4    A Warrant, dated as of June 10, 1994, executed by Safety Railway
         Service Corporation (filed as Exhibit 7.4 to the Registrant's Current
         Report on Form 8-K dated June 13, 1994).
 10.1    Commercial Loan Open End Mortgage Deed and Security Agreement and
         Commercial Mortgage Note dated July 1, 1988 in the amount of
         $1,100,000 to Centerbank (formerly Connecticut Savings Bank)(filed as
         Exhibit 10.1 to the Registrant's Annual Report on Form 10-K for the
         fiscal year ended December 31, 1994).
 10.5    Warrant Purchase Agreement, dated as of June 10, 1994, by and among
         Boyle, Fleming, George & Co., Inc. and Safety Railway Service
         Corporation (filed as Exhibit 7.3 to the Registrant's Current Report
         on Form 8-K dated June 13, 1994).
 10.10   Agreement for the Allocation of Income Tax Liability between Lynch
         Corporation and its Consolidated Subsidiaries, dated December 18,
         1988, between Lynch Corporation and Safety Railway Service Corporation
         (filed as Exhibit 10.10 to the Registrant's Annual Report on Form 10-K
         for the fiscal year ended December 31, 1994).
 10.14   Stock and Asset Purchase Agreement, dated as of September 27, 1995, by
         and among Central Products Acquisition Corp., Unisource Worldwide,
         Inc. and Alco Standard Corporation (filed as Exhibit 7.1 to the
         Registrant's Current Report on Form 8-K dated October 18, 1995).
 10.15   Credit Agreement, dated as of September 29, 1995, by and among Central
         Products Acquisition Corp., as Borrower, Spinnaker Industries, Inc.,
         as Pledgor, and Heller Financial, Inc., as Agent and a Lender (filed
         as Exhibit 7.2 to the Registrant's Current Report on Form 8-K dated
         October 18, 1995).
 10.16   Term Note A, dated October 4, 1995, from Central Products Acquisition
         Corp. payable to the order of Heller Financial, Inc. in the original
         principal amount of $20 million (filed as Exhibit 7.3 to the
         Registrant's Current Report on Form 8-K dated October 18, 1995).
 10.17   Term Note B, dated October 4, 1995, from Central Products Acquisition
         Corp. payable to the order of Heller Financial, Inc. in the original
         principal amount of $16 million (filed as Exhibit 7.4 to the
         Registrant's Current Report on Form 8-K dated October 18, 1995).
 10.18   Revolving Note, dated September 29, 1995, from Central Products
         Acquisition Corp. payable to the order of Heller Financial, Inc. in
         the maximum principal amount of $24 million (filed as Exhibit 7.5 to
         the Registrant's Current Report on Form 8-K dated October 18, 1995).
 10.19   Subordinated Promissory Note, dated September 29, 1995, from Spinnaker
         Industries, Inc. payable to Alco Standard Corporation in the original
         principal amount of $25 million (filed as Exhibit 7.6 to the
         Registrant's Current Report on Form 8-K dated October 18, 1995).
 10.20   Subordinated Promissory Note, dated September 29, 1995, from Central
         Products Acquisition Corp. payable to Alco Standard Corporation in the
         original principal amount of $5 million (filed as Exhibit 7.7 to the
         Registrant's Current Report on Form 8-K dated October 18, 1995).
 10.21   Agreement, dated October 3, 1995, between Spinnaker Industries, Inc.
         and Lynch Corporation (filed as Exhibit 7.8 to the Registrant's
         Current Report on Form 8-K dated October 18, 1995).

<PAGE>

Exhibit
Number                             Description
-------                            -----------
 10.22   Credit Agreement among Central Products Company, Brown-Bridge
         Industries, Inc. and Entoleter, Inc. as Borrowers, the Registrant, as
         Guarantor, each of the financial institutions listed on Schedule 1
         thereto, BT Commercial Corporation, as Agent, Transamerica Business
         Credit Corporation, as Collateral Agent, and Bankers Trust Company, as
         Issuing Bank (filed as Exhibit 99.1 to the Registrant's Current Report
         on Form 8-K dated November 7, 1996).
 10.23   Agreement and Plan of Merger (Brown-Bridge Minority Interest), by and
         among the Registrant, BB Merger Corp., Brown-Bridge Industries, Inc.,
         and the stockholders of Brown-Bridge Industries, Inc. listed on
         Exhibit A thereto (filed as Exhibit 99.2 to the Registrant's Current
         Report on Form 8-K dated November 7, 1996).
 11.1*   Computation of Per Share Earnings.
 21.1*   Subsidiaries of the Registrant.
 23.3    Consent of Crouch & Hallett, L.L.P. (included in Exhibit 5.1).
 27      Financial Data Schedule
 99.1    Form of Letter of Transmittal filed as Exhibit 99.1 to Registrant's
         Registration Statement on Form S-4 (No. 333-18789).
 99.2    Form of Notice of Guaranteed Delivery filed as Exhibit 99.2 to
         Registrant's Registration Statement on Form S-4 (No. 333-18789).
 99.3    Form of Letter to Brokers filed as Exhibit 99.3 to Registrant's
         Registration Statement on Form S-4 (No. 333-18789).
 99.4    Form of Letter to Clients filed as Exhibit 99.4 to Registrant's
         Registration Statement on Form S-4 (No. 333-18789).
 99.5    Instruction to Registered Holder and/or Book-Entry Transfer
         Participant from Beneficial Owner filed as Exhibit 99.5 to
         Registrant's Registration Statement on Form S-4 (No. 333-18789).
 99.6    Guidelines for Certification of Taxpayer Identification Number on
         substitute Form W-9 filed as Exhibit 99.6 to Registrant's Registration
         Statement on Form S-4 (No. 333-18789).
___________

    *Previously Filed