<PAGE>

FIVE-YEAR SELECTED FINANCIAL DATA
KUHLMAN CORPORATION AND SUBSIDIARIES

<TABLE>
<CAPTION>
For the years ended December 31,                                1995      1994      1993      1992      1991
------------------------------------------------------------------------------------------------------------
IN THOUSANDS, EXCEPT PER SHARE DATA
<S>                                                         <C>       <C>       <C>       <C>       <C>
INCOME STATEMENT DATA
Net sales                                                   $425,384  $396,117  $242,221  $231,426  $237,216
Gross profit (%)                                                19.8%     19.2%     17.9%     20.2%     22.7%
Operating expenses (%)                                          12.9%     13.3%     13.2%     14.2%     14.4%
Operating profit before restructuring costs                   29,161    23,284    11,429    14,001    19,661
Restructuring costs                                               --        --     8,650     1,650        --
Interest expense, net                                         (7,066)   (6,969)   (4,523)   (3,985)   (4,154)
Merger expenses                                               (4,510)       --        --        --        --
Other income(expense)                                            493      (712)      178     1,470        52
Income(loss) before taxes, extraordinary item
  and cumulative effect of change in accounting principles    18,078    15,603    (1,566)    9,836    15,559
Taxes(benefit) on income(loss)                                 8,034     5,633    (1,876)    4,972     6,680
Income before extraordinary item and cumulative
  effect of change in accounting principles                   10,044     9,970       310     4,864     8,879
Extraordinary item, net of tax                                (1,861)       --        --        --        --
Cumulative effect of change in accounting
  principles, net of tax                                          --        --        --   (10,111)       --
Net income(loss)                                               8,183     9,970       310    (5,247)    8,879
------------------------------------------------------------------------------------------------------------
Earnings per share
Income before extraordinary item and cumulative
  effect of change in accounting principles                 $   0.76  $   0.73  $   0.02  $   0.38  $   0.67
Extraordinary item, net of tax                                 (0.14)       --        --        --        --
Cumulative effect of change in accounting principles              --        --        --     (0.80)       --
Net income(loss)                                                0.62      0.73      0.02     (0.42)     0.67
------------------------------------------------------------------------------------------------------------
<CAPTION>
As of December 31,                                              1995      1994      1993      1992      1991
------------------------------------------------------------------------------------------------------------
IN THOUSANDS
<S>                                                         <C>       <C>       <C>       <C>       <C>
BALANCE SHEET DATA
Working capital                                             $ 39,182  $ 49,501  $ 63,397  $ 54,845  $ 58,611
Net plant and equipment                                       66,249    64,750    61,161    53,187    56,006
Total assets                                                 214,902   229,185   242,921   156,930   161,624
Total debt                                                    74,175    84,773   106,130    41,814    48,406
Shareholders' equity                                          74,232    73,216    64,187    64,842    74,925
<CAPTION>
------------------------------------------------------------------------------------------------------------
For the years ended December 31,                                1995      1994      1993      1992      1991
------------------------------------------------------------------------------------------------------------
IN THOUSANDS, WHERE APPLICABLE
<S>                                                         <C>       <C>       <C>       <C>       <C>
OTHER DATA
IBITDA(1)                                                   $ 40,974  $ 33,779  $ 20,209  $ 24,449  $ 29,473
Cash flow from operations                                     28,131    18,881    10,518    12,094    20,473
Capital expenditures                                          15,200    13,048     6,091     8,887     9,887
Depreciation and amortization                                 11,320    11,207     8,602     8,978     9,760
Dividends paid                                                 5,814     3,640     3,530     3,452     3,438
Current ratio                                                    1.6       1.7       1.9       2.3       2.3
Net book value per share                                        5.64      5.59      4.97      5.13      5.96
Return on average investment(2)                                 11.7%      9.2%      7.0%      8.8%     11.6%
Return on average equity(3)                                     18.0%     14.5%      8.4%      7.8%     12.3%
Total debt as a percentage of total capitalization              50.0%     53.7%     62.3%     39.2%     39.2%
Inventory turns                                                  7.6       7.0       6.3       5.1       4.7
Days sales outstanding                                          52.3      53.7      52.4      50.4      51.6
Number of employees                                            2,284     2,375     2,364     1,883     1,865
Shares outstanding                                            13,167    13,100    12,914    12,634    12,574
------------------------------------------------------------------------------------------------------------
</TABLE>

(1) INCOME BEFORE INTEREST AND TAXES PLUS DEPRECIATION AND AMORTIZATION, 
EXCLUDING RESTRUCTURING COSTS AND MERGER EXPENSES.
(2) INCOME IS DEFINED AS NET INCOME PLUS NET OF TAX IMPACT OF INTEREST EXPENSE, 
RESTRUCTURING COSTS, ACCOUNTING CHANGES AND MERGER EXPENSES. AVERAGE INVESTMENT 
IS THE SUM OF TOTAL DEBT AND EQUITY PLUS THE EQUITY EFFECT OF RESTRUCTURING 
COSTS, ACCOUNTING CHANGES AND MERGER EXPENSES, LESS CASH.
(3) INCOME IS DEFINED AS NET INCOME PLUS NET OF TAX IMPACT OF RESTRUCTURING 
COSTS, ACCOUNTING CHANGES AND MERGER EXPENSES. AVERAGE EQUITY IS ADJUSTED FOR 
THE EFFECT OF RESTRUCTURING COSTS, ACCOUNTING CHANGES AND MERGER EXPENSES.



18

<PAGE>

                                        MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                         KUHLMAN CORPORATION AND SUBSIDIARIES

OVERVIEW

    Over the last three years, Kuhlman Corporation ("Kuhlman" or the 
"Company") has completed a major acquisition and a merger which along with 
internal changes have resulted in significant growth in sales and net income. 
In December 1993, Kuhlman purchased Coleman Cable Systems, Inc. ("Coleman 
Cable"), a leading domestic manufacturer and distributor of electrical and 
electronic wire and cable products, which more than doubled Kuhlman's size in 
the electrical products industry. Then, on May 31, 1995, a wholly-owned 
subsidiary of Kuhlman merged with and into Schwitzer, Inc. ("Schwitzer") 
whereby Schwitzer became a wholly-owned subsidiary of the Company. In the 
transaction, each outstanding share of common stock of Schwitzer was 
converted into 0.9615 share of the Company's common stock, resulting in the 
Company issuing an additional 6,980,000 shares of stock. The merger was 
accounted for as a pooling of interests. As a result, consolidated net sales 
exceeded $425 million in 1995, a substantial change from the $118 million 
reported in 1993 by the original Kuhlman company before giving effect to the 
merger. Similarly, net income (before merger expenses and the debt 
extinguishment costs associated with the Schwitzer merger) was almost $14 
million in 1995 compared to a net loss of $3 million reported in 1993 by the 
original Kuhlman company.

    The addition of Coleman Cable and Schwitzer, which is one of the world's 
leading manufacturers of turbochargers and other components for medium- and 
heavy-duty gasoline and diesel engines, significantly broadened and 
diversified the Company and its markets. Therefore, upon completion of the 
merger with Schwitzer, the Company's business units were realigned into two 
product segments in recognition of those distinct markets and customers 
served: Electrical and Industrial. The Electrical Products Segment 
manufactures and sells primarily electrical equipment and wire and cable 
products while the Industrial Products Segment manufactures and sells 
primarily engine components and other metal products.

    The purpose of this discussion and analysis is to enhance the 
understanding and evaluation of the Company's results of operations as well 
as its financial position, cash flows, indebtedness and other key financial 
information for the years ended December 31, 1995, 1994 and 1993. All 
financial information contained in this report has been restated to include 
the results of Schwitzer for all periods presented.

LIQUIDITY AND CAPITAL RESOURCES

    Strong cash flow from operations and the merger with Schwitzer served to 
further strengthen the Company's financial position in 1995. Management 
believes that the Company's liquidity and financial flexibility are more than 
adequate to support its continued growth through both internal expansion and 
potential acquisitions.

    Overall, the Company's cash flow from operations grew to $28,131,000 in 
1995 from $18,881,000 and $10,518,000 in 1994 and 1993, respectively. 
Improved operating earnings in each segment and strong working capital 
management were the primary contributors to the Company's growth in cash flow 
from operations. In addition, the Company generated $7,248,000 in cash in 
1995 from the sale of the net assets of a non-core business unit and other 
non-performing assets. Total cash flow generated from operations plus the 
proceeds from the sale of assets totaled $35,379,000 in 1995. The Company 
used its cash flow in 1995 primarily to fund capital expenditures, quarterly 
dividend payments and to reduce debt.

    A primary financial objective of the Company is to enhance long-term 
shareholder value. The Company believes that achieving the proper returns on 
its invested capital is a key factor in driving shareholder value. Toward 
that objective, the Company continued to focus its efforts in 1995 on 
improving the returns earned on its invested capital by redeploying 
underperforming, non-core assets and making additional capital investments 
into areas where the Company can maximize its earnings potential. As part of 
this effort, the Company sold Nehring Electrical Works Company ("Nehring"), 
a subsidiary of Coleman Cable, in the fourth quarter of 1995 for 
approximately book value. Under the terms of the sales agreement, the 
purchaser acquired substantially all of the assets and assumed certain 
liabilities of Nehring for $6,509,000 in cash plus a note for $1,500,000. In 
addition, the Company continued its capital reinvestment program in 1995 by 
spending $15,200,000 primarily for new machinery and equipment. Over the last 
three years, the Company has invested a total of $34,339,000 for new plant 
and equipment primarily to improve product quality and durability, increase 
manufacturing capacity and enhance its customer service capabilities in each 
segment. The Company believes these investments, which have exceeded 
depreciation expense by 20% over the three year period ended December 31, 
1995, will enhance its operations and financial performance in 1996 and 
beyond.

    Working capital management was a key element in increasing the Company's 
cash flow from operations in 1995. Consolidated working capital at December 
31, 1995 was $39,182,000 compared to $49,501,000 at December 31, 1994, a 
decline of $10,319,000. The decline in working capital was due primarily to 
the sale of Nehring, the receipt of certain income tax refunds, and lower
excess cash balances at the end of 1995.  The decline was partially offset by
the settlement of certain liabilities including completion of

                                                                            19

ANNUAL REPORT

<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
KUHLMAN CORPORATION AND SUBSIDIARIES


the environmental remediation program at Schwitzer's Rolla, Missouri 
facility which was closed in 1992 and sold in 1995. The cash generated from 
the decline in working capital was used to reduce the Company's outstanding 
debt. Operating working capital (defined as accounts receivable and inventory 
less accounts payable and accrued expenses) declined modestly to $40,687,000 
at December 31, 1995 from $42,385,000 at December 31, 1994 primarily due to 
the sale of Nehring, partially offset by higher levels of inventory required 
to support future sales activity principally in the Electrical Products 
Segment. In 1995, utilization measurements for working capital assets 
improved over 1994 due to the success of inventory and accounts receivable 
programs designed to enhance cash flow and minimize working capital 
requirements. Excluding the 1995 net sales of Nehring, operating working 
capital as a percentage of net sales at the end of 1995 was 10.6%. The 
percentage was 10.7% at the end of 1994 and 11.5% at the end of 1993 
(adjusted for sales of Coleman Cable for all of 1993). At December 31, 1995, 
the current ratio was 1.6 compared to 1.7 at the end of 1994.

    The Company's consolidated cash position was $581,000 at December 31, 
1995 compared to $3,036,000 at December 31, 1994. The Company's excess cash 
balances were used to reduce the outstanding debt under the long-term 
revolving credit facility in order to lower its overall interest expense. 
Under the terms of the revolving credit facility, no payments are required 
until December 31, 1999 and amounts can be reborrowed at any time subject to 
certain limitations. Also, in connection with the merger of Schwitzer, the 
Company incurred one-time transaction costs in the second quarter of 1995 
which totaled approximately $5,600,000 (net of tax) and included costs 
associated with the early extinguishment of debt ("Merger Expenses"). 
Shortly after the completion of the merger, the Company repaid substantially 
all of the domestic debt of Schwitzer with proceeds borrowed under the 
Company's current bank credit facility which was increased by $22,000,000 to 
accommodate the repayment and to pay the associated Merger Expenses. The 
Company refinanced the domestic debt of Schwitzer in order to lower its 
overall interest rate on borrowed funds based on the enhanced financial 
strength of the combined company. The cost associated with the early 
retirement of Schwitzer's domestic debt was recognized as an extraordinary 
item on the Company's Consolidated Statement of Income.

    Total debt outstanding at December 31, 1995 declined $10,598,000 (13%) to 
$74,175,000 from $84,773,000 at December 31, 1994. The Company's debt to 
total capital ratio was 50% at December 31, 1995 down from approximately 54% 
at the end of 1994. Total availability under the Company's current credit 
agreements was $18,495,000 at December 31, 1995. In addition, under the most 
restrictive warranties and covenants contained in the credit agreements, the 
Company had approximately $2,526,000 of consolidated retained earnings at 
December 31, 1995 free of any restrictions as to the payment of dividends.

    The Company paid quarterly common stock dividends of $0.15 per share in 
1995. Total dividends paid in 1995 were $5,814,000, compared to $3,640,000 in 
1994. The Company issued 6,980,000 new shares of common stock on May 31, 1995 
in conjunction with the merger of Schwitzer. These newly issued shares were 
eligible to receive only the last two quarterly dividends paid in 1995. Also 
in 1995, the Company repurchased 72,388 shares of common stock for $920,000, 
including expenses, as part of an "odd-lot" stock buy back program. The 
purpose of this program was to reduce the service and administration cost 
associated with shareholders who own less than 100 shares. The program, which 
was terminated in November 1995, reduced the number of registered 
shareholders by over 2,700 to approximately 7,900.

RESULTS OF OPERATIONS
CONSOLIDATED RESULTS

    Consolidated net sales reached a record $425,384,000 in 1995 compared 
with $396,117,000 and $242,221,000 reported in 1994 and 1993, respectively. 
For the year ended December 31, 1995, the Company reported operating net 
income (defined as net income before the net of tax effect of the 
extraordinary item, Merger Expenses and restructuring costs) of $13,783,000 
($1.05 per share) which compared to $9,970,000 ($0.73 per share) in 1994 and 
$5,614,000 ($0.42 per share) in 1993. Net income in 1995 was $8,183,000 
($0.62 per share) compared to $9,970,000 ($0.73 per share) and $310,000 
($0.02 per share) in 1994 and 1993, respectively. Net income in 1995 included 
the Merger Expenses of approximately $5,600,000 ($0.43 per share). Net income 
in 1993 included approximately $5,304,000 ($0.39 per share) associated with a 
one-time restructuring charge primarily for the cost associated with 
repositioning the Company's transformer business.

    Kuhlman's net sales in 1995 increased 7% over 1994. The growth in net 
sales in 1995 over 1994 was primarily due to the Industrial Products Segment 
which posted record sales as worldwide demand for the Company's engine 
products remained vibrant throughout the period. Unit sales volume for many 
products in the Electrical Products Segment increased in 1995, though total 
net sales for the segment showed only a modest improvement because of lower 
unit sales of distribution transformers due to the downsizing of this product 
line which began in 1993. Kuhlman's consolidated net sales in 1994 were 
substantially higher than those reported in 1993 due to the inclusion of the 
full year results of Coleman Cable, acquired in December 1993, and the surge 
in worldwide demand for turbochargers and other engine components.

20

<PAGE>

                                        MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                         KUHLMAN CORPORATION AND SUBSIDIARIES

    Kuhlman posted record operating profit in 1995 due to the strong earnings 
performance reported in each business segment. Consolidated operating profit 
increased 25% in 1995 to $29,161,000 (7% of sales) from $23,284,000 (6% of 
sales) in 1994. Operating profit more than doubled in 1994 from $11,429,000 
(5% of sales) reported in 1993 (prior to the restructuring charge of 
$8,650,000) primarily due to the acquisition of Coleman Cable. The growth in 
operating profit in 1995 was primarily due to the increased sales volumes 
noted above, improved operating performance at Kuhlman Electric Corporation 
("Kuhlman Electric"), higher gross profit margins and lower operating 
expenses as a percentage of sales. Consolidated gross profit margins 
increased to 19.8% of sales in 1995 from 19.2% and 17.9%, in 1994 and 1993, 
respectively. The improvement in gross margins occurred primarily in the 
Electrical Products Segment due to the streamlining of Kuhlman Electric and 
better manufacturing efficiencies company-wide, partially offset by higher 
raw material costs in certain products. The Company uses numerous raw 
materials in its products, including copper, aluminum, steel and plastics. 
Prices for many of these materials started to rise in 1994 as worldwide 
economies began to strengthen and continued to rise throughout much of 1995. 
Though the Company attempted to pass along these increases in the form of 
higher prices to its customers, competition made this increasingly difficult 
which resulted in pressure on operating margins for certain products. In 1995 
and 1994, the Company was able to mitigate the impact of these higher costs 
by exercising tight cost control measures and improving its operating 
efficiencies. In 1993, increases in the cost of certain raw materials and 
other manufacturing expenses due to inflation and normal business factors 
were nominal. Operating expenses for Kuhlman in 1995 were $54,946,000 or 
12.9% of sales compared to $52,601,000 or 13.3% of sales in 1994 and 
$31,869,000 or 13.2% of sales in 1993 (excluding restructuring costs). 
Operating expenses as a percentage of sales declined in 1995 compared to 1994 
due to the higher sales volume noted above and cost containment programs 
throughout the Company.

    Other income (expense) for Kuhlman is made up of Interest expense, net, 
Merger Expenses and Other, net. Interest expense, net for the Company was 
$7,066,000, $6,969,000 and $4,523,000 in 1995, 1994 and 1993, respectively. 
Interest expense was up nominally in 1995 compared to 1994 because much of 
the debt reduction in 1995 did not occur until the fourth quarter. Interest 
expense increased in 1994 compared to 1993 due to the additional debt assumed 
in connection with the Coleman acquisition. In Other, net, the Company 
generated other income of $493,000 in 1995, an expense of $712,000 in 1994 
and income of $178,000 in 1993. Other, net contains miscellaneous income and 
expense items associated with non-operating activities of the Company. These 
items consisted primarily of income from a covenant not to compete, foreign 
currency translation adjustments associated with the Company's manufacturing 
operations in Brazil and other miscellaneous items. The covenant not to 
compete, which was associated with a business sold in 1990, expired in June 
1995. Foreign currency translation adjustments related to the Company's 
Brazilian operations resulted in income of $75,000 in 1995 and expense of 
$847,000 and $1,040,000 in 1994 and 1993, respectively. Fluctuations 
associated with foreign currency translation adjustments due to the 
hyperinflationary economy of Brazil may continue in the future.

    The effective tax rate reported by the Company was 44.4%, 36.1% and a 
benefit of 119.8% in 1995, 1994 and 1993, respectively. The reasons for the 
difference between these rates and the statutory Federal income tax rate for 
those three years is detailed in Note 6 of the Notes to Consolidated 
Financial Statements.

ELECTRICAL PRODUCTS SEGMENT

    The Electrical Products Segment is comprised of Kuhlman Electric and 
Coleman Cable, which was acquired by the Company in December 1993. Sales and 
operating earnings for the Electrical Products Segment are generally affected 
by the level of domestic economic activity in the consumer, commercial and 
industrial markets served. Housing starts, commercial and industrial 
construction, and electrical usage are key indicators of demand for the 
segment's various electrical products. Additionally, the maintenance and 
upgrading of established electrical systems creates demand for the segment's 
transformer products.

    In 1995, the Electrical Products Segment reported record sales and 
operating earnings. Net sales increased to $243,761,000 in 1995 from 
$235,274,000 reported in 1994 and $109,458,000 in 1993. Operating earnings 
for the Electrical Products Segment were $13,639,000 in 1995 compared to 
$8,611,000 in 1994 and a loss of $6,325,000 in 1993. In 1995, sales and 
operating earnings increased 4% and 58%, respectively, primarily due to the 
consistent results reported for wire and cable products and a substantial 
improvement in the operating performance of the transformer company. In 1994, 
sales and operating earnings increased substantially over 1993 because of the 
addition of Coleman Cable in December 1993 and the impact of restructuring 
the transformer business which began in 1993.

    The improvement in the financial results reported by the Electrical 
Products Segment in 1995 was due principally to the turnaround in operating 
performance of Kuhlman Electric. In the early 1990's, there was a significant 
shift in the buying patterns and purchasing practices of electrical utilities 
which resulted in lower orders throughout the industry, creating significant 
price competition on the remaining orders for many transformer products. As a


                                                                            21

<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
KUHLMAN CORPORATION AND SUBSIDIARIES



consequence, the Company initiated a major restructuring program in 1993 
which was designed to improve the competitiveness and profitability of 
Kuhlman Electric. This program, which resulted in restructuring costs of 
$8,650,000 ($7,705,000 of which related to the transformer company in 1993), 
included reductions in workforce, redeployment of personnel, elimination of 
certain unprofitable product lines and actions designed to streamline 
operations. As a result of these and other actions, some of which carried 
into the first quarter of 1995, Kuhlman Electric became a more flexible and 
efficient organization, better able to provide its customers with higher 
value-added products and services. In 1995, Kuhlman Electric reported steady 
improvement in its quarterly operating earnings on lower unit sales volumes 
compared to prior periods. Total sales of transformer products declined 
approximately 14% in 1995 compared to 1994 and 20% compared to 1993, while 
operating earnings have almost doubled in 1995 when compared to 1993 (before 
restructuring costs). Kuhlman Electric had minimal operating earnings in 
1994. The decline in sales occurred primarily because of lower shipments of 
distribution transformers and the discontinuation of certain unprofitable 
transformer product lines. Unit sales volume of the Company's other major 
transformer product, power transformers, has increased almost 20% in each of 
the last two years due to the Company's improved lead times and product 
quality.

    Net sales and operating earnings for wire and cable products reached 
record highs in 1995 though margins as a percentage of sales trailed those 
reported in 1994. Net sales increased 16% in 1995 compared to 1994 primarily 
due to higher shipments of battery booster cables in late 1995, greater 
penetration of the electrical distributor channel and to a lesser extent, the 
impact of the high cost of copper throughout much of 1995. Operating earnings 
grew nominally in 1995 compared to 1994 due to the higher volumes noted above 
and better manufacturing efficiencies, partially offset by lower gross 
margins earned on key products. Gross profit margins were impacted by the 
softness in the domestic economy, particularly for retail sales and new 
construction in the first half of 1995, resulting in significant price 
competition in many of the Company's key wire and cable markets.  Gross 
profit margins improved in the second half of 1995 primarily due to greater 
demand for certain products, particulary booster cables, and the impact of 
lower material costs.

INDUSTRIAL PRODUCTS SEGMENT

    The Industrial Products Segment is comprised of Schwitzer, Inc. and Emtec 
Products Corporation. Profitability in this segment is affected by economic 
conditions in industrialized and developing regions of the world. Capital 
expenditures for medium- and heavy-duty trucks, construction and agricultural 
equipment and other industrial transportation equipment are indirect 
indicators of demand for the segment's products.

    Net sales and operating earnings in the Industrial Products Segment 
reached record highs in 1995. Net sales were $181,623,000 in 1995 compared to 
$160,843,000 and $132,763,000 in 1994 and 1993, respectively. Operating 
earnings for the Industrial Products Segment increased to $19,541,000 in 1995 
from $17,096,000 in 1994 and $9,163,000 in 1993. Operating earnings as a 
percentage of sales were 10.8%, 10.6% and 6.9% in 1995, 1994, and 1993, 
respectively. Sales to domestic customers as a percentage of total Industrial 
Products Segment sales were 66%, 70% and 74% in 1995, 1994 and 1993, 
respectively.

    Sales and operating earnings increased 13% and 14%, respectively, in 1995 
compared to 1994. The improvement was primarily the result of higher sales 
volumes generated by the strong worldwide demand for turbochargers and other 
engine and commercial components. The surge in demand came primarily from 
original equipment manufacturers (OEMs) in the United States and Europe as 
low interest rates continued to support growth in many economies around the 
world. Sales to domestic based customers grew 7% in 1995 from 1994 while 
international sales increased over 27% in the same period. The growth in 
international sales came primarily in Europe due to greater market 
penetration of the Company's products. Operating earnings grew $2,445,000 or 
14% in 1995 over 1994 while profit margins in 1995 showed modest gains over 
1994. The increase in operating margins was primarily due to improved 
operating efficiencies, the impact of higher sales volume and lower operating 
expenses as a percentage of sales. Operating margins in the Industrial 
Products Segment in 1995 were suppressed somewhat by a higher mix of OEM 
versus aftermarket shipments and higher raw material and production costs for 
certain products. Operating earnings in 1994 were impacted by one-time 
charges totaling $2,100,000 for environmental remediation costs and valuation 
allowances associated with the Rolla, Missouri facility, sold in 1995.

    In 1994, sales and operating earnings for the Industrial Products Segment 
grew 21% and 87%, respectively, over the results reported in 1993. The growth 
in sales volume was due primarily to greater demand from OEM and aftermarket 
customers as market conditions in many parts of the world continued to 
improve. Domestic sales increased approximately 14% in 1994 compared to 1993 
primarily due to improved market conditions for medium- and heavy-duty trucks 
and agriculture and construction equipment. International sales increased 43% 
in 1994 compared to 1993 as demand for the Company's products increased 
dramatically due to strengthening worldwide economies, primarily in Europe 
and South America, and greater market penetration by the Company's industrial 
products. The improvement in operating margins was driven by the higher sales 
volume resulting in better utilization of production capacity, lower 
manufacturing variances in 1994 due to higher expenses associated with a 
plant start up in 1993 and lower operating expenses as a percentage of sales.


22

<PAGE>


                                        MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                           KUHLMAN CORPORATION AND SUBSIDIARIES

SUBSEQUENT EVENT

On February 16, 1996, the Company, through a wholly-owned subsidiary,
completed a tender offer for the outstanding shares of Communication Cable, Inc.
("CCI"), a North Carolina corporation traded on NASDAQ .  Pursuant to the
Company's offer to purchase shares of CCI for $14.00 per share, shareholders of
CCI tendered 2,291,800 shares through that date.  Kuhlman previously owned
315,703 shares of CCI.  As of February 21, 1996, Kuhlman owned 2,607,503 shares
or 82.2% of all CCI shares outstanding for an aggregate total cost of
approximately $35,873,000.  Kuhlman plans to purchase the remaining CCI shares
outstanding as soon as practicable.  The acquisition of CCI shares was funded
primarily through a $40,000,000 increase in the Company's bank credit facility.

    CCI engineers, designs and manufactures a wide variety of low voltage 
electronic wire and cable products which are marketed to original equipment 
manufacturers and, through distributors, to a variety of end users, 
principally in the United States.  CCI's products include coaxial, 
multi-conductor and "category" cables which are used for data, voice and 
video communication applications by the computer and data processing 
industries, medical and industrial electronics users, the U.S. Government and 
associated agencies, and for satellite and other telecommunication 
applications. Sales and net income for CCI's fiscal year ended October 31, 
1995 were $56,256,000 and $2,118,000, respectively.

OUTLOOK FOR 1996

    Over the past three years, Kuhlman Corporation has made significant 
progress toward its objective of becoming a larger, more diversified 
organization. Through diversification and size, management believes that 
Kuhlman will be less dependent on the business cycles of a single economy, 
industry or product and thus able to provide more consistent and sustainable 
growth in earnings and cash flow on which to build the Company in the future. 
Actions, such as the acquisition of Coleman, the merger with Schwitzer and 
the streamlining of Kuhlman Electric, coupled with a significant capital 
expenditure program, have made Kuhlman Corporation a larger and more 
diversified company with greater financial resources.  As Kuhlman enters 
1996, management believes that the Company is positioned to grow and prosper 
in its many markets.

    A key objective in 1996 will continue to be to further enhance long-term 
shareholder value by building a larger, more focused manufacturing 
organization. Management believes that the addition of CCI will serve to 
strengthen the Company by expanding its product offering in one of the 
fastest growing areas of the wire and cable industry, data transmission and 
telecommunications.  Further, management remains optimistic that its 
acquisition program will continue to provide future growth opportunities.  As 
a consequence of the above actions, management remains cautiously optimistic 
about the Company's near-term prospects and confident about its long-term 
future.

                                                                            23

<PAGE>


CONSOLIDATED STATEMENTS OF INCOME
KUHLMAN CORPORATION AND SUBSIDIARIES

<TABLE>
<CAPTION>

FOR THE YEARS ENDED DECEMBER 31,                               1995         1994         1993
----------------------------------------------------------------------------------------------
IN THOUSANDS, EXCEPT PER SHARE AMOUNTS
<S>                                                           <C>          <C>         <C>

Net sales                                                  $425,384     $396,117     $242,221

Cost of goods sold                                          341,277      320,232      198,923
---------------------------------------------------------------------------------------------
  Gross profit                                               84,107       75,885       43,298
---------------------------------------------------------------------------------------------
Operating expenses:
Selling, engineering, general and administrative             54,946       52,601       31,869
Cost of restructuring                                            --          --         8,650
---------------------------------------------------------------------------------------------
  Total operating expenses                                   54,946       52,601       40,519
---------------------------------------------------------------------------------------------

    OPERATING PROFIT                                         29,161       23,284        2,779

Other income (expense):
Interest expense, net                                        (7,066)      (6,969)      (4,523)
Merger expenses                                              (4,510)          --           --
Other, net                                                      493         (712)         178
----------------------------------------------------------------------------------------------
  Total other income (expense), net                         (11,083)      (7,681)      (4,345)
----------------------------------------------------------------------------------------------

Income (loss) before taxes (benefit) and extraordinary item  18,078       15,603       (1,566)
Taxes (benefit) on income (loss)                              8,034        5,633       (1,876)
----------------------------------------------------------------------------------------------

Income before extraordinary item                             10,044        9,970          310
Extraordinary item (net of tax of $1,175)                    (1,861)          --           --
----------------------------------------------------------------------------------------------

    NET INCOME                                             $  8,183      $ 9,970       $  310
----------------------------------------------------------------------------------------------

Per share amounts:
Income before extraordinary item                           $   0.76      $  0.73       $ 0.02
Extraordinary item, net of tax                                (0.14)          --           --
----------------------------------------------------------------------------------------------

    NET INCOME                                             $   0.62      $  0.73        $0.02
----------------------------------------------------------------------------------------------

Average shares outstanding                                   13,178       13,647       13,484
----------------------------------------------------------------------------------------------

</TABLE>

THE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SHOULD BE READ IN CONJUNCTION 
WITH THESE STATEMENTS.


24


<PAGE>

CONSOLIDATED BALANCE SHEETS
KUHLMAN CORPORATION AND SUBSIDIARIES

<TABLE>
<CAPTION>

DECEMBER 31,                                                            1995          1994
------------------------------------------------------------------------------------------
IN THOUSANDS
<S>                                                                   <C>           <C>
Assets
CURRENT ASSETS
Cash and cash equivalents                                            $    581     $  3,036
Accounts receivable, less reserves of $1,442 and $990 at 
  December 31, 1995 and 1994, respectively                             55,753       59,892
Inventories                                                            41,833       43,713
Deferred income taxes                                                   4,901        6,071
Prepaid expenses and other current assets                               3,535        5,887
------------------------------------------------------------------------------------------
  TOTAL CURRENT ASSETS                                                106,603      118,599
------------------------------------------------------------------------------------------

PLANT AND EQUIPMENT
Land                                                                    2,275        2,413
Buildings and leasehold improvements                                   34,802       33,564
Machinery, fixtures and equipment                                     111,175      107,692
Construction in progress                                                2,241        2,668
------------------------------------------------------------------------------------------
                                                                      150,493      146,337

Less-accumulated depreciation and amortization                        (84,244)     (81,587)
------------------------------------------------------------------------------------------
  PLANT AND EQUIPMENT - NET                                            66,249       64,750
------------------------------------------------------------------------------------------
Intangible assets, net of amortization of $2,672 and $1,668 at 
  December 31, 1995 and 1994, respectively                             37,201       39,452
Other assets                                                            4,849        6,384
------------------------------------------------------------------------------------------
                                                                     $214,902     $229,185
------------------------------------------------------------------------------------------

Liabilities and Shareholders' Equity
CURRENT LIABILITIES
Notes payable                                                        $     --     $  2,000
Current portion of long-term debt                                      10,522        5,878
Accounts payable                                                       28,542       30,624
Accrued liabilities                                                    28,357       30,596
------------------------------------------------------------------------------------------
Total current liabilities                                              67,421       69,098
------------------------------------------------------------------------------------------

LONG-TERM DEBT
Bank debt                                                              60,217       59,253
Other long-term debt                                                    3,436       17,642
------------------------------------------------------------------------------------------
  TOTAL LONG-TERM DEBT                                                 63,653       76,895
------------------------------------------------------------------------------------------
Accrued postretirement benefits                                         8,462        8,943
------------------------------------------------------------------------------------------
Deferred income taxes                                                   1,134        1,033
------------------------------------------------------------------------------------------
  TOTAL LIABILITIES                                                   140,670      155,969
------------------------------------------------------------------------------------------


SHAREHOLDERS' EQUITY
Preferred stock, par value $1.00, 2,000 shares authorized, none 
  issued; Junior participating preferred stock, Series A, no par 
  value, 200 shares authorized, none issued                                --           --
Common stock, par value $1.00, 20,000 shares authorized,  13,240
  and 13,100 shares issued at December 31, 1995 and 1994, respectively 13,240       13,100
Additional paid-in capital                                             26,217       25,300
Retained earnings                                                      37,988       36,672
Foreign currency translation adjustments                               (1,911)      (1,813)
Minimum pension liability                                                (382)         (43)
------------------------------------------------------------------------------------------
                                                                       75,157        3,216
Less--treasury stock at cost (72 shares at December 31, 1995)            (920)          --
------------------------------------------------------------------------------------------
  TOTAL SHAREHOLDERS' EQUITY                                           74,232       73,216
------------------------------------------------------------------------------------------
                                                                     $214,902     $229,185
------------------------------------------------------------------------------------------

</TABLE>

THE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SHOULD BE READ IN CONJUNCTION 
WITH THESE BALANCE SHEETS.
                                                                            25

<PAGE>

CONSOLIDATED STATEMENTS OF CASH FLOWS
KUHLMAN CORPORATION AND SUBSIDIARIES

<TABLE>
<CAPTION>

FOR THE YEARS ENDED DECEMBER 31,                                                        1995        1994       1993
-------------------------------------------------------------------------------------------------------------------
IN THOUSANDS
<S>                                                                                   <C>        <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                                                          $  8,183   $  9,970   $   310
  Adjustments to reconcile net income to net cash provided by operating activities:
   Extraordinary item, net                                                               1,861         --        --
   Merger expenses                                                                       4,510         --        --
   Depreciation and amortization                                                        11,320     11,207     8,602
   Deferred income taxes, net                                                            3,501      2,435    (1,275)
   Provision for losses on accounts receivable                                           1,211        250       201
   (Gain)loss on sale of assets                                                           (301)       207       588
   Other, net                                                                              368        351      (241)
   Cost of restructuring                                                                    --         --     8,650
   Changes in operating assets and liabilities:(1)
     Accounts receivable                                                                  (885)    (4,885)   (5,977)
     Inventories                                                                        (2,057)     3,719     5,202
     Prepaid expenses and other current assets                                           2,240     (3,536)    1,766
     Accounts payable                                                                    1,049      4,708    (1,377)
     Accrued liabilities                                                                (2,869)    (5,545)   (5,931)
--------------------------------------------------------------------------------------------------------------------
   NET CASH PROVIDED BY OPERATING ACTIVITIES                                            28,131     18,881    10,518
--------------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures                                                                 (15,200)   (13,048)   (6,091)
  Cash paid for acquired business                                                           --         --    (5,493)
  Proceeds from sales of assets                                                          7,248        346     2,460
--------------------------------------------------------------------------------------------------------------------
   NET CASH USED FOR INVESTING ACTIVITIES                                               (7,952)   (12,702)   (9,124)
--------------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Net change in revolving loan facility                                                 (4,160)   (13,941)     (658)
  Proceeds from issuance of long-term debt                                              25,016        685    68,700
  Repayment of long-term debt                                                          (32,108)    (8,259)  (68,410)
  Dividends paid                                                                        (5,814)    (3,640)   (3,530) 
  Stock options exercised                                                                  933      1,176     1,825
  Payments for merger and related expenses                                              (5,612)        --        --
  Repurchase of common stock                                                              (920)        --        --
  Restricted cash                                                                           --      1,800    (1,800)
  Payments related to the issuance of debt                                                  --         --    (2,882)
  Other                                                                                    (23)        --        --
---------------------------------------------------------------------------------------------------------------------
   NET CASH USED FOR FINANCING ACTIVITIES                                              (22,688)   (22,179)   (6,755)
---------------------------------------------------------------------------------------------------------------------

Effect of exchange rate changes on cash and cash equivalents                                54         42         4
---------------------------------------------------------------------------------------------------------------------

Decrease in cash and cash equivalents                                                   (2,455)   (15,958)   (5,357)
Cash and cash equivalents, beginning of year                                             3,036     18,994    24,351
---------------------------------------------------------------------------------------------------------------------
  CASH AND CASH EQUIVALENTS, END OF YEAR                                                $  581   $  3,036   $18,994
---------------------------------------------------------------------------------------------------------------------

</TABLE>

(1) NET OF THE EFFECTS OF ACQUISITION AND FOREIGN CURRENCY TRANSLATION, WHERE
APPLICABLE.

SEE NOTE 10 FOR INFORMATION ON NON-CASH INVESTING AND FINANCING ACTIVITIES.

THE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SHOULD BE READ IN CONJUNCTION
WITH THESE STATEMENTS.

26

<PAGE>

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
KUHLMAN CORPORATION AND SUBSIDIARIES

<TABLE>
<CAPTION>
                                                                                         FOREIGN
                                                COMMON SHARES (1)  ADDITIONAL             CURRENCY     MINIMUM
FOR THE YEARS ENDED                             -----------------   PAID-IN   RETAINED  TRANSLATION   PENSION   TREASURY
DECEMBER 31, 1995, 1994 AND 1993                SHARES    AMOUNT    CAPITAL   EARNINGS   ADJUSTMENT   LIABILITY   STOCK     TOTAL
---------------------------------------------------------------------------------------------------------------------------------
IN THOUSANDS, EXCEPT SHARES
<S>                                           <C>         <C>       <C>       <C>        <C>          <C>        <C>      <C>

BALANCE-DECEMBER 31, 1992                    12,633,655   $12,634   $20,658   $33,619    $(2,069)       $  --     $  --   $64,842
---------------------------------------------------------------------------------------------------------------------------------
Net income                                           --        --        --       310         --           --        --       310
Cash dividends declared ($0.60 per share) (2)        --        --        --    (3,565)        --           --        --    (3,565)
Exercise of stock options                       187,249       187     1,638        --         --           --        --     1,825
Issuance of common stock                         93,113        93     1,217        --         --           --        --     1,310
Minimum pension liability                            --        --        --        --         --         (245)       --      (245)
Currency translation adjustment                      --        --        --        --       (290)          --        --      (290)
---------------------------------------------------------------------------------------------------------------------------------
BALANCE-DECEMBER 31, 1993                    12,914,017   $12,914   $23,513 $  30,364    $(2,359)        (245)    $  --   $64,187
---------------------------------------------------------------------------------------------------------------------------------
Net income                                           --        --        --     9,970         --           --        --     9,970
Cash dividends declared ($0.60 per share) (2)        --        --        --    (3,662)        --           --        --    (3,662)
Exercise of stock options                       134,149       134     1,042        --         --           --        --     1,176
Issuance of common stock                         51,435        52       745        --         --           --        --       797
Minimum pension liability                            --        --        --        --         --          202        --       202
Currency translation adjustment                      --        --        --        --        546           --        --       546
---------------------------------------------------------------------------------------------------------------------------------
BALANCE-DECEMBER 31, 1994                    13,099,601   $13,100   $25,300   $36,672    $(1,813)       $ (43)    $  --   $73,216
---------------------------------------------------------------------------------------------------------------------------------
Net income                                           --        --        --     8,183         --           --        --     8,183
Cash dividends declared ($0.60 per share) (2)        --        --        --    (6,867)        --           --        --    (6,867)
Exercise of stock options                       127,130       127       806        --         --           --        --       933
Issuance of common stock                         16,000        16       176        --         --           --        --       192
Repurchase of common stock                           --        --        --        --         --           --      (920)     (920)
Minimum pension liability                            --        --        --        --         --         (339)       --      (339)
Currency translation adjustment                      --        --        --        --        (98)          --        --       (98)
Other                                            (2,943)       (3)      (65)       --         --           --        --       (68)
---------------------------------------------------------------------------------------------------------------------------------
BALANCE-DECEMBER 31, 1995                    13,239,788   $13,240   $26,217   $37,988    $(1,911)       $(382)    $(920)  $74,232
---------------------------------------------------------------------------------------------------------------------------------

</TABLE>

(1) SHARES OUTSTANDING WERE 13,167,400, NET OF 72,388 TREASURY SHARES, AT 
    DECEMBER 31, 1995.

(2) DIVIDENDS PER SHARE HAVE NOT BEEN RESTATED TO REFLECT THE SCHWITZER 
    MERGER.

THE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SHOULD BE READ IN CONJUNCTION 
WITH THESE STATEMENTS.




REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To the Shareholders of Kuhlman Corporation:


    We have audited the accompanying consolidated balance sheets of Kuhlman 
Corporation (a Delaware corporation) and subsidiaries as of December 31, 1995 
and 1994, and the related consolidated statements of income, shareholders' 
equity and cash flows for each of the three years ended December 31, 1995. 
these financial statements are the responsibility of the Company's 
management. our responsibility is to express an opinion of these financial 
statements based on our audits.

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

    In our opinion, the financial statements referred to above present 
fairly, in all material respects, the financial position of Kuhlman 
Corporation and subsidiaries as of December 31, 1995 and 1994, and the 
results of their operations and their cash flows for each of the three years 
in the period ended December 31, 1995, in conformity with generally accepted 
accounting principles.

                                                          ARTHUR ANDERSEN LLP


Louisville, Kentucky

February 6, 1996 (except with respect to the matter discussed in Note 17, as 
to which the date is February 21, 1996)

                                                                           27


<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
KUHLMAN CORPORATION AND SUBSIDIARIES

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION

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

    On May 31, 1995, the Company merged Schwitzer, Inc. ("Schwitzer") with 
a wholly-owned subsidiary of the Company. The merger was accounted for as a 
pooling of interests. The consolidated financial statements for all periods 
have been restated to present the combined balance sheets and results of 
operations of both companies as if the merger had been in effect for all 
periods presented. The consolidated statements of shareholders' equity 
reflects the accounts of the Company as if the additional common stock had 
been issued during all periods presented. Certain amounts in the 1994 and 
1993 Schwitzer financial statements were reclassified to conform with the 
presentation used by the Company. Further information pertaining to the 
merger is presented in Note 2. Merger. In addition, certain amounts in the 
Company's 1994 and 1993 financial statements have been reclassified to 
conform with the 1995 presentation.

ACCOUNTING ESTIMATES

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

REVENUE RECOGNITION

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

CASH AND CASH EQUIVALENTS

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

INVENTORIES

    Inventories are stated at the lower of cost or market and are determined 
by either the last-in, first-out (LIFO) or first-in, first-out (FIFO) method
for domestic inventories. Inventories of foreign operations are determined
principally by the first-in, first-out (FIFO) method. Approximately 50% and
53% of the inventories at December 31, 1995 and 1994, respectively, were
determined using the LIFO Method. Inventory costs include material, labor and
manufacturing overhead.

PLANT AND EQUIPMENT

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

INTANGIBLE ASSETS

    Intangible assets consist primarily of goodwill related to the 
acquisition of a business. Goodwill is being amortized on a straight-line 
basis over forty years. In accordance with statement of Financial Accounting 
Standards (SFAS) NO. 109, "Accounting for Income Taxes," adjustments 
relating to preacquisition income tax contingencies will result in 
corresponding adjustments to goodwill. During 1995, the Company reduced 
goodwill by $725,000 as a result of changes in the status of certain tax 
contingencies. When factors indicate that goodwill should be evaluated for 
possible impairment, the company uses an estimate of the related business 
segment's undiscounted net income over the remaining life of goodwill in 
measuring whether the goodwill is recoverable. Other intangible assets are 
amortized to expense using the straight-line method over three to six years.

LONG-LIVED ASSETS

    In March 1995, the Financial Accounting Standards Board issued Statement 
of Financial Accounting Standards No. 121, "Accounting for the Impairment of 
Long-Lived Assets and for Long-Lived Assets to be Disposed Of" (SFAS No. 
121).  This standard establishes accounting standards for evaluating the 
potential impairment of long-lived assets, certain identifiable intangibles 
and goodwill. The Company plans to adopt the provisions of SFAS No. 121 in 
the first quarter of 1996 and does not expect that adoption will have a 
material impact on its financial position or results of operations.

ENGINEERING

    Engineering expenses include activities associated with product 
development, the application of products to specific customer needs, and 
ongoing efforts to refine and enhance existing products. These costs are 
expensed as incurred and totaled approximately $6,745,000, $7,574,000 and 
$6,632,000 in 1995, 1994 and 1993, respectively. 

28

<PAGE>

                                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                          KUHLMAN CORPORATION AND SUBSIDIARIES

ENVIRONMENTAL REMEDIATION AND COMPLIANCE

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

FOREIGN CURRENCY TRANSLATION

    A subsidiary of the Company has foreign subsidiaries located in the United 
Kingdom (U.K.) and Brazil. Financial data of the U.K. subsidiary is 
translated into U.S. dollars at current exchange rates and translation 
adjustments are accumulated as a separate component of shareholders' equity. 
Foreign currency transaction gains and losses of the U.K. subsidiary are 
credited or charged to income as they occur.

    The Brazilian subsidiary operates in a hyperinflationary economy. 
Accordingly, financial data stated in Brazilian currencies are remeasured 
into U.S. dollars at both current (monetary items) and approximate historical 
(non-monetary items) exchange rates, and the resulting adjustments are 
charged or credited to income. Transaction adjustments included in Other, net 
on the consolidated statements of income were income of $75,000 in 1995, and 
losses of $847,000 and $1,040,000 in 1994 and 1993, respectively. The 
transaction adjustments for 1995, 1994 and 1993 are stated net of imputed 
interest income (expense) of $390,000, $(589,000) and $749,000, respectively, 
realized on net monetary assets and liabilities.

INCOME TAXES

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

    Federal and state income taxes are not provided on undistributed earnings 
of foreign subsidiaries that have been or are intended to be reinvested 
indefinitely. Based upon current tax rates and the level of undistributed 
earnings of the foreign subsidiaries, it is anticipated that no significant 
net additional taxes would be incurred if the accumulated earnings at 
December 31, 1995 were distributed.

FINANCIAL INSTRUMENTS AND HEDGING

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

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

PER SHARE INFORMATION

    Earnings per share amounts are based on the weighted average number of 
common shares outstanding during each year, as adjusted for all materially 
dilutive common equivalent shares. Common equivalent shares, which include 
stock options and warrants, were determined under the treasury stock method. 
There was no materially dilutive effect of common stock equivalents in 1995. 
Shares used in the per share calculation in 1994 and 1993 were 13,647,000 and 
13,484,000, which included 638,000 and 672,000 shares, respectively, 
resulting from the dilutive effects of common stock equivalents.

                                                                            29

<PAGE>


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
KUHLMAN CORPORATION AND SUBSIDIARIES

NOTE 2. MERGER

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

    In accordance with the pooling of interests method of accounting, the 
Company's financial statements have been restated for all periods presented 
to include the results of Schwitzer. Operating results for the Company and 
Schwitzer for the period ended March 31, 1995, and the years ended December 
31, 1994 and 1993, prior to restatement, are presented as the following:

<TABLE>
<CAPTION>


                                      THREE MONTHS ENDED       YEAR ENDED DECEMBER 31,
                                       MARCH 31, 1995              1994        1993
---------------------------------------------------------------------------------------
<S>                                      <C>                     <C>            <C>

Net sales:
   Kuhlman                                $ 61,031               $242,846    $118,097
   Schwitzer                                45,895                153,271     124,124
---------------------------------------------------------------------------------------
   Combined                               $106,926               $396,117    $242,221
---------------------------------------------------------------------------------------
Net income(loss):

   Kuhlman                                $    715               $  1,617    $ (2,998)
   Schwitzer                                 2,833                  8,930       2,530
   Adjustment to valuation allowance(1)         --                   (577)       (511)
   SFAS No. 106 adjustment(2)                   --                     --       1,289
---------------------------------------------------------------------------------------
   Combined                               $  3,548               $  9,970    $    310
---------------------------------------------------------------------------------------

</TABLE>

(1) THE TAX PROVISIONS IN 1994 AND 1993 FOR THE COMBINED COMPANY WERE 
ADJUSTED TO REFLECT CHANGES IN THE VALUATION ALLOWANCE UNDER SFAS NO. 109 AS 
IF THE COMPANIES HAD BEEN COMBINED DURING THOSE PERIODS.

(2) THE CUMULATIVE EFFECT OF ACCOUNTING CHANGES RELATED TO POSTRETIREMENT 
BENEFITS WAS ADJUSTED TO RESTATE THE COMPANY'S TRANSITION PERIOD FOR ADOPTION 
OF SFAS NO. 106 AS A RESULT OF THE MERGER.

NOTE 3. ACQUISITION AND DIVESTITURE

ACQUISITION

    On December 15, 1993, the Company acquired all of the outstanding stock 
of Coleman Holding Company ("Coleman") for $8,993,000. The acquisition was 
funded by cash of the Company. Coleman is a fully-integrated manufacturer and 
distributor of a broad range of electrical and electronic wire and cable 
products to diverse markets, principally in the United States. Coleman's 
manufacturing plants are located in Illinois.

    The acquisition has been accounted for by the purchase method of 
accounting and accordingly, the net assets and results of operations for 
Coleman are included in the Company's Consolidated Financial Statements from 
the date of acquisition. The fair value of the assets acquired, including 
goodwill, was $97,863,000, with liabilities assumed of $92,370,000. Cash paid 
for the acquisition, net of cash acquired, was $5,493,000. The purchase price 
has been allocated to the assets and liabilities of Coleman based on 
estimated fair values. At the acquisition date, the purchase price and 
expenses associated with the acquisition exceeded the fair value of Coleman's 
net assets by approximately $38,398,000 which was assigned to goodwill. 
Amortization of the excess purchase price is made over a period not to exceed 
forty years. Subsequent to the acquisition, the Company refinanced 
approximately $63,363,000 of Coleman's outstanding debt and certain related 
fees through bank borrowings. See Note 4 of the Notes to Consolidated 
Financial Statements.

    The following unaudited pro forma information combines the consolidated 
results of operations of the Company and Coleman as if the acquisition had 
occurred on January 1, 1993:

<TABLE>
<CAPTION>

IN THOUSANDS                                                      1993
-----------------------------------------------------------------------
<S>                                                            <C>
Net sales                                                      $354,243
Net income                                                     $  2,493
Net income per share                                           $   0.18
-----------------------------------------------------------------------
</TABLE>


    The pro forma operating results include each company's results of 
operations for the indicated year with the adjusted depreciation and 
amortization on plant and equipment, amortization of goodwill, along with 
other relevant adjustments to reflect fair market value required using the 
purchase method of accounting. Interest expense on Coleman's outstanding 
indebtedness was adjusted to reflect the improved creditworthiness of the 
Company.

    The pro forma information given above does not purport to be indicative 
of the results that actually would have been obtained if the operations were 
combined during the period presented and is not intended to be a projection 
of future results or trends.

DIVESTITURE

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


30

<PAGE>


                                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                          KUHLMAN CORPORATION AND SUBSIDIARIES

NOTE 4. SHORT-TERM AND LONG-TERM DEBT

    On December 15, 1993, in conjunction with the Coleman acquisition, the 
Company entered into a credit agreement with a group of banks that provided a 
$38,000,000 term loan and a $40,000,000 revolving loan facility which mature 
on December 31, 1999. Subsequent to the merger with Schwitzer on May 31, 
1995, the Company increased its availability under the revolving loan 
facility to $53,000,000 and increased the term loan facility to $47,000,000 
in order to refinance substantially all of Schwitzer's domestic debt.

    Under the terms of the credit agreement, the Company must pay a 
commitment fee at an annual rate ranging from 3/20 of 1% to 3/8 of 1%, 
depending on certain financial ratios, on the average daily unused portion of 
the revolving loan facility. Interest rates on amounts borrowed vary and are 
based on either the London Interbank Offered Rate ("LIBOR") plus .375-2.0%, 
depending on certain financial ratios, or a Prime (base) rate plus up to .75% 
option selected by the Company at the time of borrowing. At December 31, 
1995, the Company had approximately $33,900,000 outstanding under the 
revolving loan facility at an average interest rate of 7.0%. The Company is 
not required to repay any borrowings under the revolving credit facility 
before December 31, 1999. At December 31, 1995, $34,000,000 of term debt was 
outstanding and carried an average interest rate of 7.1%.

    The credit agreement of the Company contains various warranties and 
covenants pertaining to among others, the maintenance of net worth, 
compliance with certain financial ratios, restrictions on certain payments 
including dividends and the incurrence of additional indebtedness. Under the 
most restrictive of these provisions, $2,526,000 of the Company's 
consolidated retained earnings at December 31, 1995, was free of any 
restriction as to the payment of dividends. As of December 31, 1995, 
borrowings under the Company's credit agreement were generally secured by 
substantially all of the assets of the Company, except for those specific 
assets related to certain industrial revenue bonds and capital lease 
obligations.

    A foreign subsidiary of Schwitzer is party to a variable rate loan 
facility which is denominated in sterling. Interest on this facility is 
payable quarterly at variable rates. The average interest rate on this 
facility at December 31, 1995 was 8.1%. This variable rate facility also 
contains certain financial covenants, including minimum tangible net worth 
requirements of the foreign subsidiary of Schwitzer.

    At December 31, 1995, the Company had unused availability under its 
credit agreements of approximately $18,495,000.

    At December 31, 1995 and 1994, long-term debt consisted of the following:

<TABLE>
<CAPTION>

IN THOUSANDS                                                 1995         1994
------------------------------------------------------------------------------
<S>                                                        <C>          <C>
Variable rate notes supported by revolving and term 
 loan agreement with banks, maturing through 1999         $ 67,900     $64,750

Fixed rate notes payable to an institutional
 lender, rate of 10.21%                                         --      14,407

Variable rate loan facility supported by revolving 
 and term loan agreements with a bank, denominated 
 in sterling, maturing in 1995 to 1997                       1,965       1,718

Obligations under capital leases, interest rates 
 ranging from 8% to 19% (See Note 5)                         2,132       2,231

Miscellaneous other long-term debt, rates up to 12%,
 payable in various amounts through 2011                     2,178       1,667
------------------------------------------------------------------------------
                                                            74,175      84,773
Less - current portion                                     (10,522)     (7,878)
------------------------------------------------------------------------------
                                                          $ 63,653     $76,895
------------------------------------------------------------------------------
</TABLE>


The minimum scheduled principal payments on long-term debt outstanding at 
December 31, 1995 are as follows:

<TABLE>
<CAPTION>

IN THOUSANDS
------------------------------------------------------------------------------
<S>                                                                    <C>
1996                                                                   $10,522
1997                                                                     9,864
1998                                                                     9,809
1999                                                                    41,117
2000                                                                       177
Thereafter                                                               2,686
------------------------------------------------------------------------------
Total minimum scheduled principal payments                             $74,175
------------------------------------------------------------------------------

</TABLE>

                                                                           31

<PAGE>


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
KUHLMAN CORPORATION AND SUBSIDIARIES


NOTE 5. COMMITMENTS AND CONTINGENCIES

OPERATING LEASES

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

    The following is a summary of rent expense under all operating leases:

<TABLE>
<CAPTION>

IN THOUSANDS               1995                      1994               1993
----------------------------------------------------------------------------
<S>                     <C>                       <C>                <C>
Minimum rentals         $ 3,171                   $ 3,229            $ 1,621

</TABLE>


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

<TABLE>
<CAPTION>

IN THOUSANDS
----------------------------------------------------------------------------
<S>                                                               <C>
1996                                                                $  2,591
1997                                                                   2,257
1998                                                                   1,879
1999                                                                   1,716
2000                                                                   1,406
Subsequent to 2000                                                     1,434
----------------------------------------------------------------------------
Total minimum rental payments                                       $ 11,283
----------------------------------------------------------------------------

</TABLE>


CAPITAL LEASES

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


    At December 31, 1995 and 1994, property under capital leases included 
with plant and equipment in the accompanying consolidated balance sheet is as 
follows:

<TABLE>
<CAPTION>

IN THOUSANDS                                        1995                1994
----------------------------------------------------------------------------
<S>                                               <C>              <C>
Building and improvements                           $ 2,360          $ 2,360
Machinery and equipment                                 247              384
----------------------------------------------------------------------------
                                                      2,607            2,744
Less-accumulated depreciation                          (964)            (879)
----------------------------------------------------------------------------
Plant and equipment, net                            $ 1,643          $ 1,865
----------------------------------------------------------------------------

</TABLE>

    Minimum future lease payments under capital leases as of December 31, 
1995 are as follows:

<TABLE>
<CAPTION>

IN THOUSANDS
----------------------------------------------------------------------------
<S>                                                                  <C>
1996                                                                 $   356
1997                                                                     347
1998                                                                     347
1999                                                                     347
2000                                                                     347
Subsequent to 2000                                                     2,981
----------------------------------------------------------------------------
Total minimum lease payments                                         $ 4,725
Less-amounts representing interest                                    (2,593)
----------------------------------------------------------------------------
Present value of net minimum lease payments                            2,132
Less-current portion                                                     (66)
----------------------------------------------------------------------------
Long-term obligations under capital leases                           $ 2,066
----------------------------------------------------------------------------

</TABLE>

    Certain capital leases provide for purchase options. Generally, purchase 
options are at prices representing the expected fair value of the property at 
the expiration of the lease term.

ENVIRONMENTAL MATTERS

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

LEGAL MATTERS

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

32


<PAGE>


                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                            KUHLMAN CORPORATION AND SUBSIDIARIES

NOTE 6. INCOME TAXES

    Income (loss) before taxes (benefits) and extraordinary item was as follows:

<TABLE>
<CAPTION>


IN THOUSANDS                      1995             1994                 1993
----------------------------------------------------------------------------
<S>                           <C>               <C>                 <C>
Domestic                      $  13,270         $  11,270           $ (2,919)
Foreign                           4,808             4,333              1,353
----------------------------------------------------------------------------
                              $  18,078          $ 15,603           $ (1,566)
----------------------------------------------------------------------------

</TABLE>

    The provision (benefit) for income taxes consisted of the following:

<TABLE>
<CAPTION>

IN THOUSANDS                      1995             1994                 1993
----------------------------------------------------------------------------
<S>                            <C>               <C>                 <C>
Current:
    Federal                     $ 3,784          $ 1,388             $  (441)
    State                           630              280                (306)
    Foreign                       1,680            1,750                 566
----------------------------------------------------------------------------
                                $ 6,094          $ 3,418             $  (181)
----------------------------------------------------------------------------
Deferred:
    Federal                     $ 1,738          $ 2,393             $(1,373)
    State                           204              305                (281)
    Foreign                          (2)            (483)                (41)
----------------------------------------------------------------------------
                                  1,940            2,215              (1,695)
----------------------------------------------------------------------------
Total                           $ 8,034          $ 5,633             $(1,876)
----------------------------------------------------------------------------

</TABLE>

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

<TABLE>
<CAPTION>

IN THOUSANDS                              1995                1994                1993
------------------------------------------------------------------------------------------------
<S>                                  <C>      <C>         <C>     <C>         <C>      <C>
                                              PERCENTAGE          PERCENTAGE           PERCENTAGE
                                              OF INCOME           OF INCOME            OF INCOME
                                               BEFORE              BEFORE               BEFORE
                                      AMOUNT   TAXES      AMOUNT    TAXES      AMOUNT    TAXES
------------------------------------------------------------------------------------------------

Statutory United States
    Federal income tax               $ 6,147   34.0%     $ 5,305    34.0%   $   (533)   (34.0%)
State income taxes, net of
    Federal income tax effect            550    3.0          359     2.3         (96)    (6.1)
Additional taxes provided                 --     --          490     3.1      (1,486)   (94.9)
Amortization of goodwill                 332    1.8          326     2.1          --       --
Effect of foreign subsidiaries            75    0.4         (403)   (2.6)         64      4.0
Merger costs                             949    5.3           --      --          --       --
Other                                    (19)  (0.1)        (444)   (2.8)        175     11.2
------------------------------------------------------------------------------------------------
                                     $ 8,034   44.4%      $ 5,633   36.1%   $ (1,876)  (119.8%)
------------------------------------------------------------------------------------------------

</TABLE>

    The net deferred tax asset recognized in the consolidated statements of
financial position as of December 31, 1995 and 1994, consists of the following
(in thousands):

<TABLE>
<CAPTION>

                                                    1995                1994
----------------------------------------------------------------------------
<S>                                               <C>              <C>
Total deferred tax assets                        $  11,053        $  14,180
Total deferred tax liabilities                      (5,972)          (7,142)
----------------------------------------------------------------------------
Net deferred tax assets                          $   5,081        $   7,038
----------------------------------------------------------------------------

</TABLE>


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

<TABLE>
<CAPTION>

IN THOUSANDS                        1995           1994                 1993
----------------------------------------------------------------------------
<S>                              <C>              <C>                  <C>
Net operating loss carryforwards  $  425         $   67              $ 1,119
Restructuring costs                 (326)         1,342               (1,560)
Depreciation                          47           (540)                (291)
Compensation, benefits & pensions    566           (407)                (267)
Warranty & other sales accruals      129            443                 (242)
Additional taxes provided             --            490               (1,486)
Inventory reserves & valuation        40            312                    6
Postretirement benefits              217            309                  323
Environmental reserve                490           (524)                  --
Bad debt reserves                   (184)           261                  102
Purchase price premium              (209)           (76)                  --
Other, net                           745            538                  601
----------------------------------------------------------------------------
Total                             $1,940         $2,215              $(1,695)
----------------------------------------------------------------------------

</TABLE>

    The tax effect of each temporary difference and carryforward that gives rise
to significant deferred tax assets and deferred tax liabilities as of December
31, 1995 and 1994, respectively, are as follows (in thousands):


<TABLE>
<CAPTION>

                                                    1995                1994
----------------------------------------------------------------------------
<S>                                               <C>              <C>
Accumulated tax depreciation of
    property and equipment in excess
    of accumulated book depreciation            $ (4,445)           $ (4,502)
Purchase price premium in inventory               (1,543)             (1,752)
Net operating loss carryforwards                   1,729               2,202
Inventory reserves                                   775                 638
Warranty and other sales accruals                  1,026               1,155
Restructuring costs                                   38                 532
Postretirement benefits                            3,830               4,047
Environmental reserve                                 34                 524
Accrued employee benefits                          2,053               2,771
Bad debt reserves                                    643                 459
Miscellaneous accruals                               941                 964
----------------------------------------------------------------------------
                                                $  5,081            $  7,038
----------------------------------------------------------------------------

</TABLE>

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

<TABLE>
<CAPTION>

<S>                                                                  <C>

2004                                                                 $ 4,095
2005                                                                     455
----------------------------------------------------------------------------
                                                                     $ 4,550
----------------------------------------------------------------------------

</TABLE>

    The application of these net operating loss carryforwards against future 
taxable income is limited under the provisions of Internal Revenue Code 
Section 482 to $455,000 per taxable period. Management expects that the full 
amount of these carryforwards will be utilized over the next ten years.

                                                                           33

<PAGE>


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
KUHLMAN CORPORATION AND SUBSIDIARIES


NOTE 7. EMPLOYEE BENEFIT PLANS

EMPLOYEE RETIREMENT PLANS

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

    The total expense under these plans amounted to $1,556,000 in 1995, 
$1,686,000 in 1994 and $2,239,000 in 1993. Pension expense for the defined 
benefit plans in 1995, 1994 and 1993 is comprised of the following elements:

<TABLE>
<CAPTION>

IN THOUSANDS                        1995           1994                 1993
----------------------------------------------------------------------------
<S>                             <C>            <C>                  <C>
Current service cost            $  1,576       $  1,669             $  1,662
Interest on projected
 benefit obligations               2,008          1,878                1,957
(Return) loss on assets           (3,151)           933               (1,264)
Gain due to curtailment               --           (138)                  --
Net amortization and deferral      1,123         (2,656)                (116)
----------------------------------------------------------------------------
                                $  1,556       $  1,686             $  2,239
----------------------------------------------------------------------------

</TABLE>

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


    The following table summarizes the funded status of the Company's defined 
benefit pension plans and the related amounts recognized in the Company's 
consolidated balance sheets as of December 31, 1995 and 1994:

<TABLE>
<CAPTION>

IN THOUSANDS                                   1995                           1994
-------------------------------------------------------------------------------------------
                                    ACCUMULATED     ASSETS         ACCUMULATED     ASSETS
                                      BENEFITS      EXCEED           BENEFITS      EXCEED
                                       EXCEED     ACCUMULATED        EXCEED     ACCUMULATED
                                       ASSETS       BENEFITS         ASSETS       BENEFITS
-------------------------------------------------------------------------------------------
<S>                                  <C>           <C>              <C>          <C>
Actuarial present value of
  benefit obligations:
    Vested                             $3,216       $17,578       $  13,563        $4,503
    Nonvested                             707         1,138           1,476           347
-------------------------------------------------------------------------------------------
Accumulated benefit
  obligations                           3,923        18,716          15,039         4,850
Effects of salary progression              --         5,879           2,061         2,692
-------------------------------------------------------------------------------------------
Projected benefit obligations           3,923        24,595          17,100         7,542
Plan assets at fair value               2,889        22,649          13,411         7,721
-------------------------------------------------------------------------------------------
Plan assets over/(under)
  projected benefit
  obligations                         $(1,034)      $(1,946)      $  (3,689)       $  179
Unrecognized transition
  (asset) liability                       (76)          319            (477)          132
Unrecognized net loss                     551         1,852           1,734           898
Unrecognized prior service
  cost                                    580           669             785           439
Other                                      --            --              --          (164)
Adjustment to recognize
  minimum liability                    (1,130)           --            (614)           --
-------------------------------------------------------------------------------------------
(Accrued) prepaid
  pension expense                     $(1,109)       $  894       $  (2,261)       $1,484
-------------------------------------------------------------------------------------------
Intangible asset                      $   498        $   --       $     543        $   --
Pre-tax reduction to
  shareholders' equity                $   632        $   --       $      71        $   --

</TABLE>




    The assumptions used as of December 31, 1995, 1994 and 1993 in 
determining pension expense and funded status information shown above are as 
follows:

<TABLE>
<CAPTION>

                                  1995             1994                 1993
----------------------------------------------------------------------------
<S>                              <C>             <C>                 <C>
Discount rate                     7.5%           7.5-8.7%            7.2-8.5%
Rate of salary
  progression                     4.2%           4.2-5.0%            4.2-6.0%
Long-term rate
  of return on assets             9.7%           8.0-9.7%            9.0-9.7%

</TABLE>

    In addition to providing pension benefits, the Company and certain operating
subsidiaries provide savings plans for management and other employees. The
plans provide for matching contributions based on the terms of such plans to the
accounts of plan participants. The Company and its operating subsidiaries
expensed $664,000, $377,000 and $397,000 in the years ended December 31, 1995,
1994 and 1993, respectively, related to these savings plans.







34


<PAGE>

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                            KUHLMAN CORPORATION AND SUBSIDIARIES


POSTRETIREMENT BENEFITS OTHER THAN PENSIONS

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

    Net periodic postretirement benefit cost for 1995, 1994 and 1993 included 
the following components (in thousands):

<TABLE>
<CAPTION>

                                    1995             1994               1993
----------------------------------------------------------------------------
<S>                             <C>              <C>                <C>
Service cost-benefits
  attributed to service
  during the period               $   80           $   94             $  117
Interest cost on accumulated
  postretirement benefit
  obligation                         968              894                971
Net deferral and amortization         26               28                 --
----------------------------------------------------------------------------
Net periodic postretirement
  benefit cost                    $1,074           $1,016             $1,088
----------------------------------------------------------------------------

</TABLE>


    The amounts recognized in the Company's consolidated balance sheet at
December 31, 1995 and 1994 were as follows (in thousands):


<TABLE>
<CAPTION>

                                                       1995             1994
----------------------------------------------------------------------------
<S>                                                <C>              <C>
Accumulated postretirement
  benefit obligation:
    Retirees                                         $11,326         $11,422
    Fully eligible active plan
      participants                                       442             363
----------------------------------------------------------------------------
    Fully eligible                                    11,768          11,785
    Other active plan participants                     1,481             946
----------------------------------------------------------------------------
Accumulated benefit obligation                        13,249          12,731
Unrecognized net loss                                 (3,019)         (1,855)
----------------------------------------------------------------------------
Postretirement liability recognized
  in financial statements                            $10,230         $10,876
----------------------------------------------------------------------------

</TABLE>


    The accumulated postretirement obligation was determined using a discount 
rate of approximately 7.5%. An increase of approximately 10% in per capita 
claims cost was assumed for 1996. The assumption provides for this rate to 
decline by 1% per year through 2000 and then remain constant at 5.5% 
thereafter.

    A 1% increase in the health care cost trend rate would increase the 
estimated accumulated postretirement benefit obligation as of December 31, 
1995 by approximately $938,000. The impact on net periodic cost is minimal. 
The Company's postretirement benefit plans are unfunded.

SEVERANCE AGREEMENTS

    The Company maintains a severance policy applicable to certain of its
executive officers. The severance policy provides that if an executive officers'
employment is terminated, the executive's base pay, medical and dental coverage,
health and accident insurance, and disability and group life insurance will be
continued for a period of up to twenty-four months, subject to certain
conditions. The aggregate maximum commitment under the executive severance
policy should all four covered employees be terminated is up to approximately
$2,800,000.

NOTE 8. COST OF RESTRUCTURING

    In 1993, the Company recorded a restructuring charge of $8,650,000
($5,304,000 net of tax benefits or $0.39 per share). The restructuring charge
was for actions implemented by the Company to reduce its cost structure and to
improve its operating efficiencies, primarily at its Kuhlman Electric
subsidiary. The charge included $5,281,000 for severance, pension and other
personnel costs primarily related to reductions in the salaried and hourly
workforce, $1,468,000 for the writedown and disposal of operating assets due to
the elimination of unprofitable product lines, $1,735,000 for the implementation
of programs to streamline operations and $166,000 for other writeoffs. In 1993,
the Company made cash outlays of $4,143,000 and recognized asset writedowns of
$1,225,000 related to the restructuring program. In 1994, the Company made cash
outlays of $3,282,000 related to the restructuring program.

NOTE 9. OTHER, NET

    Other, net for the years ended December 31, 1995, 1994 and 1993 consisted of
the following:


<TABLE>
<CAPTION>

IN THOUSANDS                        1995             1994               1993
----------------------------------------------------------------------------
<S>                             <C>              <C>                <C>
Covenant not to compete        $     624         $  1,250          $   1,250
Foreign currency
  translation adjustments             75             (847)            (1,040)
Expenses of a
  terminated merger                   --             (530)                --
Miscellaneous                       (206)            (585)               (32)
----------------------------------------------------------------------------
                               $     493         $   (712)         $     178
----------------------------------------------------------------------------

</TABLE>



                                                                              35

<PAGE>


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
KUHLMAN CORPORATION AND SUBSIDIARIES


NOTE 10. SUPPLEMENTAL CASH FLOW INFORMATION

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


<TABLE>
<CAPTION>

IN THOUSANDS                        1995             1994               1993
----------------------------------------------------------------------------
<S>                             <C>              <C>                <C>
Interest                        $  6,743          $ 7,642           $  5,342
Income taxes, net of refunds    $  1,726          $ 3,600           $ (1,316)

</TABLE>


SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES

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

    In 1995, 1994, and 1993, the Company issued 16,000, 10,816 and 11,585 
shares of its common stock, respectively, under the 1993 Non-Employee 
Directors Stock Plan in  non-cash transactions. The fair market value of the 
stock at the time of issuance was $192,000, $192,000 and $168,000, 
respectively, and these amounts were amortized to expense over the one-year 
term of the grants.

    In 1993, the Company issued 50,000 shares of its common stock to an 
executive in a non-cash transaction. The fair market value of the stock at 
the time of issuance was $750,000, and this amount was charged to expense 
during 1993.

    In 1993, the Company issued 19,047 shares of its common stock to an 
executive in lieu of a cash bonus. The fair market value of the stock at the 
time of issuance was approximately $300,000, and this amount was charged to 
expense during 1993.

    See Note 3. Acquisition and Divestiture and Note 8. Cost of Restructuring 
to the Notes to Consolidated Financial Statements for additional supplemental 
information on non-cash investing and financing activities.

NOTE 11. SHAREHOLDERS' EQUITY AND OTHER STOCK INFORMATION

PREFERRED STOCK PURCHASE RIGHTS

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

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

STOCK REPURCHASE

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

COMMON STOCK OPTIONS, STOCK GRANTS AND STOCK APPRECIATION RIGHTS

    The 1994 Stock Option Plan was approved by shareholders of the Company on 
May 31, 1995. The plan provides for the granting of up to 500,000 options to 
purchase common shares to officers and key employees of the Company. All 
options under the 1994 Plan are granted at prices equal to the market value 
at the date of grant and may be exercised up to ten years from that date. As 
of December 31, 1995, there were 213,663 options available for grant under 
the 1994 Plan.

    The Company maintains three other employee stock option plans, a 1983, a 
1986 and a 1989 Stock Option Plan, for the granting of options to officers 
and key employees of the Company. All options under the 1983 Plan and the 
1986 Plan were granted at prices equal to the market value at the date of 
grant and may be exercised up to ten years from that date. The 1983 Plan and 
the 1986 Plan expired in 1992 and 1995, respectively, except to the extent 
that options were outstanding. In conjunction with the merger with Schwitzer 
in May, 1995, the Company assumed the outstanding stock options under the 
1989 Plan, subject to the conversion ratio specified in the merger agreement. 
The 1989 Plan provides for the granting of options to officers and key 
employees of Schwitzer at the market value of shares at the date of grant. 
Subsequent to the merger, no additional options will be granted under the 
1989 Plan.

36
<PAGE>

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                            KUHLMAN CORPORATION AND SUBSIDIARIES



    In 1993, the Board of Directors adopted, and the shareholders approved the
1993 Non-Employee Directors Stock Plan ("New Directors Plan"). Pursuant to the
New Directors Plan, each non-employee director receives annually a number of
shares equal to an aggregate fair market value of $24,000 concurrent with the
meeting of the Board of Directors held each year following the Annual Meeting of
Stockholders. A total of 36,599 shares were available for grants as of December
31, 1995. With the adoption of the 1993 New Directors Plan, the 1988 Stock
Option Plan for Non-Employee Directors was terminated, except to the extent that
options were outstanding.

    The following table summarizes the transactions pursuant to the company's
stock option plans for the three-year period ended December 31, 1995:

<TABLE>
<CAPTION>

                                         NUMBER OF                    OPTION
                                            SHARES                    PRICES
----------------------------------------------------------------------------
<S>                                     <C>                     <C>
IN THOUSANDS, EXCEPT OPTION PRICES

Options outstanding at
  December 31, 1992                         1,232           $ 4.81 to $16.90
----------------------------------------------------------------------------
    Granted                                   364           $ 7.02 to $16.13
    Exercised                                (203)          $ 4.81 to $15.63
    Expired or terminated                     (50)          $ 4.81 to $16.90
----------------------------------------------------------------------------
Options outstanding at
  December 31, 1993                         1,343           $ 4.81 to $16.90
----------------------------------------------------------------------------
    Granted                                   383           $ 9.75 to $17.75
    Exercised                                (137)          $ 4.81 to $15.63
    Expired or terminated                     (40)          $ 4.81 to $16.90
----------------------------------------------------------------------------
Options outstanding at
  December 31, 1994                         1,549           $ 4.81 to $17.75
----------------------------------------------------------------------------
    Granted                                   382           $ 8.45 to $12.88
    Exercised                                (134)          $ 4.81 to $12.32
    Expired or terminated                    (225)          $12.25 to $17.00
----------------------------------------------------------------------------
OPTIONS OUTSTANDING AT
  DECEMBER 31, 1995                         1,572           $ 4.81 TO $17.75
----------------------------------------------------------------------------
EXERCISABLE AT
  DECEMBER 31, 1995                         1,420
----------------------------------------------------------------------------

</TABLE>

    In 1994, the Company adopted the 1994 Stock Appreciation Rights Plan (the 
"SAR Plan"). The SAR Plan provides for discretionary grants to key 
employees of cash-only stock appreciation rights in shares of the Company's 
common stock. Each Stock Appreciation Right ("SAR") measures the change in 
value of a share of the Company's common stock from the date of grant to the 
date of exercise. Unearned compensation, representing changes in the market 
value of the SAR, will be charged to income in the period incurred. A total 
of 1,500,000 SARs are authorized to be granted under the SAR Plan. As of 
December 31, 1995, 151,000 SARs with a basis of $13.88 had been awarded and 
were outstanding under the SAR Plan.

WARRANTS

    The Company issued detachable warrants to a former lender of Schwitzer. 
The warrants give the holder the right to purchase 480,750 shares, in the 
aggregate, of the Company's common   stock at an exercise price of $8.32 per 
share, subject to certain  conditions.

    The Company has the right, subject to certain conditions, to repurchase the
warrants, which expire on April 15, 2002.

NOTE 12. INVENTORIES

    Inventories at December 31, 1995 and 1994 consisted of the following:

<TABLE>
<CAPTION>

IN THOUSANDS                                  1995                      1994
----------------------------------------------------------------------------
<S>                                     <C>                     <C>

FIFO cost:
Raw materials                            $  20,630                $   17,333
Work-in-progress                             7,359                     8,262
Finished products                           16,276                    21,677
----------------------------------------------------------------------------
                                            44,265                    47,272
Excess of FIFO over LIFO cost               (2,432)                   (3,559)
----------------------------------------------------------------------------
                                         $  41,833                $   43,713
----------------------------------------------------------------------------
----------------------------------------------------------------------------
</TABLE>


NOTE 13. ACCRUED LIABILITIES

    Accrued liabilities at December 31, 1995 and 1994 consisted of 
the following:

<TABLE>
<CAPTION>

IN THOUSANDS                                  1995                      1994
----------------------------------------------------------------------------
<S>                                     <C>                     <C>
Salaries, wages and employee benefits     $  13,891                $  14,396
Warranty related accruals                     2,554                    3,573
Dividends payable                             1,975                      922

Other                                         9,937                   11,705
----------------------------------------------------------------------------
                                          $  28,357                $  30,596
----------------------------------------------------------------------------

</TABLE>


                                                                              37



<PAGE>


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
KUHLMAN CORPORATION AND SUBSIDIARIES



NOTE 14. BUSINESS AND GEOGRAPHICAL SEGMENT INFORMATION

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

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

    The Company's operations by business segment and geographic area for the 
years ended December 31, 1995, 1994 and 1993, are as follows:

FINANCIAL DATA BY BUSINESS SEGMENT

<TABLE>
<CAPTION>


IN THOUSANDS                          1995            1994            1993
----------------------------------------------------------------------------
<S>                                 <C>            <C>              <C>     

NET SALES (1)
Electrical                          $243,761       $ 235,274       $ 109,458
Industrial                           181,623         160,843         132,763
----------------------------------------------------------------------------
                                    $425,384       $ 396,117       $ 242,221
----------------------------------------------------------------------------
INCOME (LOSS) BEFORE TAXES (BENEFIT) AND
EXTRAORDINARY ITEM
Electrical(2)                       $ 13,639       $   8,611       $  (6,325)
Industrial                            19,541          17,096           9,163
----------------------------------------------------------------------------
Operating earnings(3)                 33,180          25,707           2,838
Corporate(2)                          (4,156)         (3,855)         (1,931)
Interest expense, net                 (7,066)         (6,969)         (4,523)
Merger expenses                       (4,510)             --              --
Unallocated                              630             720           2,050
----------------------------------------------------------------------------
                                    $ 18,078       $  15,603       $  (1,566)
----------------------------------------------------------------------------
IDENTIFIABLE ASSETS
Electrical                          $127,760       $ 142,190       $ 148,806
Industrial                            84,145          85,447          81,195
Corporate/unallocated                  2,997           1,548          12,920
----------------------------------------------------------------------------
                                    $214,902       $ 229,185       $ 242,921
----------------------------------------------------------------------------
CAPITAL EXPENDITURES
Electrical                          $  4,287         $ 6,283       $   2,429
Industrial                             9,183           6,211           3,521
Corporate/unallocated                  1,730             554             141
----------------------------------------------------------------------------
                                     $15,200        $ 13,048       $   6,091
----------------------------------------------------------------------------
DEPRECIATION AND AMORTIZATION
Electrical                           $ 5,667        $  5,406       $   2,635
Industrial                             5,606           5,771           5,957
Corporate/unallocated                     47              30              10
----------------------------------------------------------------------------
                                     $11,320        $ 11,207       $   8,602
----------------------------------------------------------------------------

</TABLE>

(1)  IN 1995, 1994 AND 1993, SALES TO A LONG-TIME CUSTOMER OF THE COMPANY'S
INDUSTRIAL PRODUCTS SEGMENT REPRESENTED 10%, 11% AND 15%, RESPECTIVELY, OF THE
COMPANY'S NET SALES. NO OTHER CUSTOMER REPRESENTS MORE THAN 4% OF THE COMPANY'S
NET SALES.

(2)  1993 OPERATING EARNINGS REFLECT A RESTRUCTURING CHARGE OF $8,650, OF WHICH
$7,705 RELATES TO THE ELECTRICAL PRODUCTS SEGMENT AND $945 TO CORPORATE/
UNALLOCATED.

(3)  OPERATING EARNINGS IS DEFINED AS OPERATING PROFIT PLUS OTHER, NET DIRECTLY
ATTRIBUTABLE TO EACH SEGMENT.


38


<PAGE>

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                            KUHLMAN CORPORATION AND SUBSIDIARIES



FINANCIAL DATA BY GEOGRAPHIC SEGMENT

<TABLE>
<CAPTION>


IN THOUSANDS                            1995            1994            1993
----------------------------------------------------------------------------
<S>                                  <C>            <C>             <C>     
NET SALES
United States                      $ 363,050       $ 347,173       $ 207,945
Europe                                50,632          38,630          27,294
Brazil, other                         11,702          10,314           6,982
----------------------------------------------------------------------------
                                   $ 425,384       $ 396,117       $ 242,221
----------------------------------------------------------------------------
INCOME(LOSS) BEFORE TAXES(BENEFIT)
AND EXTRAORDINARY ITEM
United States                      $  24,100       $  16,999       $    (705)
Europe                                 4,601           3,304           1,763
Brazil, other                            323           1,549            (151)
Interest expense, net                 (7,066)         (6,969)         (4,523)
Merger expenses                       (4,510)             --              --
Unallocated                              630             720           2,050
----------------------------------------------------------------------------
                                   $  18,078       $  15,603       $  (1,566)
----------------------------------------------------------------------------
IDENTIFIABLE ASSETS
United States                      $ 181,699       $ 196,481       $ 216,933
Europe                                26,308          23,925          18,385
Brazil, other                          6,895           8,779           7,603
----------------------------------------------------------------------------
                                   $ 214,902       $ 229,185       $ 242,921
----------------------------------------------------------------------------

</TABLE>


NOTE 15. FINANCIAL INSTRUMENTS

FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

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

    At December 31, 1995 and 1994, the Company had  $1,328,000 and $5,225,000,
respectively, of commodity hedging futures contracts outstanding, substantially
all of which were for copper. In addition, the company had $765,000 of commodity
hedging option contracts for copper outstanding at December 31, 1994. The
hedging contracts generally have maturities that do not exceed 12 months.

    In 1995, the Company entered into three interest rate swap agreements to
reduce the risk of movements in interest rates on a portion of its variable rate
debt. The terms of the agreements,  which have a combined notional principal
amount of $35,000,000, allow the Company to receive or make payments on the
difference between the stated LIBOR rate and current market rates. The stated
LIBOR rates are fixed and range from 5.40% to 6.35%. The agreements commence
on various dates starting on June 30, 1995 and mature on various dates, the
latest of which is September 30, 1998.

    A subsidiary of the Company was a party to an interest rate swap agreement
with a bank that expired in April 1994 pursuant to which that subsidiary paid
interest or received interest payments for the difference between a fixed rate
of 10.29% and LIBOR on $22,000,000 of principal.

FAIR VALUE OF FINANCIAL INSTRUMENTS

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

    The fair value of the Company's futures contracts are estimated based on 
current settlement values. The fair value of the interest rate swaps are 
based on valuations from a financial institution. The fair value of the 
futures and option contracts and swap agreements approximate the unrealized 
gains or losses on these instruments. Realized gains or losses during 1995 
and unrealized gains or losses at December 31, 1995 on the commodity futures 
contracts and interest rate swaps were minimal.

CONCENTRATIONS OF CREDIT RISK

    Financial instruments, which potentially subject the Company
to concentrations of credit risk, consist principally of trade accounts
receivable. The risk is limited due to the large number of entities comprising
the Company's customer base and their dispersion across many different
industries and geographies. At December 31, 1995, the Company had no significant
concentrations of credit risk.

GUARANTEES

    The Company has guaranteed the payment obligations for certain leases and
certain payment commitments of its subsidiaries. These guarantees amounted to
$1,872,000 at December 31, 1995. The Company is of the opinion that its
subsidiaries will be able to perform under their respective obligations and
that no payments will be required and no losses will be incurred under such
guarantees.

LETTERS OF CREDIT AND SURETY BONDS

    At December 31, 1995, the Company had letters of credit and surety bonds
outstanding totaling $3,850,000 which guarantee certain activities, primarily
performance of the Company's obligations under certain self-insured workers'
compensation insurance programs. The Company is of the opinion that no losses
will be incurred due to non-performance of these obligations.


                                                                              39



<PAGE>


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
KUHLMAN CORPORATION AND SUBSIDIARIES


NOTE 16. QUARTERLY FINANCIAL DATA (UNAUDITED)

    The Company's quarterly results are summarized below for the years ended
December 31, 1995 and 1994.


<TABLE>
<CAPTION>


IN THOUSANDS, EXCEPT PER SHARE DATA                 QUARTER
                                 ----------------------------------------------
1995                                FIRST      SECOND(1)      THIRD      FOURTH       TOTAL
-------------------------------------------------------------------------------------------
<S>                                <C>        <C>           <C>        <C>       <C>
Net sales                        $106,926      $102,814    $108,561    $107,083    $425,384
Gross profit                       20,713        19,391      22,061      21,942      84,107
Operating profit                    7,191         6,000       7,911       8,059      29,161
Income before
  extraordinary 
  item                              3,548          (725)      3,393       3,828      10,044
Extraordinary
  item, net                            --        (1,861)         --          --      (1,861)
Net income                          3,548        (2,586)      3,393       3,828       8,183
-------------------------------------------------------------------------------------------
Earnings per share:
Income before
  extraordinary
  item                               0.27         (0.06)       0.26        0.29        0.76
Extraordinary
  item, net                            --         (0.14)         --          --       (0.14)
Net income per
  share                              0.27         (0.20)       0.26        0.29        0.62
-------------------------------------------------------------------------------------------


                                                      QUARTER
                                 ----------------------------------------------
1994                                FIRST        SECOND       THIRD      FOURTH       TOTAL
-------------------------------------------------------------------------------------------
Net sales                        $ 99,162      $ 95,679    $102,192    $ 99,084    $396,117
Gross profit                       19,655        19,125      20,006      17,099      75,885
Operating profit                    6,621         6,004       6,870       3,789      23,284
Net income                          2,860         2,587       3,519       1,004       9,970
-------------------------------------------------------------------------------------------
Earnings per share:
Net income
  per share                          0.21          0.19        0.26        0.07        0.73
-------------------------------------------------------------------------------------------

</TABLE>

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

NOTE 17. SUBSEQUENT EVENT

    On February 16, 1996, the Company, through a wholly-owned subsidiary,
completed a tender offer for the outstanding shares of Communication Cable, Inc.
("CCI"), a North Carolina corporation traded on NASDAQ . Pursuant to the
Company's offer to purchase shares of CCI for $14.00 per share, shareholders of
CCI tendered 2,291,800 shares through that date. Kuhlman previously owned
315,703 shares of CCI.  As of February 21, 1996, Kuhlman owned 2,607,503 shares
or 82.2% of all CCI shares outstanding for an aggregate total cost of
approximately $35,873,000.  Kuhlman plans to purchase the remaining CCI shares
outstanding as soon as practicable.  The acquisition of CCI shares was funded
primarily through a $40,000,000 increase in the Company's bank credit facility.
CCI sales and net income for its fiscal year ended October 31, 1995 were
$56,256,000 and $2,118,000 respectively.


40

<PAGE>


COMMON STOCK PRICE RANGES

<TABLE>
<CAPTION>
                                         1995                                    1994
----------------------------------------------------------------------------------------------------------
Quarters                  High      Low       Close   Dividend(a)     High     Low     Close   Dividend(a)
----------------------------------------------------------------------------------------------------------
<S>                      <C>       <C>        <C>       <C>          <C>      <C>     <C>        <C> 
1st                      13 1/2    10 3/4     11 5/8    $0.15        19 3/8   15      16 3/4     $0.15
2nd                      12 3/8    10 3/8     11 1/4     0.15        18 3/8   14 3/4  14 3/4      0.15
3rd                      13        10 3/4     12 1/8     0.15        15 3/8   14 1/8  14 3/4      0.15
4th                      13 3/8    10 7/8     12 1/2     0.15        16       11      12 1/8      0.15
</TABLE>
(a) DIVIDENDS PER SHARE NOT RESTATED TO REFLECT THE MERGER WITH SCHWITZER.

     The Common Stock of Kuhlman (KUH) is listed on the New York Stock Exchange 
and is quoted daily by the Exchange in most major newspapers.  The table above 
shows the price range per share and the dividends declared per share for the 
last two years.  At December 31, 1995, there were 13,167,400 shares of Common 
Stock outstanding and 7,895 shareholders of record.  It is estimated there are 
approximately 17,500 shareholders in total, including those holding stock in 
"nominee" or "street" name.

     A dividend investment program is maintained for Kuhlman shareholders of 
record.  Additional shares of stock may be purchased with dividends paid on 
Kuhlman stock and/or with cash payments of $10 to $3,000 per calendar quarter. 
The Company pays all brokerage fees and administrative costs on these stock 
purchases.  The plan is administered for the Company by its Transfer Agent, 
Harris Trust and Savings Bank.  Inquiries concerning the plan should be 
directed to the bank.

-C-1996 Kuhlman Corporation



42