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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K
                                    ---------

|X|       ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 1998

                                       OR

| |     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
        SECURITIES EXCHANGE ACT OF 1934

            For the transition period from ___________ to ___________

                        Commission File Number: 333-31071

                           Wells Aluminum Corporation
             (Exact name of Registrant as Specified in Its Charter)



             Maryland                             35-1139550
 (State or Other Jurisdiction of              (I.R.S. Employer
  Incorporation or Organization)             Identification No.)


     809 Gleneagles Court, Suite 300
           Baltimore, Maryland                      21286  
(Address of Principal Executive Offices)          (Zip Code)

       Registrant's telephone number, including area code: (410) 494-4500

                                   -----------

             Indicate  by check mark  whether the  registrant  (1) has filed all
reports  required to be filed by Section 13 or 15(d) of the Securities  Exchange
Act of 1934 during the preceding 12 months (or for such shorter  period that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.         Yes X     No   
                                                     ----      ----

    As of March 30, 1999, the  registrant  had 729,892.5  shares of Common Stock
outstanding.



<PAGE>

                                TABLE OF CONTENTS


                                                                            Page


PART I ....................................................................... 1
  Item 1. Business ............................................................1
  Item 2. Properties .........................................................10
  Item 3. Legal Proceedings ..................................................10
  Item 4. Submission of Matters to a Vote of Security Holders ................10
PART II ......................................................................11
  Item 5. Market for Registrant's Common Equity and Related Stockholder 
          Matters ............................................................11
  Item 6. Selected Financial Data ............................................11
  Item 7. Management's Discussion and Analysis of Financial Condition 
          and Results of Operations...........................................12
  Item 7A. Quantitative and Qualitative Disclosures about Market Risk ........20
  Item 8. Financial Statements and Supplementary Data ........................21
  Item 9. Changes in and Disagreements with Accountants on Accounting 
          and Financial Disclosure............................................41
PART III .....................................................................41
  Item 10. Directors and Executive Officers of the Registrant ................41
  Item 11. Executive Compensation ............................................43
  Item 12. Security Ownership of Certain Beneficial Owners and Management ....45
  Item 13. Certain Relationships and Related Transactions ....................46
PART IV ......................................................................48
  Item 14. Exhibits, Financial Statement Schedules, and Reports
          on Form 8-K ........................................................48
SIGNATURES ...................................................................49


<PAGE>

                                     PART I.

ITEM 1.    BUSINESS

    The following  description  of Wells  Aluminum  Corporation  ("Wells" or the
"Company"), the aluminum extrusion industry, and the Company's business contains
statements  which  constitute  forward  looking  statements,  and not historical
facts,  within the meaning of the Private  Securities  Litigation  Reform Act of
1995.  These  statements  appear in a number of places  and  include  statements
regarding  the  intent,  belief or current  expectations  of the  Company or its
officers primarily with respect to the future prospects, financial condition and
operating  performance  of the  Company.  Any such  forward  looking  statements
regarding  the  Company,  the aluminum  extrusion  industry,  and the  Company's
business  are not  guarantees  of  future  performance  and  involve  risks  and
uncertainties.  A variety  of  factors  could  cause  actual  results  to differ
materially from those anticipated in the Company's forward looking statements.

THE COMPANY
-----------

    Wells Aluminum  Corporation was incorporated in Maryland in November 1967 as
the successor to an aluminum extrusion business which began in the early 1950's.
Gibbons,  Goodwin,  van Amerongen  ("GGvA") is the sole general partner of Wells
Holdings  Limited  Partnership,  which  currently owns 76.7% of the  outstanding
shares of the Company's  common  stock.  As a result,  GGvA has the  controlling
interest in the  Company and has the power to elect a majority of the  directors
of the Company and to control all matters  submitted to the  stockholders of the
Company, including approving business combinations involving the Company.

    Wells is a custom  extruder,  finisher and fabricator of soft alloy aluminum
products,  principally for the building/construction,  transportation,  consumer
durables and equipment/electrical markets. In addition to the production of mill
finished extrusions,  the Company's  operations include painting,  anodizing and
fabrication,   which  enables  the  Company  to  provide  its   customers   with
assembly-ready   aluminum   components  and  assemblies.   The  Company  shipped
approximately  166.3 million pounds of aluminum  extrusions in 1998, an increase
of 11.4  million  pounds,  or 7.4%,  over the 1997  shipments  of 154.9  million
pounds.

    The Company's  network of plants consists of seven  facilities in six states
in the  midwestern and  southeastern  United States.  These  facilities  contain
twelve  extrusion  presses,  sizes 7" to 10",  and are  located to meet  various
regional demands, minimize transportation costs, balance production requirements
among plants and provide  single  source  reliability  to large  customers.  The
Company also operates its own casting facility for aluminum billet, enabling the
Company to manage its  internal  billet  requirements  as well as to recycle its
scrap for use in its extrusion operations. The Company believes that its ability
to cast the majority of its billet needs  provides a cost  advantage  over those
extruders without an internal casting capability.

    The Company sells its products to approximately  800 customers  primarily in
the    building/construction,     transportation,    consumer    durables    and
equipment/electrical  markets. In 1998, the Company's top ten customers received
approximately  38% of the Company's  shipped volume in pounds sold, with the top
twenty-five  customers  accounting for approximately 57%. In 1998, one customer,
Navistar International  Corporation,  accounted for 10.4% of the Company's gross
sales measured in dollars.

    The Company  focuses on  long-term  customer  relationships  to maintain and
enhance its business prospects.  Approximately  two-thirds of the Company's 1998
sales in  extrusion  pounds  shipped  were  made to  customers  that  have  been
customers of the Company for more than ten years.  The Company believes that its
relatively  stable  customer  base is  attributable,  in part,  to the Company's
ability to provide a high level of customer service,  engineering  expertise and
quality products at competitive prices.


                                              1

<PAGE>

PRODUCTS
--------

    Through its regional plant system, Wells is able to produce a broad range of
extruded, finished and fabricated aluminum products used by its customers in the
manufacture of their end products. In 1998, over 90% of the products sold by the
Company  were  designed  and  manufactured   according  to  individual  customer
specifications. The Company believes that the large share of customized products
sold by the Company can be  attributed to the Company's  product  quality,  high
level of  customer  service,  the  coordination  between  its  sales  force  and
engineering  staff  at each  plant,  engineering  design  capabilities,  and its
extensive extrusion, finishing and fabrication capabilities.

    Building/Construction

    In the  building/construction  market,  the Company produces  extrusions and
fabricated products for residential and commercial window and door frames, storm
doors, vents and louvers,  railings,  stadium seating systems,  patio enclosures
and  a  variety  of  architectural  specialty  applications.  The  Company  also
manufactures and markets a proprietary line of sliding patio doors and a line of
commercial  entrance  doors  and  storefront  systems.  In  1998,  shipments  to
customers in the  building/construction  market represented approximately 44% of
the   Company's   total  pounds  sold.  Of  the  pounds  sold  in  this  market,
approximately 58% were shipped to customers in the residential  segment with the
remaining pounds being shipped to customers in the commercial segment.

    Transportation

    In the transportation market, the Company produces extrusions and fabricated
products for truck cabs, commercial truck trailers,  recreational vehicles, golf
carts, utility trailers and automotive accessories.  The Company also produces a
number of complex assemblies,  including complete door frames and structural sub
frames for use in Class 8 truck tractors and complete window  assemblies for use
in school buses and delivery vans. In 1998,  approximately  25% of the Company's
total pounds sold were shipped to customers in the transportation market.

    Consumer Durables

    In the  consumer  durables  market,  the  Company  produces  extrusions  and
fabricated   products  for  a  wide  variety  of  applications,   including  the
manufacture of high-end office furniture and pleasure boats. In 1998,  shipments
to customers in the consumer  durables market  represented  approximately 10% of
the Company's total pounds sold.

    Equipment/Electrical

    In the  equipment/electrical  market,  the Company  produces  extrusions and
fabricated products for applications such as heat sinks and electronic component
mounting  systems,  electrical  distribution  and commercial  lighting  systems,
material handling systems,  and industrial  guarding and fixturing  systems.  In
1998,  approximately  8% of the  Company's  total  pounds  sold were  shipped to
customers in the equipment/electrical market.

    Distributors

    For the distributor market, the Company produces extruded products which the
distributors then resell to manufacturers,  contractors and other industrial end
users.  The  Company's  focus  in  the  distribution   market  is  on  producing
application  specific  components,  which are sold via  specialty,  value  added
distributors.   The  Company  does  not  regularly   participate  in  the  stock
shape/metal service center portion of the distribution market. Thus, the Company
believes that the end use of products  produced for distributors and then resold
tends to parallel the uses of customers  which the Company serves  directly.  In
1998, shipments to distributors  represented  approximately 13% of the Company's
total pounds sold.


                                        2

<PAGE>

MANUFACTURING
-------------

    Wells'  manufacturing  processes involve casting,  extruding,  finishing and
fabricating  soft alloy  aluminum.  The  Company's  operations  and  engineering
activities are directed by its Vice President of Operations,  from the Company's
corporate  headquarters.  Management of  production  activities is structured to
provide  strong  decentralized  plant  operations  in  combination  with certain
centralized corporate functions.  Each plant location, of which there are seven,
is managed by an operations manager,  who in most cases, is supported by a plant
manager.  Operations  management focuses on plant site issues,  such as customer
service,  delivery,  product quality,  productivity,  operating costs and labor,
that are directly under operations control.

    Casting

    The Company has two casting furnaces and ancillary  equipment which are used
to produce  aluminum  billet.  The first step in the casting  process is to melt
primary  aluminum and aluminum scrap in a large furnace.  The molten aluminum is
either directly  alloyed in this furnace or transferred to another furnace where
the alloying materials are added. The aluminum is then cast into logs of varying
diameters  with lengths of up to 16 feet.  Next,  these logs are heated and then
cooled at a controlled  rate to allow the cast aluminum to achieve the optimally
distributed chemical composition for extrusion, a process called homogenization.
Afterwards,  some aluminum logs are cut into shorter lengths called billets, the
main raw material for the production on aluminum  extrusions.  Aluminum logs and
billets are then  transferred to the Company's  extrusion  plants for subsequent
production of aluminum extrusions.

    Extrusion

    The Company  operates  five  extrusion  plants  which have in the  aggregate
twelve extrusion presses  producing varying sizes of extrusions.  Extrusion is a
manufacturing  process by which aluminum billet is heated and pushed by a press,
or  extruded,  through a die to produce a piece of metal in the shape of the die
and at the desired  length.  Extrusions are then  straightened by stretching and
cut to the required  lengths which range from 8 to 50 feet.  Most extrusions are
hardened  by aging in large  ovens  from 6 to 12  hours.  Typically,  75% of the
results of the  extrusion  process are salable  products;  the  remaining 25% is
aluminum  scrap,  which is either recast into aluminum  billet by the Company or
sold on the open market to metal  dealers.  Almost all of the Company's dies are
designed  to  produce  aluminum  extrusions  according  to  individual  customer
specifications.

    Finishing

    The Company has extensive  finishing  capabilities with two painting and two
anodizing  facilities  providing coverage of markets from the East Coast through
the Midwest.  In addition,  the Company uses contract  painters and anodizers to
augment its finishing capabilities.  These combined finishing capabilities allow
the  Company  to provide  its  customers  a single  source  for  components  and
assemblies ready for processing. Often additional finishing-related services are
provided,  including  two-tone  painting  and  taping of  painted  surfaces  for
protection during the customer's  manufacturing  process. These services enhance
the Company's  value to its customers and provide  appreciable  added income and
profit margin.

    Fabrication

    The  Company  has six  fabrication  operations,  of which two are  dedicated
fabrication  plants.  The Company  employs a variety of  fabrication  processes,
including  notching,  bending,  punching,  drilling,  tight  tolerance  cutting,
computerized  numerical control ("CNC")  machining,  manual and robotic welding,
and assembly.  These fabrication  operations differ in complexity,  ranging from
Tier  #3  activities,  which  include  welding,  high  tolerance  machining  and
assembly, to Tier #1 activities, which involve light punching, manual sawing and
drilling,  and hand  deburring.  Fabricated  products  may  range  from a simple
cut-to-length  extrusion  notched and punched for use as a door threshold,  to a
step  assembly for a truck cab, to a curved and fully formed trim cap for use on
an


                                              3

<PAGE>

office  partition,  to a panel van window assembly complete with glass. In 1998,
the  Company's  two Tier #3  operations  received  QS9000/ISO9002  certification
demonstrating  the Company's  commitment to the production of quality  products.
The  Company's   fabrication   operations  are  attractive  to  those  customers
interested  in  outsourcing  certain  manufacturing  in order to better  control
operating costs,  manage  inventory,  accommodate  growth, or more sharply focus
their own operations.  The Company's  fabrication  operations provide additional
opportunities  to enhance  profit  margins and help  protect the  business  from
market penetration by other competitors.

    Backlog

    Extrusion  turnaround time is generally  sufficiently short as to permit the
Company to fill customer orders for most of its products in a short time period.
Accordingly,  the Company does not consider backlog to have a material effect on
its business.

RAW MATERIALS
-------------

    Wells'  principal raw material for aluminum  extrusions is aluminum  billet,
the majority of which the Company produces at its own casting facility. The main
materials  used in the  production  of billet  are  primary  aluminum  ingot and
aluminum scrap. In 1998, the Company purchased its primary aluminum requirements
pursuant to supply  agreements  with five North  American  suppliers  at current
market prices at the delivery dates.  Over 60% of the aluminum scrap required in
1998 was sourced from the Company's own manufacturing  processes.  The remaining
requirements  for primary ingot and scrap were purchased from a variety of metal
and scrap brokers and dealers.

    For 1999,  the  Company  has  secured  commitments  with six North  American
suppliers to purchase primary  aluminum for its casting  requirements at current
market prices at the delivery dates. Over 60% of the aluminum scrap required for
1999 is expected to be sourced from the Company's own  manufacturing  processes.
The Company believes that its remaining requirements for primary ingot and scrap
are  readily  available  in the open  market  from metal and scrap  brokers  and
dealers.

    Aluminum Cost Recovery

    Aluminum  is subject to  extensive  price  volatility  in the world  market,
reflecting both domestic and international economic demand as well as activities
by financial hedge investment funds. The Company seeks to reduce its exposure to
the volatility in aluminum prices by fixing the cost of metal by hedging against
committed fixed price sales or by passing cost increases through to customers by
systematic  market  indexed  sales  pricing.  The  Company  limits  its  hedging
activities to committed sales and does not engage in speculative  hedging.  As a
further  control  technique,  the  Company  maintains  its  inventory  at levels
consistent with operating needs (35 days on hand) through centralized purchasing
and logistics, and sells any excess primary aluminum in the open market, closely
matching  the  cost  of  metal  purchased  to the  price  of  such  metal  sold.
Notwithstanding  the  Company's  efforts,  any  increase in the cost of aluminum
purchases could have an adverse effect on the Company's  financial condition and
operations  if the Company is unable to pass such  increases to its customers or
it does not effectively hedge against such aluminum price changes.

CAPITAL IMPROVEMENTS
--------------------

    Capital  expenditures  for 1998 totaled $3.3 million,  with  expenditures of
$1.6  million  on   extrusion   press   upgrades,   $0.3  million  on  finishing
capabilities,   $0.5  million  on  cast  house  improvements,  $0.6  million  on
additional  fabrication  capabilities,  and $0.3 million on other capital items.
Since the middle of 1995,  the Company has  focused  its capital  investment  on
technology and  productivity  improvements in extrusion and casting that support
the Company's marketing  initiatives.  These investments generally have expected
paybacks of less than 18 months and have increased  capacity  without  requiring
the  acquisition of major new equipment.  In 1998, the Company  upgraded its 10"
extrusion  press and  ancillary  equipment,  including  the  installation  of an
isothermal  control system, at its North Liberty,  Indiana  facility,  improving
productivity by 15%. The Company also installed an isothermal 


                                        4

<PAGE>

control system on the 8" extrusion  press at its Kalamazoo,  Michigan  facility,
increasing  productivity in excess of 15%. In 1998, the Company replaced a small
homogenization  oven with a new high  capacity  unit and  modernized an existing
homogenization  oven at its casting  facility.  A billet cooling system was also
replaced  to  support  this  new  capacity  and  to  improve  the  metallurgical
properties  of the  aluminum  billet  cast.  In 1998,  the Company  improved its
fabrication  capabilities  through  investments  in  additional  CNC bending and
machining  equipment,  two new precision  saws, a robotic welding system and two
new CNC routers capable of machining large subassemblies.

    The Company plans to make capital expenditures of approximately $4.0 million
in 1999 and $3.5 million annually from 2000 through 2003. The Company intends to
continue to expand  capacity by upgrading its equipment  rather than  purchasing
expensive new equipment.  Over the next five years,  the Company plans to update
and modernize two extrusion presses per year,  increasing  extrusion capacity by
at least 10% per press and reducing scrap  generated in the process by 1.5%. The
Company  believes  that by upgrading  its  extrusion  presses,  the Company will
receive 90% of the productivity  benefits realized by replacing equipment but at
50% of the capital  investment  required.  The Company  will  continue to invest
selectively in advanced computer isothermal control equipment, which the Company
believes can increase extrusion press capacity by at least 11%.

SALES AND MARKETING
-------------------

    Wells' sales and marketing activities and its field sales force are directed
by  its  Senior  Vice  President,   Sales  and  Marketing,  from  the  corporate
headquarters.  The centralized  sales and marketing  organization is accountable
for market research and all product and market development activities, including
promotional  materials and activities.  These activities include the development
and implementation of customer  strategies and the strict maintenance of pricing
discipline  throughout the Company.  All extrusion  pricing is centrally managed
and  administered  by  the  Vice  President,  Business  Selection  and  Capacity
Management, who reports to the Senior Vice President, Sales and Marketing.

     Two regional  sales  managers,  located in the Southeast and Midwest,  have
day-to-day  responsibility  for  directing  the  sales  force  and  implementing
agreed-to  market and customer  strategies.  The regional  sales  managers  work
hand-in-hand  with the operations  managers at each plant location to coordinate
customer service and tailor their sales activities to meet the business needs of
the plants.  This  arrangement  allows field sales and  operations  personnel to
react to changing market  conditions,  while  facilitating a uniform approach to
the market and the  reassignment  of production  requirements  among plants when
warranted to maintain customer service or plant utilization.  In addition to the
regional  sales  managers,  the Company  employs nine direct  sales  persons and
utilizes six independent  manufacturers'  representatives  for its extrusion and
fabrication  businesses.  The  Company  also  utilizes  a  number  of  specialty
representatives for its patio door and commercial doors businesses. Compensation
for the  direct  sales  force is  comprised  of  salary  plus  performance-based
bonuses.

    The  Company  has   implemented   a  program  to  upgrade  its  field  sales
organization,  which is  expected  to continue  in 1999.  Key  elements  include
increasing the responsibility of sales managers and  representatives for account
strategy  development  and  forecasting,  providing easy access to the Company's
central data bases via portable laptop  computers,  adding  additional  employed
sales personnel, and tying sales manager compensation to account profitability.

    Customer Service

    Wells  seeks to provide  high  quality  customer  service for the markets it
serves by capitalizing on its marketing  experience,  manufacturing  flexibility
and technical  expertise.  The Company  believes  that its strategic  network of
facilities and the integration among marketing,  sales and manufacturing provide
it with a  competitive  advantage by


                                        5

<PAGE>

allowing  it  to  respond  quickly  to  customer   demands.   Customer   service
organizations  are located at each of the  Company's  plants,  reporting  to the
operations manager, in order to ensure sensitivity and facilitate quick response
to  customer  needs  and  inquiries.   Customer  service   representatives   are
responsible  for order entry,  and in  coordination  with the field sales force,
routinely initiate day-to-day contact with long-standing  customers. The Company
believes that this close,  local contact between  experienced  customer  service
personnel  and its  established  customers is a critical  factor in  maintaining
strong customer relationships.

    Pricing and Hedging Programs

    The Company offers its customers three basic pricing  alternatives:  forward
sales contracts,  formula pricing, and market pricing. These alternatives can be
tailored to meet a customer's specific market and risk management requirements.

    Forward sales  contracts,  which  accounted for  approximately  43% of total
pounds sold by the Company in 1998, are "take or pay" agreements negotiated with
long-standing  customers.  These  contracts  fix the  sales  price at which  the
Company agrees to sell and the customer agrees to purchase a specified  quantity
of  aluminum  extrusions  in the  future.  These  contracts  typically  cover  a
substantial  portion  of the  customer's  requirements  for a three to six month
period.  The fixed  sales price is based on the price at which  aluminum  can be
hedged for future delivery plus a conversion spread to cover operating costs and
provide a profit margin.

    The  Company  also  offers to  long-standing  customers  a  formula  pricing
mechanism  which  adjusts  pricing  monthly based on aluminum  price  movements.
Monthly  price changes are based on the Midwest  Transaction  Price Average (the
"MWTP"),  plus a negotiated spread covering  conversion costs and profit margin.
Formula  pricing  allows the Company to stay current  with the aluminum  market,
balancing   upward  and  downward   movements  on  a  monthly  basis.  In  1998,
approximately  37% of total  pounds  sold  were  sold by the  Company  using the
formula pricing mechanism.

    The Company also quotes individual orders, based on the MWTP in the previous
month,  for its remaining  open market  accounts.  Profit margins on such market
accounts are often  higher than on forward  sales  contracts  or formula  priced
accounts.  In addition,  the Company's  exposure to aluminum price  movements is
nominal since such orders are based on 30 day delivery,  enabling the Company to
manage its metal cost.

    Fabricated components and assemblies, including the Company's patio door and
commercial  door product  lines,  are  typically  priced  quarterly  utilizing a
formula mechanism based on the previous  quarter's average metal cost.  Aluminum
costs are  generally a less  significant  element of such product  costs,  which
typically  include  purchased  parts and  substantial  fabrication  and assembly
labor. Pricing,  however, is tightly controlled via a quote process during which
purchased  parts  are  quoted  and  internal  costs  are  established  and  then
appropriate  burden rates and target  profit  margins are added.  The  quarterly
metal price  adjustments  allow for a "natural" hedge in the first month,  which
minimizes the risk of changes in metal  prices.  In certain  cases,  the Company
will enter into aluminum futures  contracts to hedge against price volatility in
the second and third months based on expected  purchases,  although  such hedges
have certain risks because customers are not bound to purchase fixed volumes.

    The Company takes forward  positions in the aluminum  market,  but only when
supported by forward sales contracts or by firm orders for fabricated  products.
As a matter of  corporate  policy,  the Company  does not engage in  speculative
hedging activities regarding future aluminum price movements.

    Product Delivery

    In 1998, Wells distributed approximately 75% of its products through its own
fleet of 32 tractors and 140 trailers.  All of the Company's tractors are leased
whereas all of its trailers are owned.  The Company  believes  that its selected
use  of  its  tractor-trailer  fleet  enhances  the  level  of  service  to  its
long-standing  customers by


                                        6

<PAGE>

enabling  more timely  delivery  with less  damage.  The Company also uses motor
common  carriers for certain  hauls,  such as partial truck loads and situations
where no back haul of aluminum scrap is available, when cost effective.

COMPETITION
-----------

    The North  American  aluminum  extrusion  market is  fragmented  and  highly
competitive  in that  there are over 100  extruders  who  operate  more than 170
extrusion  plants  with  more than 450  extrusion  presses.  Recently,  however,
competitors  in the market have begun  consolidating  as evidenced by William L.
Bonnell,  Inc.'s acquisition of three extrusion  facilities from Reynolds Metals
Company and its  acquisition of Exal Aluminum Inc.  adding another two extrusion
facilities.  In  addition,  ALCOA Inc.  acquired  Alumax,  Inc.,  including  its
thirteen extrusion facilities.

    In the U.S. aluminum extrusion market, the Company believes that competition
is  regionally  oriented and that  aluminum  extrusion  end users are  typically
looking for "local" plants with a strong focus on customer service,  quality and
a  reputation  for fair market  pricing.  In addition,  competition  is based on
delivery  time and  specialty  engineering/design/production  capabilities.  The
Company also  believes  that a regional  network of plants is important to large
end  users  in order to meet the  needs of their  multi-plant  locations  and to
ensure continuity of sourcing.

    Competitors  in the U.S.  aluminum  extrusion  market  include the extrusion
businesses of primary aluminum producers, such as ALCOA Inc. and Kaiser Aluminum
Corporation,  and sizeable multi-plant  independent extruders,  such as Aluminum
Shapes,  Inc.,  Easco,  Inc.,  William L Bonnell  Company,  Inc., and V.A.W.  of
America,  Inc.  Competitors also include small local  operators,  such as Elixir
Industries,  Western Extrusions Corp., Jordan Company,  and Astro Shapes,  Inc.,
and Canadian and Mexican  exporters,  such as Caradon Indalex and Cuprum S.A. de
C.V.

    Material Substitution

    A factor potentially affecting the Company's future operating performance is
material substitution.  Other materials,  such as vinyl and rolled steel, may be
used as substitutes for aluminum extrusions in certain markets and under certain
circumstances.  In recent years,  vinyl, with its penetration of the residential
window and door market,  has been the most commonly used substitute for aluminum
extrusions.  Industry forecasts indicate that the movement away from aluminum in
this market has slowed and that aluminum  should  essentially  maintain its unit
volume  (though not its market share in the window and door market)  through the
end of the 1990's. In areas where the Company does significant business, such as
window  components for the modular and mobile home segments,  which  represented
approximately  12% of pounds  sold by the  Company in 1998,  vinyl is not a good
substitute  due to cost and  strength  limitations.  Rolled steel may be another
substitute  for aluminum when aluminum  costs rise to such an extent that rolled
steel becomes a viable  economic  alternative for certain  manufacturing  needs.
However,  the Company  estimates its  participation in markets which may utilize
rolled steel to be  approximately  2% of the pounds sold by the Company in 1998.
An increase  in the use of  substitutes  for  aluminum  extrusions  could have a
material  adverse  effect  on the  financial  condition  and  operations  of the
Company.

EMPLOYEES

    As of December 31, 1998,  Wells employed 1,483 full time  employees,  830 of
whom are covered by collective  bargaining  agreements at five plant  locations.
These collective bargaining agreements are with local unions of the United Steel
Workers  of  America,   representing   workers  at  two  plant  locations,   the
International


                                        7

<PAGE>

Brotherhood of Teamsters,  representing workers at two plant locations,  and the
International Union of United Automobile,  Aerospace and Agricultural  Implement
Workers (the "UAW"),  representing workers at one plant location.  The Company's
collective  bargaining  agreements  are  independently  negotiated at each plant
location and expire on a staggered basis.

    The Company believes that its labor relationships with employees,  union and
non-union,  are generally satisfactory.  In 1998, the Company experienced a work
stoppage at its North Liberty,  Indiana facility,  the only work stoppage in the
last five years.  In late February  1998,  the Company's  collective  bargaining
agreement with the local union of the UAW expired,  and shortly thereafter,  the
local union  initiated a work stoppage.  In late March 1998, the Company and the
local  union  of  the  UAW  reached  agreement  on a new  collective  bargaining
agreement.  During the work  stoppage,  the Company  operated the affected plant
using salaried  personnel from within the Company and temporary  employees.  The
work  stoppage  did  not  have  a  material  adverse  effect  on  the  financial
performance of the Company.  However,  there can be no assurance that there will
be no further work stoppages in the future.  A future work stoppage could have a
material adverse effect on the financial performance of the Company.

ENVIRONMENTAL MATTERS
---------------------

    Wells is subject to extensive and evolving  environmental laws,  regulations
and rules that have been  enacted in  response  to  technological  advances  and
increased concern over environmental  issues. These regulations are administered
by the U.S.  Environmental  Protection Agency and other federal, state and local
environmental,  transportation,  and  health and safety  agencies.  The  Company
believes  that  over time  there  will  continue  to be  increased  legislation,
regulation and regulatory enforcement actions.

    In order to operate its  business,  the Company  must obtain and maintain in
effect one or more  permits for each of its  facilities  and comply with complex
regulations and rules governing air emissions,  waste water discharges, the use,
storage,  treatment and disposal of solid and  hazardous  wastes and other items
which might affect environmental  quality. As a result, the Company from time to
time is required to make  expenditures for pollution  control  equipment and for
other purposes related to its permits and compliance.

    Among  the  laws  that  may  affect  the  Company   are  the   Comprehensive
Environmental Response,  Compensation,  and Liability Act of 1980 ("CERCLA") and
analogous state laws that impose joint and several liability,  without regard to
fault,  on persons  that own or operate  locations  where there has been,  or is
threatened to be, a release of any hazardous substances into the environment, as
well as  persons  who  arranged  for the  disposal  of such  substances  at such
locations.  Such persons may become  liable for the costs of  investigating  and
remediating  such  substances.  There  are  often  also  substantial  legal  and
administrative   expenses  incurred  in  dealing  with  remediation  claims  and
activities.

    The Company has been  notified by either the U.S.  Environmental  Protection
Agency or other persons that it is considered to be a  "potentially  responsible
party" for the costs of investigating  and remediating  hazardous  substances at
several  locations  owned and operated by third persons.  At each such location,
the  Company  understands  that  it is  one  of  many  "potentially  responsible
parties." The Company believes that the volume of hazardous substances,  if any,
for which it may be held  responsible at each such location is not  significant.
While the Company  believes that it may have valid defenses to liability  claims
at these locations,  it has been settling such claims where an opportunity to do
so is  presented  at a cost which  probably  would not exceed  the  expenses  of
asserting such defenses through available administrative and judicial processes.
The Company  believes that none of these  contingencies,  individually or in the
aggregate,  could have a material adverse impact on the Company's  operations or
financial condition.


                                        8

<PAGE>

    Environmental Issues

    Certain of the Company's manufacturing facilities have been in operation for
several decades and, over such time,  these  facilities have used substances and
generated and disposed of wastes which are or may be considered  hazardous.  For
example,  certain of these  facilities  have in the past  stored or  disposed of
wastewater  treatment  sludge in on-site  catch ponds,  lagoons or other surface
impoundments.  Although  the  Company  believes  that  these  facilities  are in
substantial   compliance  with  current   environmental   laws  and  regulations
applicable  to  such  storage  and  disposal  activities,  it is  possible  that
additional  environmental  issues and related matters may arise relating to such
past activities which could require additional expenditures by the Company.

    In 1998, the Environmental  Protection Division of the Georgia Department of
Natural  Resources  approved the Company's work plan for the modification of its
waste water treatment  facilities at its Moultrie,  Georgia facility.  Under the
work plan,  which calls for the end of direct  discharge of treated  waste water
and connection to the City of Moultrie sewer system, three settling ponds on the
Company's property would be removed from services and their remaining structural
components  stabilized  and  capped  in  place.  Phase 1 of the work  plan,  the
reinforcement of pond berms, is scheduled to be completed in April 1999. Phase 2
of the work plan, the  stabilizing  and capping of the ponds, is scheduled to be
completed in 2000.  The total cost of the work plan will be  approximately  $2.1
million.

    The Company  cannot  predict what  environmental  legislation or regulations
will be enacted in the future,  how existing or future laws or regulations  will
be administered or interpreted, or what environmental conditions may be found to
exist.   Enactment  or  more  stringent  laws  or  regulations  or  more  strict
interpretation  of  existing  laws  and  regulations  could  require  additional
expenditures by the Company, some of which could be material.

PATENTS AND TRADEMARKS
----------------------

     Wells owns  certain  patents and  trademarks  but does not believe that its
business is dependent on its intellectual property rights.


                                        9

<PAGE>

ITEM 2.    PROPERTIES

    Wells has seven  production  facilities,  which  enable the Company to serve
customers effectively in markets in the East, Midwest and Southeast, as follows.
None of the owned  properties is subject to an  encumbrance  that is material to
the Company's operations.
<TABLE>
<CAPTION>
                                                                  Site                    Facilities   
                                                           ----- -------------       -------------------
         Location                Operations                Acres     Own/Lease       Sq. Ft.   Own/Lease
         --------                ----------                -----     ---------       -------   ---------
<S>                                <C>                      <C>       <C>             <C>         <C>

    Monett, Missouri          Extrusion, painting,          21.1     Owned           185,000    Owned
                              casting                        0.3     Leased

    Cassville, Missouri       Fabrication                    9.6     Owned            32,224    Owned
                                                             0.5     Owned

    North Liberty, Indiana    Extrusion, anodizing,         48.9     Owned           215,890    Owned
                              fabrication

    Kalamazoo, Michigan       Extrusion, complex            23.3     Owned           132,784    Owned
                              fabrication

    Sidney, Ohio              Complex fabrication            3.7     Leased          102,400    Leased
                                                             4.8     Owned

    Belton, South Carolina    Extrusion, painting,          54.5     Owned           165,000    Owned
                              fabrication

    Moultrie, Georgia         Extrusion, anodizing,         24.1     Leased          315,352    Leased
                              fabrication                   65.3     Owned
</TABLE>

    The Company  considers  the  condition of its  properties to be good and the
capacity  of its  facilities  to be  adequate  for the  immediate  needs  of its
business.  The  principal  executive  office of the  Company  is  located at 809
Gleneagles Court, Suite 300, Baltimore, Maryland 21286.

ITEM 3.    LEGAL PROCEEDINGS

    From time to time, Wells is a party to legal actions in the normal course of
its  business.  The Company is not currently  involved in any legal  proceedings
that it  believes  would  have a  material  adverse  effect  upon its  financial
condition or results of operations.

ITEM 4.    SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

    Wells held its annual  meeting of  stockholders  on  December 9, 1998 during
which the  stockholders  voted on: (1) the  election of eight  directors  of the
Company to serve until the 1999 annual meeting of  stockholders  and until their
respective successors are duly elected and qualified, (2) the ratification of an
amendment to the Company's 1997 Stock  Incentive Plan (the "Plan"),  whereby the
total number of options  available  under the Plan was increased  from 65,000 to
75,650,  and (3) the appointment of Ernst & Young LLP as the Company's  auditors
to serve at the  discretion of the Board of Directors.  The directors  nominated
and duly  elected  are  Russell W.  Kupiec,  W.  Russell  Asher,  Lynn F. Brown,
Elizabeth Varley Camp, Todd Goodwin,  Edward R. Heiser,  Leo A. McCafferty,  Jr.
and Lewis W. van Amerongen.  The stockholders  approved all actions presented to
them at the annual meeting.


                                       10

<PAGE>

                                     PART II

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

    Wells' common stock is not  registered  under the Securities Act of 1933, as
amended, and is not traded on any organized securities market. In December 1998,
the Board of  Directors  of the  Company  declared a cash  dividend of $2.64 per
share,  or $1.9 million,  to the holders of its common stock,  which was paid in
January 1999.

ITEM 6.    SELECTED FINANCIAL DATA

    The following table sets forth summary  financial data with respect to Wells
for the periods  ended and as of the dates  indicated.  The  summary  historical
financial  data for the five years ended  December 31, 1998 are derived from the
audited financial  statements of the Company. The following table should be read
in  conjunction  with the  Company's  financial  statements  and related  notes,
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations," and the other financial  information included elsewhere herein. All
amounts are in thousands.

<TABLE>
<CAPTION>

                                                        Fiscal Year Ended December 31,
                                        -------------------------------------------------------------
Statement of Operations Data:               1998        1997         1996        1995         1994   
                                        -----------  ----------   ----------  ----------   ----------
<S>                                          <C>         <C>          <C>         <C>           <C>
   Net sales ...........................$   251,191  $  267,349   $  228,161  $  232,555   $  197,991
   Cost of sales .......................    209,368     225,681      191,206     194,414      168,810
                                        -----------  ----------   ----------  ----------   ----------
   Gross profit ........................     41,823      41,668       36,955      38,141       29,181
   Selling, general and
     administrative expenses ...........     16,093      17,446       15,877      16,211       14,536
   Compensation from
     settlement of employee
     stock options .....................      --          4,070         --           --          --
                                        -----------  ----------   ----------  ----------   ----------
   Operating profit ....................     25,730      20,152       21,078      21,930       14,645
   Interest expense (a) ................     10,806       8,390        5,176       7,087        8,443
   Income taxes ........................      6,157       5,073        7,059       6,262        3,016
                                        -----------  ----------   ----------  ----------   ----------
   Earnings before extraordinary
     losses (b) ....................... $     8,767  $    6,689   $    8,843  $     8,581  $    3,186
                                        ===========  ==========   ==========  ===========  ==========
                                        
                                                             As of December 31,
Balance Sheet Data:                         1998        1997         1996        1995         1994   
                                        -----------  ----------   ----------  ----------   ----------
   Cash and cash equivalents .......... $     7,619  $    5,352   $      277  $      342   $    1,827
   Working capital ....................      32,306      29,989       18,175      19,355       19,813
   Inventories ........................      20,394      20,209       19,838      19,972       24,665
   Property, plant and equipment, net..      28,276      27,269       26,723      26,489       28,241
   Total assets .......................     124,478     125,383      108,726     112,261      124,800
   Total indebtedness .................     105,000     105,000       40,091      51,683       69,064
   Total stockholders' equity .........     (12,779)    (16,068)      34,472      25,246       17,142
</TABLE>

Notes to Selected Financial Data:

(a) Interest expense includes amortization of debt issuance costs of $622, $593,
    $495, $570 and $474 for the years ended December 31, 1998,  1997, 1996, 1995
    and 1994,  respectively,  and is net of interest income of $504 and $452 for
    the years ended December 31, 1998 and 1997.

(b) Earnings before  extraordinary loss excludes an extraordinary loss of $1,292
    (net of applicable  income taxes of $826) on the refinancing of debt in 1997
    and an extraordinary loss of $1,092 (net of applicable income taxes of $698)
    on the refinancing of debt in 1994.


                                       11

<PAGE>

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

    Wells Aluminum Corporation is a custom extruder,  finisher and fabricator of
soft alloy aluminum  products,  serving  principally the  building/construction,
transportation,  consumer durable and equipment/electrical  markets. The Company
operates a network of seven facilities with 12 extrusion presses, located in six
states  in  midwestern  and  southeastern  United  States,  and also has its own
casting facility for aluminum billet.

    The following discussion contains  forward-looking  statements which involve
risks and  uncertainties.  The Company's  actual  results or future events could
differ materially from those anticipated in these forward-looking  statements as
a result of certain factors,  including,  but not limited to, raw material costs
and availability  (primarily aluminum),  labor market conditions,  the Company's
level of utilization of its extrusion, finishing and fabrication capacities, and
the impact of  capacity  utilization  on costs,  whether  and to what extent the
Company's capital expenditures can facilitate  reductions in variable costs, the
highly  competitive  nature of the extrusion  industry,  and  developments  with
respect to contingencies such as environmental matters and litigation.

Basis of Presentation

    The  following   discussion  of  financial  condition  and  the  results  of
operations for the years ended 1998,  1997 and 1996 is based on the  historical,
audited results achieved by the Company.  The following tables set forth for the
periods indicated,  net sales, gross profit,  operating profit and net earnings,
and for performance and other  measurements,  pounds of product  shipped,  gross
sales price per pound,  Adjusted  EBITDA (as defined below) and Adjusted  EBITDA
per pound.  The table also includes  average market prices of aluminum per pound
and  market  price of  aluminum  per pound at  period-end.  All  amounts  are in
thousands except for per pound data.

    Adjusted  EBITDA is defined as  earnings  before  interest  expense,  income
taxes,  depreciation and amortization of goodwill,  and excludes LIFO charges or
income,  extraordinary  items,  charges for the capping of settling ponds,  gain
from the  curtailment  of a pension plan and  compensation  from  settlement  of
employee  stock options.  Adjusted  EBITDA should not be considered in isolation
of, nor in  substitute  for, net income,  cash flows from  operations,  or other
income  or cash  flow  data  prepared  in  accordance  with  generally  accepted
accounting principles.

<TABLE>
<CAPTION>

                                                                 1998                   1997                   1996     
                                                          ---------------        ---------------        ----------------
<S>                                                              <C>                   <C>                     <C>
    Statement of Operations Data:

    Net Sales - Products ................................$        247,662        $       235,467        $        208,634
    Net Sales - Metal ...................................           3,529                 31,882                  19,527
                                                          ---------------        ---------------        ----------------
        Net Sales .......................................         251,191                267,349                 228,161

    Cost of Sales - Products ............................         208,636                192,201                 173,988
    Cost of Sales - Metal ...............................           3,492                 31,409                  19,550
    LIFO Charges (Income) ...............................         (2,760)                  2,071                  (2,332)
                                                          ---------------        ---------------        ----------------
        Cost of Sales ...................................         209,368                225,681                 191,206

    Gross Profit ........................................          41,823                 41,668                  36,955
    Operating Profit ....................................          25,730                 20,152                  21,078
    Net Earnings ........................................           8,767                  5,397                   8,843
</TABLE>


                                       12

<PAGE>

<TABLE>
<CAPTION>

                                                                 1998                   1997                   1996     
                                                          ---------------        ---------------        ----------------
<S>                                                              <C>                   <C>                     <C>

    Other Measurement Data:

    Pounds of Product Shipped ........................... $       166,260        $       154,930         $       138,380

    Gross Sales - Products .............................. $       259,269                244,760                 217,764
    Gross Sales Price per Pound ..........................          1.559                  1.580                   1.574

    Adjusted EBITDA .....................................          26,765                 29,970                  22,285
    Adjusted EBITDA per Pound ...........................           0.161                  0.193                   0.161

    Average Market Price of Aluminum per Pound ..........           0.672                  0.775                   0.725
    Market Price of Aluminum per Pound at Period-End ....           0.599                  0.797                   0.736
</TABLE>


    Aluminum  Prices.  For  the  periods  indicated,  approximately  60%  of the
Company's cost of sales - products  reflect the cost of aluminum,  its principal
raw material. The Company seeks to manage aluminum price fluctuations, which can
be volatile,  principally either by passing aluminum prices through to customers
by  systematic  market  indexed  pricing  or by fixing the cost of  aluminum  by
hedging against committed fixed price sales to customers. As a result, increases
and decreases in aluminum  prices have generally  caused  similar  increases and
decreases in selling  prices,  sales and costs of sales,  and generally have had
little impact on the Company's level of profitability  for the periods described
herein.

    Business Activity. The Company's experience indicates that pounds of product
shipped has a direct impact on profitability, since a significant portion of the
Company's  operating  costs are fixed.  The  Company  defines  pounds of product
shipped  as the  weight  of  all  extrusions  shipped,  including  those  pounds
transferred  within the Company  from which it  manufactures  fabricated  parts,
components  and  assemblies,  but  excluding  the pounds of aluminum  related to
excess metal sales as described herein.

    Financial  and Other  Measures.  The  Company  believes  that its ability to
manage its sales spread (gross sales minus  aluminum  costs),  control  variable
spending and minimize its fixed cost structure are  significant  determinants of
profitability  and resultant  cash flow.  The Company,  therefore,  monitors its
sales  spread per  pound,  variable  costs per pound and fixed  costs per pound,
focusing on operating  profit as a key  performance  measure.  In addition,  the
Company monitors  Adjusted EBITDA,  as it is relevant for debt covenant analysis
under the New Credit  Agreement (as defined herein) and it can also be used as a
measure of the Company's ability to service its debt.

    LIFO Inventory. The Company values its aluminum inventory under the last-in,
first-out (LIFO) method.  During periods of rising aluminum prices,  compared to
historical LIFO inventory values, the Company may incur LIFO charges, which will
reduce  taxable  income,  and when aluminum  prices  subsequently  decline,  the
Company may recognize  LIFO income,  which will increase  taxable  income.  As a
result of  fluctuations  in earnings  levels  resulting from the  application of
LIFO, the Company  excludes LIFO charges and LIFO income from certain  measures,
such as Adjusted EBITDA.

    Excess Metal Sales.  The Company's  policy is to sell excess metal  (primary
aluminum  ingot and  billet)  on the open  market  when  necessary  to  maintain
aluminum inventory levels consistent with near-term  business needs.  Imbalances
in inventory can arise from the ongoing and efficient operation of the Company's
casting facility and from the Company's obligations to purchase fixed amounts of
primary aluminum ingot and billet under long-term supply agreements. The sale of
excess  metal,  which also reflects  aluminum  price  fluctuations,  has minimal
effect on profit performance since the prices of metal bought and metal sold are
closely matched. Pounds of excess metal sold are not included in the calculation
of pounds of product  shipped,  the  Company's  primary  indicator  of  business
activity.  In the normal  course of business,  the Company also sells  secondary
aluminum billet and aluminum scrap, which are not accounted for as excess metals
sales.

Year Ended December 31, 1998 Compared to Year Ended December 31, 1997

    The  Company's  net sales  decreased to $251.2  million in 1998 from $ 267.3
million in 1997,  a  decrease  of $16.1  million  or 6.0%.  Net sales - products
increased to $247.7  million in 1998 from $235.5 million in 1997,


                                       13

<PAGE>

an  increase  of $12.2  million or 5.2%.  Gross  sales of value  added  products
increased $7.4 million,  or 5.5%, to $142.2 in 1998 from $134.8 million in 1997.
Gross sales of mill finished  extrusions  increased  $7.0  million,  or 6.4%, to
$117.0  million in 1998 from $110.0  million in 1997.  The gross sales price per
pound declined by 1.3%, reflecting a higher percentage of mill finished sales as
compared to value added sales, the effect of a decrease of $0.103 in the average
market price per pound of aluminum,  and a changing  customer and product mix in
value  added  sales,  offset by an  improved  customer  and  product mix in mill
finished sales.

    Pounds of product shipped  increased 11.4 million pounds,  or 7.4%, to 166.3
million in 1998 from 154.9 million pounds of product shipped in 1997.  Shipments
to  commercial   construction  increased  2.2  million  pounds,  with  increased
shipments  for  several  large  architectural   projects  offsetting   decreased
shipments to the commercial door and window market. In residential construction,
shipments  increased  1.2 million  pounds,  reflecting  increased  shipments  to
suppliers to the mobile and  manufactured  home market  counteracting  decreased
shipments to suppliers to the residential  door and window market.  Shipments to
transportation  increased  4.0  million  pounds,  with  increased  shipments  to
manufacturers   of  truck  trailers,   golf  carts  and  utility   vehicles  and
manufacturers of specialty automobile and truck accessories, offsetting declines
in delivery van accounts. In consumer durables,  shipments increased 2.1 million
pounds,  reflecting  increased  shipments to manufacturers of pleasure boats and
office  furniture.  Shipments  to  equipment/electrical  decreased  1.0  million
pounds, primarily due to decreased shipments to one specialty industrial account
that was adversely  impacted by a General Motors strike in 1998. The increase of
2.9 million  pounds of  shipments  to  distributors/other  resulted  mainly from
increased   shipments  to  distributors  of  specialty   products   serving  the
southeastern and midwestern  markets and increased  shipments to distributors in
Puerto Rico serving the Caribbean basin.

    Cost of sales  decreased  to $209.4  million in 1998 from $225.7  million in
1997, a decrease of $16.3 million or 7.2%. Cost of sales - products increased to
$208.6 million in 1998 from $192.2 million in 1997, an increase of $16.4 million
or 8.5%. This increase  resulted from a $8.8 million increase in operating costs
and a $7.6  million  increase  in  aluminum  costs.  Variable  costs  per  pound
increased  to $0.442 in 1998 from $0.423 in 1997,  a change of $0.019 per pound.
This  increase was primarily due to  additional  costs  associated  with a major
upgrade of an extrusion  press,  the effect of a 4 1/2 week work stoppage at one
plant location,  additional  overtime costs incurred in response to the increase
in sales volume and the effect of initial lower productivity  related to the use
of temporary help and the hiring of new personnel.

    Gross profit  increased to $41.8 million in 1998 from $41.7 million in 1997,
an increase of $0.1 million or 0.2%.

    Selling,  general and administrative  expenses decreased to $16.1 million in
1998 from $21.5  million  in 1997,  a decrease  of $5.4  million or 25.1%.  This
decrease is primarily attributable to a decrease in compensation expense of $5.4
million,  of which $4.1  million  related to the  settlement  of employee  stock
options as part of the  Recapitalization  (as defined  herein) and $1.3  million
related to  reduced  incentive  compensation.  A gain of $1.6  million  from the
curtailment of the Retirement Plan for Salaried Employees offsets an increase in
costs of $1.6 million for environmental remediation.

    Operating  profit  increased to $25.7  million in 1998 from $20.2 million in
1997, an increase of $5.5 million or 27.2%.

    Interest expense, net of interest income, increased to $10.8 million in 1998
from $8.4 million in 1997,  an increase of $2.4 million or 28.6%.  This increase
was mainly attributable to the increase in debt outstanding and higher effective
interest  rates  as a  result  of the  Recapitalization,  offset  in  part by an
increase in interest  income.  Income tax expense  increased  to $6.2 million in
1998 from $5.1  million in 1997,  an increase  of $1.1  million,  or 21.6%.  The
effective  tax rates for the years ended  December  31, 1998 and 1997 were 41.3%
and 43.1%,  respectively,  which differed from the federal statutory rate of 35%
due to the goodwill amortization and state income taxes.


                                       14

<PAGE>

    In 1997, the Company incurred an extraordinary  loss of $1.3 million (net of
applicable  income taxes of $0.8 million) on the  refinancing of debt related to
the Recapitalization.

    As a result of the above factors,  net earnings increased to $8.8 million in
1998 from $5.4 million in 1997, an increase of $3.4 million or 63.0%.

    Adjusted EBITDA, as previously defined herein, decreased to $26.8 million in
1998 from  $30.0  million  in 1997,  a decrease  of $3.2  million or 10.7%.  The
decline in  Adjusted  EBITDA  consisted  of a decrease  in sales  spread of $2.4
million and an  increase  in  operating  costs of $4.5  million,  offset by $3.7
million from increased  sales volume.  The decrease in sales spread was affected
by a continuing  decrease in aluminum prices in 1998 since market indexed prices
charged to customers  declined more rapidly than the costs charged from aluminum
inventory.  Adjusted  EBITDA  per  pound  decreased  $0.032  to  $0.161 in 1998,
reflecting both lower Adjusted EBITDA and increased pounds of product shipped.

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

    The  Company's  net sales  increased to $267.3  million in 1997 from $ 228.2
million in 1996,  an  increase of $39.1  million or 17.1%.  Net sales - products
increased to $235.5  million in 1997 from $208.6 million in 1996, an increase of
$26.9  million or 12.9%.  Gross sales of value  added  products  increased  $8.1
million,  or 6.4%, to $134.8 in 1997 from $126.7 million in 1996. Gross sales of
mill finished extrusions increased $18.9 million, or 20.7%, to $110.0 million in
1997 from $91.1  million in 1996.  The gross sales price per pound  increased by
0.4%,  reflecting an increase of $0.051 in the average market price per pound of
aluminum and an improved  customer and product mix in value added sales,  offset
by the effect of a higher sales mix of mill finished extrusions.

    Pounds of product shipped  increased 16.5 million pounds, or 11.9%, to 154.9
million in 1997 from 138.4 million pounds of product shipped in 1996.  Shipments
to commercial  construction decreased 1.3 million pounds,  resulting mainly from
the loss of a curtain  wall/store  front  account,  the completion of a contract
involving  a  bridge  renovation  project,  and the  loss of a  commercial  door
account. In residential construction,  shipments increased 2.3 million pounds as
a  result  of  increased  shipments  to door  and  window  manufacturers  and to
suppliers to the mobile and manufactured home market despite a decision to shift
capacity to the more profitable distributor market.  Shipments to transportation
increased 7.8 million pounds, due to increased shipments to major truck, utility
vehicle and trailer manufacturers. In consumer durables, shipments decreased 1.0
million pounds,  resulting  mainly from decreased  shipments to manufacturers of
pleasure boats and other consumer durable products,  offset in part by increased
shipments to office furniture  manufacturers.  Shipments to equipment/electrical
increased 2.0 million pounds due to the continuing strong performance of several
niche accounts,  particularly manufacturers of electrical products. The increase
of 6.7 million pounds of shipments to  distributors/other  resulted  mainly from
continuing  sales  efforts to increase  custom  extrusion  business  with select
distributors,  including  a  Puerto  Rico  based  distributor  who is  expanding
throughout the Caribbean basin.

    Cost of sales  increased  to $225.7  million in 1997 from $191.2  million in
1996, an increase of $34.5 million or 18.0%. Cost of sales - products  increased
to $192.2  million in 1997 from  $174.0  million in 1996,  an  increase of $18.2
million  or 10.5%.  This  increase  resulted  from a $4.5  million  increase  in
operating costs and a $13.7 million  increase in aluminum costs.  Variable costs
per  pound,  however,  decreased  to  $0.423 in 1997  from  $0.444  in 1996,  an
improvement of $0.021 per pound. This improved  performance was due to effective
utilization of capacity,  continuing  extrusion press and casting  efficiencies,
and effective control of variable spending.

    Gross profit  increased to $41.7 million in 1997 from $37.0 million in 1996,
an increase of $4.7 million or 12.7%.

    Selling,  general and administrative  expenses increased to $21.5 million in
1997 from $15.9  million in 1996,  an  increase of $5.6  million or 35.2%.  This
increase  is  primarily   attributable   to  an  increase  of  $4.1  million  in
compensation  related to the settlement of employee stock options as part of the
Recapitalization  (as  defined  herein)


                                       15

<PAGE>

and an  increase  of $0.8  million in  incentive  compensation.  Other  selling,
marketing,  general and administrative costs increased $0.7 million,  reflecting
the  increased  level of  business  activity  and the  development  of sales and
marketing programs.

    Operating  profit  decreased to $20.2  million in 1997 from $21.1 million in
1996, a decrease of $0.9 million or 4.3%.

    Interest expense, net of interest income,  increased to $8.4 million in 1997
from $5.2 million in 1996,  an increase of $3.2 million or 61.5%.  This increase
was mainly attributable to the increase in debt outstanding and higher effective
interest  rates  as a  result  of the  Recapitalization,  offset  in  part by an
increase in interest  income.  Income tax expense  decreased  to $5.1 million in
1997 from $7.1  million  in 1996,  a  decrease  of $2.0  million  or 28.2%.  The
effective tax rates for the years ended  December 31, 1997 and 1996 were 43% and
44%, respectively,  which differed from the federal statutory rate of 35% due to
the goodwill amortization and state income taxes.

    In 1997, the Company incurred an extraordinary  loss of $1.3 million (net of
applicable  income taxes of $0.8 million) on the  refinancing of debt related to
the Recapitalization.

    As a result of the above factors,  net earnings decreased to $5.4 million in
1997 from $8.8 million in 1996, a decrease of $3.4 million or 38.6%.

    Adjusted EBITDA, as previously defined herein, increased to $30.0 million in
1997 from $22.3  million in 1996,  an  increase  of $7.7  million or 34.5%.  The
improvement in Adjusted  EBITDA  consisted of $7.0 million from increased  sales
volume,  $0.5 million from a net  reduction  in operating  costs (as  previously
discussed)  and $0.5  million of income from  excess  metal  sales,  offset by a
decrease in sales spread of $0.3 million.  Adjusted  EBITDA per pound,  in turn,
increased  $0.032 to $0.193 in 1997 since the  increase in  Adjusted  EBITDA was
substantially greater than the increase in pounds shipped.

Liquidity and Capital Resources

    The Company has historically  obtained funds from its operations,  augmented
by borrowings under various credit  agreements.  Aluminum price changes increase
or decrease  working  capital  requirements  since the dollar  value of accounts
receivable,  inventories  and accounts  payable  reflect these changes.  Working
capital  requirements  are generally  higher during  periods of higher  aluminum
prices.

    As of December  31,  1998,  the  Company  had $105  million of New Notes (as
defined herein)  outstanding and no borrowings under the New Credit Facility (as
defined  herein).  The  significant  indebtedness  incurred  by the Company as a
result of the Recapitalization has several important consequences,  the foremost
being  that  interest  expense  is  substantially   higher  than  prior  to  the
Recapitalization. The ability of the Company to satisfy its obligations pursuant
to such  indebtedness,  including  pursuant  to the New Notes and the  Indenture
(under which the New Notes were  issued),  will be dependent  upon the Company's
future performance, which, in turn, will be subject to management, financial and
other  business  factors  affecting the business and  operations of the Company,
some of which are not in the Company's control. The Company's liquidity may also
be impacted by environmental and other regulatory matters.

    The Company  currently  believes that cash flow from  operating  activities,
together  with  borrowings  available  under the New  Credit  Facility,  will be
sufficient  to fund  currently  anticipated  working  capital  needs and capital
expenditure  requirements for at least several years.  However,  there can be no
assurance that this will be the case.

  Cash Flows from Operating Activities

    Cash provided by operations  in 1998,  1997 and 1996 was $8.7 million,  $5.3
million and $14.1 million,  respectively. In 1998, cash flow increased primarily
because of improved  net  earnings  and  continued  emphasis on


                                       16

<PAGE>

working capital management, particularly accounts receivable and inventories. In
addition,  cash flow  increased as a result of decreases in accounts  receivable
and  inventories  from decreased  aluminum prices despite the increased level of
business activity. In 1997, cash flow decreased primarily as a result of reduced
net earnings,  reflecting the  non-recurring  compensation  charge and increased
interest  costs.  In addition,  cash flow  decreased as a result of increases in
accounts receivable and inventories  resulting from increased levels of business
activity and increased aluminum prices. In 1996, cash flow increased  reflecting
a modest  improvement in profit  performance  and continued  emphasis on working
capital management.

    Total  working  capital  (excluding  current  portion of long-term  debt) at
December  31, 1998,  1997 and 1996 was $32.3  million,  $30.0  million and $18.2
million, respectively. In 1998, cash and cash equivalents increased $2.3 million
to $7.6  million.  Decreases  in current  assets of $1.1  million were offset by
larger decreases in current liabilities,  particularly accounts payable relating
to metal purchases. In 1997, cash and cash equivalents increased $5.1 million to
$5.4  million due in part to the terms and  conditions  of the Notes (as defined
herein)  outstanding  (see Cash Flows from Financing  Activities).  Increases in
other  working  capital  accounts  reflected  the impact of  increased  business
activity,  the  effect of rising  aluminum  prices,  and the change in timing of
interest payments.  In 1996, lower aluminum prices and inventory levels resulted
in slightly lower working capital requirement than 1995.

  Cash Flows from Investing Activities

    Expenditures  for property,  plant and equipment in 1998, 1997 and 1996 were
$3.3 million, $3.0 million and $2.6 million, respectively. During the last three
years,  the Company has  successfully  increased its casting capacity by 15% and
capacities on two extrusion presses by an average of 11% without the acquisition
of expensive  new  equipment.  The Company also made  investments  in CNC mills,
benders, saws and presses to increase its fabrication capabilities.  The Company
anticipates that  expenditures  for property,  plant and equipment will approach
$4.0  million in 1999 and will average $3.5 million per annum for the years 2000
through 2003.  The Company  plans to update and modernize two extrusion  presses
per year,  including the installation of advanced  isothermal  extrusion control
equipment,  where cost  justified.  The Company  expects to  increase  extrusion
capacity  by 10% per press and reduce  scrap  generated  in the process by 1.5%.
Approximately  $1.0 million of the annual expenditure for the years 1999-2003 is
expected  to be used for  maintenance  capital  with the  remainder  invested in
productivity improvements and capacity enhancements.

  Cash Flows from Financing Activities

    Cash used in  financing  activities  was $3.1 million in 1998 as compared to
cash  provided by financing  activities of $2.8 million in 1997 and cash used in
financing activities of $11.6 million in 1996. Cash used in financing activities
in 1998 included the repurchase of common stock (as described herein). Cash used
in financing activities in 1996 reduced borrowings under the Old Credit Facility
(as defined herein).

    On May 28, 1997, the Company issued and sold $105.0 million principal amount
of 10.125% Series A Senior Notes (the "Notes") due 2005. The Company is required
to make  semi-annual  payments of interest on the Notes on June 1 and December 1
of each year.  As of May 28,  1997,  the Company  used a portion of the proceeds
from the issuance of the Notes to repay an existing  credit  facility  (the "Old
Credit Facility") of $21.2 million  outstanding  (including accrued interest and
agency fees) and to retire its $16.3 million  (including  accrued interest and a
prepayment  penalty  for  the  early  retirement  of  debt)  of  14.125%  Senior
Subordinated Notes due 2001 (the "Subordinated Notes"). Upon the issuance of the
Notes,  the  Company  entered  into  a new  credit  facility  (the  "New  Credit
Facility"),  which  provides a $15.0  million  secured line of revolving  credit
maturing on the last business day of June 2002.  Under the New Credit  Facility,
the Company is required to make  payments of interest on a monthly or  quarterly
basis. As of December 31, 1998 and 1997, there were no loans  outstanding  under
the New Credit Facility.

    The offering of the Notes,  the  repayment of the Old Credit  Facility,  the
retirement  of the  Subordinated  Notes,  and the entering  into of a New Credit
Facility  were  part  of  an  overall   recapitalization  of  the  Company  (the


                                       17

<PAGE>

"Recapitalization").  As  part  of  the  Recapitalization,  the  Company  used a
substantial  portion of the proceeds  received from the issuance and sale of the
Notes to pay a special  cash  dividend  to holders of its common  stock,  settle
existing employee stock options, and repurchase, or offer to repurchase,  shares
of common stock held by certain stockholders.

    In 1997,  the Company paid a special cash  dividend of $62.00 per share,  or
$56.0  million,  to holders of common stock,  paid an aggregate of $37.5 million
for the  repayment  and  retirement  of debt,  and  paid  $1.2  million  for the
repurchase and retirement of 152,100 shares of Class A Common Stock from certain
shareholders. The Company also incurred $4.1 million of compensation expense and
issued  158,042.5  shares of Class A Common Stock  related to the  settlement of
employee  stock  options.  The  compensation  expense  represents the difference
between  fair market value and the exercise  price on the  settlement  of 57,000
employee  stock options and $0.9 million of bonuses paid to satisfy a portion of
income  taxes  incurred  by option  holders as a result of  receiving  shares of
common stock.

    On November  7, 1997,  the  Company  consummated  an exchange of 100% of the
Notes for $105.0  aggregate  principal  amount of 10.125%  Series B Senior Notes
(the "New Notes") due 2005,  which are  registered  under the  Securities Act of
1933, as amended.

    In October  1998,  the Company  entered into a Stock  Purchase  Agreement to
repurchase all of the shares of Class A common stock of the Company owned by CVG
Industria  Venezolana de Aluminio,  C.A.  ("Venalum") for an aggregate  purchase
price of $3.1 million.  On November 13, 1998, the repurchase was completed,  and
as of that  date,  Venalum  no longer  owned any  shares of common  stock of the
Company.

Declaration of Cash Dividend

    On December 9, 1998,  the Board of Directors of the Company  declared a cash
dividend of $2.64 per share of Class A common  stock,  or $1.9  million,  to the
holders of its Class A common stock, which was paid on January 12, 1999.

Futures Contracts and Forward Sales Contracts

    In the normal  course of business,  the Company  enters into  forward  sales
contracts  with certain  customers for the sale of fixed  quantities of finished
products at  scheduled  intervals.  The aluminum  cost  component of the forward
sales  contract  is fixed for the  duration  of the  contract,  based on forward
market prices at the  inception of the contract.  In order to hedge its exposure
to aluminum price volatility  under these forward sales  contracts,  the Company
enters into aluminum  futures  contracts (a financial  hedge) based on scheduled
deliveries.

    At December  31,  1998,  the Company was party to $18.8  million of aluminum
futures contracts through nationally  recognized brokerage firms and major metal
brokers.  These aluminum futures  contracts are for periods between January 1999
and December 1999,  covering 30.9 million pounds of aluminum at prices  expected
to be settled  financially  in cash as they reach  their  respective  settlement
dates. The market value of these aluminum futures contracts at December 31, 1998
was $17.5  million.  The Company does not engage in any  speculative  trading of
aluminum futures contracts.

LIFO Adjustment and Inflation

  The  largest  component  of the  Company's  cost of  sales  is  aluminum,  its
principal raw material. Aluminum costs can be volatile, and reported results may
vary due to LIFO  adjustments,  as previously  discussed.  With the exception of
LIFO  adjustments,  the  Company  does  not  believe  that  inflation  has had a
significant impact on its results of operations for the years ended December 31,
1998, 1997 and 1996.


                                       18

<PAGE>

Seasonality

    The Company  generally  does not experience  significant  seasonality in its
business.  However,  working capital requirements are often higher and operating
results are often lower  during the fourth  quarter  principally  due to reduced
shipments of product and increased inventory due to the decrease in sales during
the holiday season and increased  accounts  receivable due to customers delaying
payment until after the year-end.

Year 2000 Systems Compliance

    The  Company  has  undertaken  a number of  initiatives  to ensure  that its
computer systems, microprocessors,  electronic data interchange ("EDI") systems,
and  other  computer  based  applications  are  compliant  with  the  Year  2000
requirements.  The Year  2000  issue  stems  from the fact  that  many  computer
programs  were  written  with two,  rather  than four,  digits to  identify  the
applicable year. As a result, computer programs with time-sensitive software may
recognize a two-digit  code for any year in the next  century as related to this
century.  For example,  "00" entered into a date-field  for the year 2000 may be
interpreted as the year 1900,  resulting in system  failures or  miscalculations
and  disruptions  of  operations,  including,  among other  things,  a temporary
inability to process transactions or engage in other normal business activities.

    The Company has  completed an evaluation  of its  centralized  main computer
system and related software and  manufacturing  equipment and facilities and has
determined that this system and the software and the manufacturing equipment and
facilities are compliant with the Year 2000 requirements.  The Company is in the
process of evaluating its other computer systems,  microprocessors,  EDI systems
and other  computer based  applications  for Year 2000  compliance.  The Company
expects to complete any required Year 2000 remediation  prior to any anticipated
impact on its  operations.  The  Company  believes  that with  modifications  to
existing software and conversions to new systems,  where required, the Year 2000
issue will not pose significant  operational  problems for its computer systems,
manufacturing  equipment  or  facilities.  However,  if  such  modifications  or
conversions are not made, or are not completed timely, the Year 2000 issue could
have a material impact on the operations of the Company.

    The Company is  contacting  vendors and customers to determine the extent to
which the  Company's  interface  systems are  vulnerable  to the failure of such
companies to remediate  their own Year 2000 issues.  There is no guarantee  that
the  systems of the  Company's  vendors  and  customers  on which the  Company's
systems rely will be modified or  converted on a timely basis by such  companies
and that such Year 2000 issues would not have an adverse effect on the Company's
systems.

    The  Company  is  currently  inquiring  of  its  significant  suppliers  and
subcontractors that do not share information systems with the Company ("external
agents").  To date,  the Company is not aware of any external  agent with a Year
2000 issue that would  materially  impact the Company's  results of  operations,
liquidity,  or capital resources.  However, the Company has no means of ensuring
that  external  agents will be Year 2000  compliant.  The  inability of external
agents to complete their Year 2000 resolution  process in a timely fashion could
materially  impact the Company.  The effect of non-compliance by external agents
is not determinable.

    Management of the Company believes that it has an effective program in place
to resolve the Year 2000 issue in a timely manner.  As noted above,  the Company
has not yet completed all necessary phases of the Year 2000 program. The Company
does not believe the remaining phases would  significantly  impact the Company's
ability  to  take  customer  orders,  manufacture  and  ship  products,  invoice
customers or collect  payments.  However,  disruptions in the economy  generally
resulting from Year 2000 issues could  materially  adversely affect the Company.
The Company could be subject to litigation for computer systems product failure,
for example,  equipment  shutdown or failure to properly date business  records.
The  amount  of  potential  liability  and lost  revenue  cannot  be  reasonably
estimated at this time.

    Except as described  above, the Company has not developed a contingency plan
for the reasonably likely worst case scenario concerning the Year 2000 issue. If
a Year 2000  problem  were to occur  that the  Company  could  not


                                       19

<PAGE>

successfully  resolve, it could have a material adverse effect on the results of
operations and financial condition of the Company.

Termination of Retirement Plan for Salaried Employees

    In 1998, as disclosed  herein,  the Company  recorded a gain of $1.6 million
related to the  curtailment of the Retirement  Plan for Salaried  Employees.  In
1999,  the  Company  expects to record  expense of  approximately  $1.1  million
associated with settling the Retirement Plan for Salaried Employees.

Commitments and Contingencies

    At December 31, 1998, the Company has commitments with eleven North American
suppliers  to purchase  101.4  million  pounds of primary  aluminum and aluminum
billet from January 1999 through  December 1999 at current  market prices at the
specified  delivery dates.  Management  expects that such quantities of aluminum
will be utilized in the normal  course of  operations  during the terms of these
agreements.

    In the normal course of business,  the Company has received notice of claims
asserting  potential  liability  under various  federal and state  environmental
laws. The Company accrues for losses associated with  environmental  remediation
obligations when such losses are probable and reasonably  estimable.  Based upon
information  that is currently  available,  management  does not expect that the
resolution of  environmental  claims will have a material  adverse effect on the
Company.  However, given the inherent uncertainties in evaluating  environmental
exposure,  it is  not  possible  to  predict  the  amount  of  future  costs  of
environmental claims which may be subsequently  determined.  The Company has not
anticipated  any insurance  proceeds or third-party  payments in determining its
estimated liability for environmental remediation.

    The Company is also a party to a number of other lawsuits and claims arising
out of the conduct of its  business.  Although the ultimate  results of lawsuits
and other  proceedings  against the Company cannot be predicted with  certainty,
management  does not expect  that  these  matters  will have a material  adverse
effect on the Company and its operations.

ITEM 7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

    See  "Item  1.  Business  -  Pricing  and  Hedging  Programs"  and  "Item 7.
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations - Future Contracts and Forward Sales Contracts."


                                       20

<PAGE>

ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                          Index to Financial Statements

<TABLE>
<CAPTION>

                                                                                           Page
                                                                                           ----
<S>                                                                                         <C> 

Report of Independent Auditors ..............................................................22
Balance Sheets as of December 31, 1998 and 1997 .............................................23
Statements of Operations for the years ended December 31, 1998, 1997 and 1996 ...............24
Statements of Stockholders' Equity for the years ended December 31, 1998, 1997 and 1996 .....25
Statements of Cash Flows for the years ended December 31, 1998, 1997 and 1996 ...............26
Notes to Financial Statements ...............................................................27
Schedule II -- Valuation and Qualifying Accounts ............................................40

</TABLE>


                                              21

<PAGE>

                         Report of Independent Auditors



The Board of Directors
Wells Aluminum Corporation

    We have  audited  the  balance  sheets of Wells  Aluminum  Corporation  (the
"Company")  as of December  31, 1998 and 1997,  and the  related  statements  of
operations,  stockholders'  equity and cash flows for each of the three years in
the period  ended  December  31, 1998.  Our audits also  included the  financial
statement  schedule in the Index at Item 14(a).  These financial  statements and
schedule are the responsibility of the Company's management.  Our responsibility
is to express an opinion on these financial statements and schedule 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 Wells Aluminum  Corporation
as of December  31, 1998 and 1997,  and the results of  operations  and its cash
flows for each of the three years ended  December 31, 1998, in  conformity  with
generally  accepted  accounting  principles.  Also, in our opinion,  the related
financial statement schedule, when considered in relation to the basic financial
statements  taken  as a whole,  present  fairly  in all  material  respects  the
information set forth therein.


                                            /s/ Ernst & Young LLP

March 19, 1999
Baltimore, Maryland


                                       22

<PAGE>


                                  WELLS ALUMINUM CORPORATION

                                        BALANCE SHEETS

                                    (Dollars in Thousands)

<TABLE>
<CAPTION>

                                                                                December 31,
                                                                           ---------------------
                                                                              1998        1997
                                                                           ----------  ---------
                                        Assets
                                        ------
<S>                                                                             <C>       <C>
Current assets:
    Cash and cash equivalents .............................................$    7,619  $   5,352
    Accounts receivable, principally trade, less allowances of $442 
          and $825                                                             26,213     30,599
    Inventories ...........................................................    20,394     20,209
    Other current assets ..................................................     2,319      1,444
        Total current assets ..............................................    56,545     57,604
Property, plant and equipment, at cost less accumulated depreciation ......    28,276     27,269
Debt issuance costs, net of accumulated amortization of  $984 and $362 ....     3,765      4,387
Goodwill, net of accumulated amortization of $13,662 and $12,474 ..........    33,362     34,550
Other assets ..............................................................     2,530      1,573
                                                                           ----------  ---------
        Total assets ......................................................$  124,478  $ 125,383
                                                                           ==========  =========

                      Liabilities and Stockholders' Equity
                      ------------------------------------

Current liabilities:
    Accounts payable, principally trade ...................................$   14,186  $  20,253 
    Accrued expenses ......................................................    10,053      7,362  
                                                                           ----------  ---------                                  
        Total current liabilities .........................................    24,239     27,615
Long-term debt, less current portion ......................................   105,000    105,000
Deferred income taxes .....................................................     5,446      5,804
Deferred benefit plan obligations .........................................     2,572      3,032
                                                                           ----------  ---------
        Total liabilities .................................................   137,257    141,451
                                                                           ----------  ---------
Stockholders' equity:
    Common stock, Class A, par value $0.01 per share, 1,100,000 shares
        authorized, 728,642.5 and 909,005.0 shares issued .................         7          9
    Additional paid-in capital ............................................        --      1,215
    Accumulated deficit ...................................................   (11,811)   (16,805)
    Additional minimum pension liability ..................................      (975)      (487)
                                                                           ----------   --------
        Total stockholders' equity ........................................   (12,779)   (16,068)
                                                                           ----------   --------
        Total liabilities and stockholders' equity ........................$  124,478   $125,383
                                                                           ==========   ========
</TABLE>

  See accompanying notes.


                                       23

<PAGE>

                           WELLS ALUMINUM CORPORATION

                            STATEMENTS OF OPERATIONS

                             (Dollars in Thousands)

<TABLE>
<CAPTION>

                                                                     Year Ended December 31,
                                                           ----------------------------------------
                                                                 1998          1997        1996
                                                           --------------  ------------  ----------
<S>                                                               <C>          <C>           <C>
Net sales .................................................$      251,191  $    267,349  $  228,161

Cost of sales .............................................       209,368       225,681     191,206
                                                           --------------  ------------  ----------
Gross profit ..............................................        41,823        41,668      36,955

Selling, general and administrative expenses ..............        16,093        17,446      15,877

Compensation from settlement of employee stock options ....            --         4,070          --
                                                           --------------  ------------  ----------
Operating profit ..........................................        25,730        20,152      21,078

Interest expense, net of interest income ..................        10,806         8,390       5,176
                                                           --------------  ------------  ----------

Earnings before income taxes and extraordinary item .......        14,924        11,762      15,902

Income taxes ..............................................         6,157         5,073       7,059
                                                           --------------  ------------  ----------
Earnings before extraordinary item ........................         8,767         6,689       8,843

Extraordinary loss on refinancing of debt,
    net of  applicable income taxes of $826 ...............            --        (1,292)         --
                                                           --------------  ------------  ----------
Net earnings ..............................................$        8,767  $      5,397  $    8,843
                                                           ==============  ============  ==========
</TABLE>

See accompanying notes.


                                              24

<PAGE>

                                  WELLS ALUMINUM CORPORATION

                              STATEMENTS OF STOCKHOLDERS' EQUITY

                                    (Dollars in Thousands)

<TABLE>
<CAPTION>

                                                               Accumu-      Additional
                                                 Additional     lated        Minimum
                                     Common       Paid-In      Earnings      Pension
                                      Stock       Capital      (Deficit)     Liability     Total
                                   -----------  ------------  -----------  ------------  ----------
<S>                                     <C>         <C>           <C>           <C>         <C>
Balance at December 31, 1995 ...    $     9     $     24,360  $     1,722  $      (845)  $   25,246
                                   -----------  ------------  -----------  ------------  ----------
    Net earnings for 1996.......            --            --        8,843            --       8,843
    Change in additional minimum
        pension liability, net 
        of tax .................            --            --           --           353         353
                                   -----------  ------------  -----------  ------------  ----------
    Comprehensive income
        (expense) ..............            --            --        8,843           353       9,196
    Exercise of stock options ..            --            30           --            --          30
                                   -----------  ------------  -----------  ------------  ----------
Balance at December 31, 1996 ...             9        24,390       10,565         (492)      34,472
                                   -----------  ------------  -----------  ------------  ----------
    Net earnings for 1997 ......            --            --        5,397            --       5,397
    Change in additional minimum
        pension liability, net of
        tax.....................            --            --           --             5           5
                                   -----------  ------------  -----------  ------------  ----------
    Comprehensive income
        (expense) ..............            --            --        5,397             5       5,402
    Dividend declared ..........            --       (24,390)     (31,600)           --     (55,990)
    Repurchase of common stock .            (2)          (48)      (1,167)           --      (1,217)
    Settlement of stock options.             2         1,263           --            --       1,265
                                   -----------  ------------  -----------  ------------  ----------
Balance at December 31, 1997 ...             9         1,215      (16,805)         (487)    (16,068)
                                   -----------  ------------  -----------  ------------  ----------
    Net earnings for 1998 ......            --            --        8,767            -        8,767
    Change in additional minimum
        pension liability, net 
        of tax ..................           --            --           --          (488)       (488)
                                   -----------  ------------  -----------  ------------  ----------
    Comprehensive income
        (expense)...............            --            --        8,767          (488)      8,279
    Repurchase of common stock .            (2)         (241)      (2,823)           --      (3,066)
    Dividend declared ..........            --          (974)        (950)           --      (1,924)
                                   -----------  ------------  -----------  ------------  ----------
Balance at December 31, 1998 ...   $         7  $        --   $   (11,811) $       (975) $  (12,779)
                                   ===========  ============  ===========  ============  ==========
</TABLE>

  See accompanying notes.


                                              25

<PAGE>

                           WELLS ALUMINUM CORPORATION

                            STATEMENTS OF CASH FLOWS

                             (Dollars in Thousands)

<TABLE>
<CAPTION>

                                                                  Year Ended December 31,
                                                              1998          1997          1996
                                                         ------------  -------------  ------------
<S>                                                            <C>            <C>         <C>
Operating activities:

Net earnings ..........................................  $      8,767  $       5,397   $     8,843

Adjustments  to  reconcile  net  earnings  to net  cash  
    provided  by  operating activities:
        Depreciation and amortization .................         4,130          4,270         4,034
        Settlement of employee stock options ..........            --          1,263            --
        Deferred income taxes .........................          (278)            30          (704)
        Extraordinary loss on refinancing of debt .....            --          1,292            --
        Changes in operating assets and liabilities:
            Accounts receivable, net ..................         4,386         (8,320)        2,362
            Inventories ...............................          (185)          (371)          134
            Accounts payable and accrued expenses .....        (5,825)         2,471          (930)
            Other assets and liabilities ..............        (2,328)          (728)          348
                                                         ------------  -------------  ------------
Net cash provided by operating activities .............         8,667          5,304        14,087
                                                         ------------  -------------  ------------
Investing activities:

Purchase of property, plant and equipment .............        (3,334)        (3,035)       (2,589)
                                                         ------------  -------------  ------------
Net cash used in investing activities .................        (3,334)        (3,035)       (2,589)
                                                         ------------  -------------  ------------
Financing activities:

Principal payments on long-term debt ..................            --        (69,791)      (93,793)
Proceeds from long-term debt ..........................            --        134,700        82,200
Payment of debt issuance costs ........................            --         (4,749)           --
Proceeds from the exercise of stock options ...........            --             --            30
Payment  of cash dividend .............................            --        (55,990)           --
Prepayment penalty on early retirement of debt ........            --           (149)           --
Purchase of common stock ..............................        (3,066)        (1,215)           --
                                                         ------------  -------------  ------------
Net cash (used in) provided by financing activities ...        (3,066)         2,806       (11,563)
                                                         ------------  -------------  ------------

Net increase (decrease) in cash and cash equivalents ..         2,267          5,075           (65)
Cash and cash equivalents at beginning of year ........         5,352            277           342
                                                         ------------  -------------  ------------
Cash and cash equivalents at end of year ..............  $      7,619  $       5,352  $        277
                                                         ============  ============== ============
</TABLE>

  See accompanying notes.


                                              26

<PAGE>

                           WELLS ALUMINUM CORPORATION

                          NOTES TO FINANCIAL STATEMENTS


1.  Summary of Significant Accounting Policies

    Wells Aluminum  Corporation  (the  "Company") is a domestic  manufacturer of
aluminum  extruded  and  fabricated  products  for  several  diverse  industries
including    building/construction,    transportation,    durable    goods   and
equipment/electrical.  Gibbons,  Goodwin,  van  Amerongen  ("GGvA")  is the sole
general  partner of Wells Holdings  Limited  Partnership,  which  currently owns
76.7% of the outstanding shares of the Company's common stock.

Reclassification

    Certain amounts  previously  reported have been reclassified to conform with
the 1998 presentation.

Use of Estimates

    The  preparation  of  financial  statements  in  conformity  with  generally
accepted  accounting  principles  requires that  management  make  estimates and
assumptions  that affect the amounts  reported in the financial  statements  and
accompanying  notes. Actual results inevitably will differ from those estimates,
and such differences may be material to the financial statements.

Cash and Cash Equivalents

    Cash and cash  equivalents  include cash on hand and short-term  investments
with original maturities of three months or less.

Inventories

    The aluminum  component of  inventories,  representing  67% and 68% of total
inventories at December 31, 1998 and 1997, respectively,  is stated at the lower
of cost or  market,  using the  last-in,  first-out  method  (LIFO).  The labor,
overhead and supplies components of inventories are carried at the lower of cost
or market using the first-in,  first-out  method (FIFO).  The outside  purchased
parts  component of inventories are carried at the lower of cost or market using
the weighted average cost method.

Property, Plant and Equipment

    Property, plant and equipment is stated at cost. Maintenance and repairs are
charged to operations  when incurred,  while  expenditures  having the effect of
extending the useful life of an asset are capitalized.  Depreciation is computed
using the  straight-line  method over the estimated  useful lives of the assets.
Depreciation  expense for the years ended  December 31, 1998,  1997 and 1996 was
$2,321,000, $2,489,000 and $2,351,000, respectively.

Debt Issuance Costs

    Costs incurred to obtain  financing are  capitalized and amortized using the
straight-line  method over the term of the related  financing.  Amortization  of
debt  issuance  costs is included in the  Statements of Operations as an item of
interest expense, net of interest income.


                                       27

<PAGE>

                           WELLS ALUMINUM CORPORATION

                    NOTES TO FINANCIAL STATEMENTS (Continued)


1.  Summary of Significant Accounting Policies (Continued)

Goodwill

    The excess of the  purchase  price of the Company over the fair value of the
net assets  acquired was recorded as goodwill.  Amortization  is recorded on the
straight-line  method  over  forty  years.  On a  periodic  basis,  the  Company
estimates its future  undiscounted  cash flows of the business to which goodwill
relates in order to ensure that the carrying value of such goodwill has not been
impaired.

Credit Risk

    The Company is  potentially  subject to  concentrations  of credit risk with
accounts  receivable and futures  contracts.  Although the Company has a diverse
customer  base,  31%  and  34% of the  accounts  receivable  balance  was due in
aggregate  from five  customers as of December 31, 1998 and 1997,  respectively.
The Company  performs  ongoing  credit  evaluations  of  customers  and does not
require   collateral  for  accounts   receivable.   The  Company  evaluates  the
creditworthiness  of the  counterparties  to the futures contracts and considers
nonperformance risk to be remote.

Pension Plans and Other Postretirement Benefits

    The Company is in the process of  terminating  its defined  benefit  pension
plan for salaried  employees,  with benefits under the plan curtailed  effective
September 30, 1998. The Company plans to implement a defined  contribution  plan
for salaried employees, with benefits retroactive to January 1, 1999.

    The  Company   sponsors  several  defined  benefit  pension  plans  covering
substantially  all  employees.  The Company  uses the  "projected  unit  credit"
actuarial  method for  financial  reporting  purposes and the "entry age normal"
actuarial method for funding purposes.

    The Company has historically provided  postretirement  medical insurance and
life insurance benefits (primarily for salaried employees). The Company accounts
for  postretirement  benefits by accruing  such benefits  during the  employees'
years of service.

Forward Sales Contracts and Futures Contracts

    In the normal  course of business,  the Company  enters into  forward  sales
contracts  with certain  customers for the sale of fixed  quantities of extruded
aluminum at scheduled  intervals  whereby the cost of the aluminum  component of
the contract is fixed for the duration of the contract, based on market price at
the inception of the contract.  In order to hedge its exposure to aluminum price
volatility under these forward sales contracts, the Company enters into aluminum
futures contracts to purchase aluminum,  based on scheduled deliveries under the
forward sales contracts.  Gains and losses on futures  contracts  designated and
effective as hedges of aluminum  price  exposure are recorded as  adjustments to
the cost of inventory.  If it becomes probable that the anticipated  transaction
will not occur as expected, the deferred gain or loss on the hedging transaction
applicable  to the  portion  of the  transaction  that  will not  occur  will be
recognized in income currently.

    In June 1998, the Financial  Accounting Standards Board issued SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities,  which is required
to be adopted for years beginning after June 15, 1999. Early


                                       28

<PAGE>

                    NOTES TO FINANCIAL STATEMENTS (Continued)

1.  Summary of Significant Accounting Policies (Continued)

Forward Sales Contracts and Futures Contracts (Continued)

adoption of SFAS No. 133 is permitted as of the beginning of any fiscal  quarter
after its  issuance.  SFAS No. 133 will  require  the Company to  recognize  all
derivatives on the balance sheet at fair value.  Derivatives that do not qualify
as hedges under the new standard must be adjusted to fair value through  income.
If a  derivative  qualifies  as a hedge,  depending  on the nature of the hedge,
changes in fair value of derivatives will either be offset against the change in
fair  value of the  hedged  assets,  liabilities,  or firm  commitments  through
earnings or  recognized in other  comprehensive  income until the hedged item is
recognized in earnings.  The  ineffective  portion of a  derivative's  change in
value will be immediately recognized in earnings.

    The Company has not yet determined when it will adopt SFAS No. 133, although
early adoption is considered  possible.  The Company has not yet determined what
effect SFAS No. 133 will have on its earnings and financial position.

Related Party Transactions

    During  the years  ended  December  31,  1998,  1997 and 1996,  the  Company
purchased aluminum from CVG Industria  Venezolana de Aluminio C.A.  ("Venalum"),
previously  an owner of  180,362.5  shares of Class A common  stock,  with total
amounts  purchased of $5,371,000,  $69,606,000  and  $69,288,000,  respectively.
Amounts payable to Venalum at December 31, 1997 were $6,344,000.

    In 1987, the Company entered into an agreement with GGvA,  pursuant to which
GGvA provides  financial  advisory and other  services to the Company.  For such
services,  GGvA was paid an annual  retainer of  $250,000 in 1996 and 1997,  and
$350,000  in  1998,  plus  reimbursement  for  its  out-of-pocket  expenses.  In
addition,  GGvA  received a fee of $500,000  for  financial  advisory  and other
services in connection with the Recapitalization (as herein defined) in 1997.

Stock-Based Compensation

    As described in Note 12, the Company has elected to follow the provisions of
Accounting  Principles Board Opinion ("APB") No. 25, Accounting for Stock Issued
to Employees, for stock based compensation. Pro forma disclosures required under
Statement of Financial  Accounting  Standards  ("SFAS") No. 123,  Accounting for
Stock-Based  Compensation,  are not included herein since the information is not
materially different from the amounts reported.

Business Segments

    In 1997,  the  Financial  Accounting  Standards  Board  issued SFAS No. 131,
Disclosures  about Segments of an Enterprise and Related  Information,  which is
required to be adopted  effective  December 31, 1998, and requires,  among other
things, that the Company provide financial and descriptive information about its
operating segments.  Under SFAS No. 131, operating segments are components of an
enterprise  about which  separate  financial  information  is available  that is
regularly  evaluated by the enterprise's chief operating decision maker deciding
how to  allocate  resources  and  in  assessing  performance.  The  Company  has
evaluated  the adoption of the new standard and has  concluded  that it has only
one reportable operating segment.


                                       29

<PAGE>

                           WELLS ALUMINUM CORPORATION

                    NOTES TO FINANCIAL STATEMENTS (Continued)


Business Segments (Continued)

    In  1998  and  1997,  one  customer,   Navistar  International  Corporation,
accounted  for  10.4% and  9.6%,  respectively,  of the  Company's  gross  sales
measured in dollars.

2.  Inventories

    A summary of inventories at December 31 follows (dollars in thousands):

<TABLE>
<CAPTION>
                                                                        1998          1997
                                                                  --------------   ------------
               <S>                                                      <C>             <C>
       Cost for aluminum and FIFO cost for other components:
           Raw materials .........................................$       10,233   $     11,840
           Finished goods and work-in-process ....................         9,589         10,658
           Supplies ..............................................           572            471
                                                                  --------------   ------------
                                                                  $       20,394   $     22,969
           Less LIFO reserve .....................................            --         (2,760)
                                                                  --------------   ------------
                                                                  $       20,394   $     20,209
                                                                  ==============   ============
</TABLE>

3.  Property, Plant and Equipment

    A summary of property,  plant and equipment at December 31 follows  (dollars
in thousands):

<TABLE>
<CAPTION>
                                                                        1998          1997
                                                                  --------------   ------------
               <S>                                                      <C>             <C>
           Land ..................................................$          816   $        816
           Buildings and improvements .............................        9,138          9,075
           Machinery and equipment ................................       50,304         45,847
           Construction in progress ...............................          576          1,848
                                                                  --------------   ------------
                                                                          60,834         57,586
           Less accumulated depreciation ..........................      (32,558)       (30,317)
                                                                  --------------   ------------
                                                                   $      28,276   $     27,269
                                                                  ==============   ============
</TABLE>

4.  Recapitalization

    On May 5, 1997,  125,000  shares of Class B common  stock were  converted to
125,000  shares of Class A common stock,  increasing the total shares of Class A
common stock outstanding to 903,062.5.

    In May 1997, the Company issued and sold  $105,000,000  principal  amount of
10.125%  Series A Senior Notes  ("Series A Notes") due 2005. In connection  with
the  consummation  of the  issuance  and sale of the Notes,  the Company  repaid
existing  indebtedness  and entered into a new bank credit  facility (see Note 8
herein)  providing a secured working capital line of $15,000,000,  which matures
in 2002.

    The  offering  of the  Series A  Notes,  the  repayment  of  $20,992,000  of
indebtedness under an old bank credit facility, the retirement of $15,000,000 of
14.125%  Senior  Subordinated  Notes  ("Subordinated  Notes") due 2001,  and the
entering  into  of  a  new  bank  credit   facility  were  part  of  an  overall
recapitalization   of  the   Company   ("Recapitalization").   As  part  of  the
Recapitalization,  the  Company  used a  substantial  portion  of  the  proceeds
received  from the issuance and sale of the Series A Notes to pay a special cash
dividend to holders of its common


                                       30

<PAGE>

                           WELLS ALUMINUM CORPORATION

                    NOTES TO FINANCIAL STATEMENTS (Continued)


4.  Recapitalization (Continued)

stock,  settle  existing  employee stock options,  and  repurchase,  or offer to
repurchase, shares of common stock held by certain stockholders.

    In 1997,  the Company paid a special cash  dividend of $62.00 per share,  or
$55,990,000,  to the holders of common stock,  paid an aggregate of  $37,467,000
related to the  repayment or  retirement of debt,  and paid  $1,217,000  for the
repurchase and retirement of 152,100 shares of Class A common stock from certain
shareholders.  The Company also incurred $4,070,000 of compensation  expense and
issued  158,042.5  shares of Class A common stock  related to the  settlement of
employee  stock  options.  The  compensation  expense  represents the difference
between  fair market value and the exercise  price on the  settlement  of 57,000
employee  stock  options and  $900,000  of bonuses  paid to satisfy a portion of
income  taxes  incurred  by option  holders as a result of  receiving  shares of
common stock.

    In November 1997, the Company  consummated an exchange of 100% of the Series
A Notes for $105,000,000  aggregate  principal amount of 10.125% Series B Senior
Notes due 2005,  which are  registered  under  the  Securities  Act of 1993,  as
amended.

    At December 31, 1997,  there were  909,005.0  shares of Class A common stock
outstanding.

5.  Repurchase of Common Stock

    In October  1998,  the Company  entered into a Stock  Purchase  Agreement to
repurchase  all of the shares of Class A common  stock of the  Company  owned by
Venalum for an aggregate  purchase price of $3.1 million.  On November 13, 1998,
the repurchase was completed,  and as of that date,  Venalum no longer owned any
shares of common stock of the Company.

    At December 31, 1998,  there were  728,642.5  shares of Class A common stock
outstanding.

6.  Declaration of Cash Dividend

    On December 9, 1998,  the Board of Directors of the Company  declared a cash
dividend of $2.64 per share of Class A common  stock,  or $1.9  million,  to the
holders of its common stock, which was paid on January 12, 1999.

7.  Accrued Expenses

    A summary of accrued expenses at December 31 follows (dollars in thousands):

<TABLE>
<CAPTION>

                                                                                     
                                                                       1998           1997
                                                                   ------------   ------------
          <S>                                                            <C>             <C>
   Interest................................................        $        900   $        886
   Salaries, wages and other compensation..................               1,160          3,697
   Environmental remediation...............................               2,100            ---
   Unrealized loss on futures contracts....................               1,280            ---
   Cash dividend on common stock...........................               1,924            ---
   Other...................................................               2,689          2,779
                                                                   ------------   ------------
                                                                   $     10,053   $      7,362
                                                                   ============   ============
</TABLE>


                                       31
<PAGE>

                           WELLS ALUMINUM CORPORATION

                    NOTES TO FINANCIAL STATEMENTS (Continued)

8.  Long-Term Debt

    A summary of long-term debt at December 31 follows (dollars in thousands):
<TABLE>
<CAPTION>

                                                                                     1998            1997
                                                                                --------------  -------------
               <S>                                                                      <C>             <C> 
         Credit agreement:
             Revolving loan facility.......................................     $          --   $           --
         Senior notes:
             10.125% Series B senior notes (see Note 4)....................            105,000         105,000
                                                                                --------------   -------------
                                                                                       105,000         105,000
             Less current portion                                                           --              --
                                                                                --------------   -------------
                                                                                $      105,000   $     105,000
                                                                                ==============   =============
</TABLE>

    Aggregate maturities of long-term debt for each of the five years succeeding
December 31, 1998 are $0.

    Credit Agreement

    In December 1994, the Company  entered into a $62,000,000  credit  agreement
("1994 Credit  Agreement")  with Banque  Indosuez (now known as Credit  Agricole
Indosuez),  New York Branch  ("Agent").  In May 1997, the Company entered into a
$15,000,000  credit  agreement  ("1997 Credit  Agreement")  with Credit Agricole
Indosuez by amending and restating the 1994 Credit Agreement.

    The 1994  Credit  Agreement  with the Agent  consisted  of 1) a  $22,000,000
working  capital line of credit ("1994  Revolving Loan  Facility"),  which would
mature on December 31, 2000, 2) a $33,000,000  term loan ("Term A Loan"),  which
would  mature on  December  31,  2000,  and 3) a  $7,000,000  term loan ("Term B
Loan"), which would mature on March 31, 2001. The proceeds under the 1994 Credit
Agreement were used to refinance existing debt.

    Outstanding  balances of the 1994  Revolving  Loan  Facility were subject to
interest,  at the  Company's  option , at  either  1.5% over the  Agent's  prime
lending rate or 2.75% over LIBOR.  On or after January 1, 1996,  either rate was
subject to a reduction  of 0.25% or 0.50% if the  Company met certain  financial
criteria  stated in the 1994 Credit  Agreement.  The Company met these financial
criteria and as such the interest rates were reduced by 0.25%. In addition,  the
Company  paid a  commitment  fee of 0.50% per annum on the average  daily unused
amounts.  The 1994 Revolving Loan Facility included  available letters of credit
of  $5,000,000  which  were not used by the  Company.  In May 1997,  outstanding
balances of the 1994  Revolving  Loan  Facility were paid in full as part of the
Recapitalization.  As a  consequence  of  paying  off the  1994  Revolving  Loan
Facility, the Company recorded an extraordinary loss of $370,000,  consisting of
$606,000 of unamortized costs, net of an income tax benefit of $236,000.

    The Term A Loan required quarterly principal payments of $1,375,000, through
December  31, 2000 and was subject to  interest,  at the  Company's  option,  at
either 1.5% over the Agent's prime lending rate or 2.75% over LIBOR. On or after
January 1, 1996, either rate was subject to a reduction of 0.25% or 0.50% if the
Company met certain financial criteria stated in the 1994 Credit Agreement.  The
Company met these financial criteria and as such the interest rates were reduced
by 0.25%. In May 1997, the remaining  balance due under the Term A Loan was paid
in full as part of the Recapitalization. As a consequence of retiring the Term A
Loan,  the Company  recorded an  extraordinary  loss of $555,000,  consisting of
$910,000 of unamortized costs, net of an income tax benefit of $355,000.


                                       32

<PAGE>

                           WELLS ALUMINUM CORPORATION

                    NOTES TO FINANCIAL STATEMENTS (Continued)

8.  Long-Term Debt (Continued)

    The Term B Loan, payable in full on March 31, 2001, was subject to interest,
at the Company's  option,  at either 2.0% over the Agent's prime lending rate or
3.25% over  LIBOR.  On or after  January 1, 1996,  either  rate was subject to a
reduction of 0.25% or 0.50% if the Company met certain financial criteria stated
in the 1994 Credit  Agreement.  The Company met these financial  criteria and as
such the  interest  rates were  reduced  by 0.25%.  In May 1997,  the  remaining
balance   due  under  the  Term  B  Loan  was  paid  in  full  as  part  of  the
Recapitalization.  As a  consequence  of retiring  the Term B Loan,  the Company
recorded  an  extraordinary   loss  of  $118,000,   consisting  of  $193,000  of
unamortized costs, net of an income tax benefit of $75,000.

    The 1997  Credit  Agreement  with the Agent is  comprised  of a  $15,000,000
secured line of revolving credit maturing on the last business day of June 2002.
Outstanding  balances  under this  agreement  are  subject to  interest,  at the
Company's  option,  at either 1.0% over the Agent's  prime lending rate or 2.25%
over LIBOR. In addition, the Company pays a commitment fee of 0.35% per annum on
the average daily unused amounts.  The 1997 Credit Agreement  includes available
letters of credit of $5,000,000,  which have not been used by the Company. There
are no additional fees with respect to unused letters of credit.

    The 1997 Credit Agreement  contains  numerous  covenants,  including:  (a) a
limitation on the payment of dividends or the repurchase of common stock;  (b) a
restriction on redemption or purchase of any  indebtedness  or the alteration of
terms  of any  indebtedness;  (c) a  restriction  on the  incurrence  of  future
indebtedness,  capital  expenditures,   investments,  liens,  transactions  with
affiliates  and  disposition  of assets;  and (d) the  maintenance  of specified
financial  rations  and minimum net worth.  The Company was in  compliance  with
these covenants at December 31, 1998.

    The  Company's  obligations  under the 1997 Credit  Agreement are secured by
substantially  all of the  Company's  inventories  and accounts  receivable.  No
borrowings were  outstanding  under the 1997 Credit Agreement as of December 31,
1998.

    Subordinated Notes

    In 1987, the Company issued $15,000,000 of 14.125% Junior Subordinated Notes
with a required  mandatory  redemption  of $7,500,000 on June 15, 1998 and final
maturity  on July 15,  1999.  In December  1994,  the  Company  entered  into an
Exchange and Amendment  Agreement  whereby the original notes were exchanged for
the Subordinated  Notes. The Subordinated Notes were redeemable at the option of
the Company, assuming no notes were held by original note holders, at a price of
105.375% of the principal amount redeemed,  with the prepayment penalty reducing
annually  thereafter to 100.0%.  In connection  with the  Recapitalization,  the
Company placed funds in escrow in May 1997 to be used to redeem the Subordinated
Notes  at  101.625%  on  July  15,  1997.  As  a  consequence  of  retiring  the
Subordinated  Notes,  the Company  recorded an  extraordinary  loss of $249,000,
comprised of $244,000 of prepayment  penalty and $165,000 of unamortized  costs,
net of an income tax benefit of $160,000.

    During 1995, the Company  entered into a 7.50% interest cap agreement  which
had the  effect  of  limiting  exposure  to  fluctuating  interest  rates on its
variable  rate debt  under the 1994  Credit  Agreement.  The  interest  rate cap
agreement was terminated in June 1997 in connection with the Recapitalization.


                                       33

<PAGE>

                           WELLS ALUMINUM CORPORATION

                    NOTES TO FINANCIAL STATEMENTS (Continued)

9.  Interest Expense, Net of Interest Income

    A summary of interest expense,  net of interest income,  for the years ended
December 31 follows (dollars in thousands):

<TABLE>
<CAPTION>

                                                            1998           1997          1996
                                                     ---------------- -------------- -------------
                    <S>                                       <C>           <C>           <C>
       Interest expense .............................$         10,688 $        8,249 $       4,681
       Amortization of debt issuance costs ..........             622            593           495
                                                     ---------------- -------------- -------------
                                                               11,310          8,842         5,176
       Interest income ..............................            (504)          (452)           --
                                                     ---------------- -------------- -------------
       Interest expense, net of interest income......$         10,806 $        8,390 $       5,176
                                                     ================ ============== =============

</TABLE>

    Cash paid for interest  amounted to  $10,674,000,  $8,375,000 and $5,015,000
for the years ended December 31, 1998, 1997 and 1996, respectively.

10. Financial Instruments

    Statement of Financial  Accounting Standard No. 107,  Disclosures about Fair
Values  of  Financial  Instruments,  defines  the  fair  value  of  a  financial
instrument as the amount at which the instrument could be exchanged in a current
transaction between willing parties.  The carrying value reported in the balance
sheets for cash, accounts receivable and accounts payable approximate their fair
values.  The  carrying  value for  long-term  debt as of  December  31, 1998 was
$98,175,000 whereas the carrying value of long-term debt as of December 31, 1997
approximated its fair value.

11. Income Taxes

    Significant components of deferred tax liabilities and assets at December 31
follow (dollars in thousands):
<TABLE>
<CAPTION>

                                                                         1998          1997
                                                                  ---------------- -------------
               <S>                                                       <C>             <C>
       Deferred tax liabilities:
           Property, plant and equipment .........................$          6,281 $       6,372
           Inventory .............................................             167           237
                                                                  ---------------- -------------
       Total deferred tax liabilities ............................           6,448         6,609
                                                                  ---------------- -------------
       Deferred tax assets:
           Pension and benefit plan liabilities ..................              17           568
           Accrued liabilities ...................................             318           319
           Environmental remediation .............................             819            --
           Allowance for doubtful accounts .......................             172           322
                                                                  ---------------- -------------
       Total deferred tax assets .................................           1,326         1,209
                                                                  ---------------- -------------
       Net deferred tax liabilities ..............................$          5,122 $       5,400
                                                                  ================ =============
</TABLE>

    Deferred  income taxes are included in the Balance  Sheets in other  current
assets and  deferred  income  taxes.  For the years ended  December 31, 1998 and
1997, there was no valuation allowance for any deferred tax assets.


                                       34

<PAGE>

                           WELLS ALUMINUM CORPORATION

                    NOTES TO FINANCIAL STATEMENTS (Continued)

11. Income Taxes (Continued)

    A  reconciliation  of the  statutory  income tax to the  income tax  expense
included in the Statements of Operations for the years ended December 31 follows
(dollars in thousands):

<TABLE>
<CAPTION>

                                                                 1998           1997          1996
                                                          ----------------  -------------  ------------
                    <S>                                            <C>            <C>             <C>
           Income tax expense calculated at the statutory
               federal income tax rate ..................  $         5,224  $       4,117  $      5,566
           Amortization of goodwill ......................             416            416           416
           State taxes, net of federal benefits ..........             644            518           683
           Prior years' income taxes .....................              --             --           313
           Other .........................................            (127)            22            81
                                                          ----------------  -------------  ------------
           Income tax expense ............................ $         6,157  $       5,073  $      7,059
                                                          ================  =============  ============

                                                                 1998           1997          1996
                                                          ----------------  -------------  ------------
           Current taxes ................................. $         6,435  $       5,043  $      7,763
           Deferred taxes ................................            (278)            30          (704)
                                                          ----------------  -------------  ------------
           Income tax expense ............................ $         6,157  $       5,073  $      7,059
                                                          ================  =============  ============
</TABLE>

    Cash paid for  federal  and  state  income  taxes  amounted  to  $4,575,000,
$4,490,000 and $6,883,000 for the years ended December 31, 1998,  1997 and 1996,
respectively.

12. Leases

    The Company leases various  facilities and equipment under short-term rental
and operating lease agreements.  Rent expense under these agreements amounted to
$1,760,000,  $1,752,000  and  $1,496,000  for the years ended December 31, 1998,
1997 and  1996,  respectively.  Future  minimum  payments  under  noncancellable
operating  leases as of December 31, 1998 are:  $1,176,000 in 1999,  $866,000 in
2000,  $580,000  in 2001,  $319,000  in  2002,  $254,000  in 2003  and  $573,000
thereafter.

13. Pension Plans and Other Postretirement Benefits

    The Company is in the process of  terminating  its defined  benefit  pension
plan  for  salaried  employees,  with  the  curtailment  of  benefits  effective
September  30,  1998.  The Company  plans to  implement  a defined  contribution
retirement plan for salaried employees,  with benefits retroactive to January 1,
1999.

    The following  table sets forth the funded status of the defined benefit and
postretirement  plans, and amounts recognized in the Balance Sheet (thousands of
dollars).  Assets of the defined  benefit  pension plans consist  principally of
equity securities, debt securities,  mutual funds and cash equivalents.  Defined
postretirement  benefits  consist of  unfunded  health  care plans that  provide
certain  postretirement  medical  and  life  insurance  benefits  for  employees
(primarily   salaried   employees)   who  retire   under   certain   eligibility
requirements.  The postretirement  benefits are contributory and include certain
cost-sharing features, such as deductibles and co-payments.


                                       35

<PAGE>

                           WELLS ALUMINUM CORPORATION

                    NOTES TO FINANCIAL STATEMENTS (Continued)

13. Pension Plans and Other Postretirement Benefits (Continued)
<TABLE>
<CAPTION>

                                        Pension Benefits: Plans         Other Postretirement
                                          in the United States           Benefits: All Plans
                                          --------------------         ----------------------
                                             1998        1997              1998        1997
                                          ----------  ---------        ----------  -----------
               <S>                            <C>        <C>               <C>          <C>
    Change in Benefit Obligation:
      Benefit obligation at beginning of
          year ..........................$    15,661   $ 12,657        $    3,821  $     3,124
      Service cost ......................        832        803               239          183
      Interest cost  ....................      1,030      1,005               247          243
      Participants' contributions .......         --         --                49           --
      Actuarial (gains) losses ..........      1,802      1,687               (73)         358
      Benefit payments ..................       (616)      (491)              (93)         (87)
      Plan amendments ...................         --         --                54           --
      Curtailment (gains) losses ........     (2,190)        --                --           --
      Settlements .......................     (2,228)        --                --           --
                                          ----------  ---------        ----------  -----------
      Benefit obligation at end of year.. $   14,291  $  15,661        $    4,244  $     3,821
                                          ==========  =========        ==========  ===========

    Change in Plan Assets:
      Fair value of plan assets at
          beginning of year ............  $   13,142  $   9,710                --           --
      Actual return on plan assets .....       1,476      1,072                --           --
      Employer contributions ...........       2,825      2,850                --           --
      Benefit payments .................        (616)      (491)               --           --
      Settlements ......................      (2,228)        --                --           --
                                          ----------  ---------        ----------  -----------
      Fair value of plan assets at
          end of year ..................  $   14,599  $  13,141                --           --
                                          ==========  =========        ==========  ===========

    Funded Status:
      Funded status at end of year ....   $       30  $   2,520)       $   (4,244) $    (3,821)
      Unrecognized net actuarial                                                 
          (gain) loss ..................       2,220      1,705              (209)        (148)
      Unrecognized prior service cost ..       1,132      1,070                50           --
      Unrecognized net asset at date of
          adoption, net of amortization.          --         --             2,300        2,444
                                          ----------  ---------        ----------  -----------
      Prepaid (accrued) benefit cost..    $    3,660  $     255        $   (2,103) $    (1,525)
                                          ==========  =========        ==========  ===========
    Amounts Recognized in the
      Balance Sheet:
      Prepaid benefit cost ...........    $    2,287  $      --                --           --
      Accrued benefit liability ......          (469)    (1,192)           (2,103)      (1,525)
      Intangible asset  ..............           243        648                --           --
      Accumulated other comprehensive
          income .....................         1,599        799                --           --
                                          ----------  ---------        ----------  -----------
      Net amount recognized...........    $    3,660  $     255        $   (2,103) $    (1,525)
                                          ==========  =========        ==========  ===========
</TABLE>


                                       36

<PAGE>

                           WELLS ALUMINUM CORPORATION

                    NOTES TO FINANCIAL STATEMENTS (Continued)


13. Pension Plans and Other Postretirement Benefits (Continued)

    The net periodic  benefit cost related to the defined  benefit pension plans
included the following components (dollars in thousands):

<TABLE>
<CAPTION>

                                                     Pension Benefits: Plans in the United States
                                                     --------------------------------------------
                                                           1998            1997          1996
                                                     ---------------  -------------  ------------
                    <S>                                   <C>               <C>           <C> 
       Service cost .................................$           832  $         803  $        825
       Interest cost ................................          1,030          1,005           884
       Expected return on plan assets ...............         (1,031)          (836)         (702)
       Amortization of prior service cost ...........            132            118            95
       Recognized actuarial (gain) loss .............             21             20            44
                                                     ---------------  -------------  ------------
       Net periodic benefit cost ....................            984          1,110         1,146
       Curtailment (gain) loss ......................         (1,724)            --            --
       Settlement (gain) loss .......................            160             --            --
                                                     ---------------  -------------  ------------
       Net period benefit cost after curtailments and
           settlements ..............................$          (580) $       1,110  $      1,146
                                                     ===============  =============  ============

       Weighted average assumptions as of December 31:
         Discount rate ..............................          6.75%          7.25%         7.75%
         Expected return on plan assets .............          8.00           8.00          8.00
         Rate of compensation increase ..............            --           4.50          4.50
</TABLE>

    The net periodic benefit cost related to the defined benefit  postretirement
plans included the following components (dollars in thousands):

<TABLE>
<CAPTION>

                                                     Other Postretirement Benefits: All Plans
                                                     ----------------------------------------
                                                          1998          1997          1996
                                                     ------------ --------------- -----------
                    <S>                                    <C>         <C>           <C>
       Service cost .................................$        239 $           183 $       186
       Interest cost .................................        247              24         220
       Amortization of transition obligation .........        144             144         144
       Amortization of prior service cost ............          4              --          --
       Amortization of net actuarial (gain) loss .....        (12)             (2)         --
                                                     ------------ --------------- -----------
       Net periodic benefit cost ....................$        622 $           568 $       550
                                                     ============ =============== ===========
       Weighted average assumptions as of December 31:
         Discount rate ...............................      6.75%           7.25%       7.75%
</TABLE>

    The health care cost trend rate used to determine the postretirement benefit
obligation was 7.0% for 1998,  decreasing  gradually to an ultimate rate of 5.0%
in 2001 and remains at that level  thereafter.  The trend rate is a  significant
factor in determining the amounts reported. The effect of a one-percentage-point
change in these  assumed  health care cost trend rates would have the  following
effects (dollars in thousands):

<TABLE>
<CAPTION>

                                                                     Increase      Decrease
                                                                     --------      --------
                         <S>                                           <C>              <C>
       Effect on total of service and interest cost component ....   $     88      $    (67)
       Effect on postretirement obligation .......................        723          (487)
</TABLE>


                                       37

<PAGE>

                           WELLS ALUMINUM CORPORATION

                    NOTES TO FINANCIAL STATEMENTS (Continued)


14. Stock Option Plans

    In November  1993,  the Board of Directors  of the Company  approved a stock
option plan which authorized up to 60,000 shares of Class A common stock for the
plan.  The plan  provided  for the  granting of options to  officers,  other key
employees and directors at an exercise price not to exceed the fair market value
on the date of the  grant as  determined  by the Board of  Directors.  Under the
terms of the plan,  the maximum term for the options  granted was ten years with
the options  vesting  ratably over a period of four years.  The options  granted
were  exercisable at a price of $10.00 per share.  All options granted under the
plan  were  settled  on May 28,  1997 as  part  of the  Recapitalization  of the
Company.

<TABLE>
<CAPTION>

                                                                          1997           1996
                                                                   ----------------  ------------
                    <S>                                                   <C>            <C> 
       Options outstanding at January 1 .......................             57,000       53,000
       Options exercised ......................................                 --       (3,000)
       Options settled ........................................            (57,000)          --
       Options granted ........................................                 --        7,000
       Options canceled .......................................                 --           --
                                                                   ----------------  ------------
       Options outstanding at December 31 .....................                 --       55,000
                                                                   ================  ============
       Options exercisable at December 31 .........................             --       42,750
                                                                   ================  ============
</TABLE>


    The Company  recognized  $4,070,000 in compensation  expense relating to the
57,000 options settled in 1997 and $250,000 in compensation  expense relating to
the 7,000 options granted in 1996.

    In June 1997, the Board of Directors of the Company  approved a stock option
plan which  authorized up to 65,000 shares of Class A common stock for the plan.
The plan  provides for the granting of options to officers,  other key employees
and  directors  at an exercise  price not to exceed the fair market value on the
date of the grant as determined  by the Board of  Directors.  Under terms of the
plan,  the maximum  term for the  options  granted is ten years with the options
vesting  ratably over a period of four years. In November 1998, the Stock Option
Committee of the Company  approved  and amended the number of shares  authorized
from 65,000 to 75,650.  The options  granted have exercise  prices  ranging from
$8.00 to $17.00 a share. All of the options granted and canceled in 1997 were at
an exercise  price of $8.00.  In 1998,  the Company  granted  13,000  options to
various Company  employees at a weighted average  exercise price of $12.29.  The
weighted  average  exercise price of options  canceled in 1998 was $8.00.  As of
December  31, 1998,  the Company had 60,450  options  outstanding  at a weighted
average price of $8.92 with 12,425  options  exercisable  at a weighted  average
exercise price of $8.00. The weighted-average  remaining contractual life of the
options outstanding as of December 31, 1998 approximates 8.7 years.

<TABLE>
<CAPTION>

                                                                          1998           1997
                                                                   ----------------  ------------
                    <S>                                                    <C>               <C>
                                                                                             
       Options outstanding at January 1 ...........................          51,700            --
       Options exercised ..........................................              --            --
       Options granted ............................................          13,000        61,350
       Options canceled ...........................................          (4,250)       (9,650)
                                                                   ----------------  ------------
       Options outstanding at December 31 .........................          60,450        51,700
                                                                   ================  ============
       Options exercisable at December 31..........................          12,425            --
                                                                   ================  ============
</TABLE>


                                       38

<PAGE>

                           WELLS ALUMINUM CORPORATION

                    NOTES TO FINANCIAL STATEMENTS (Continued)


15. Futures Contracts

    The Company, in the normal course of business, enters into futures contracts
to manage the risk of fluctuations in the price of aluminum. Fluctuations in the
price of  aluminum  can have a  significant  impact upon the  operations  of the
Company.  These instruments  involve elements of credit and market risk that are
not  reflected on the Company's  balance  sheet.  Entering into these  contracts
involves not only the risk of dealing with  counterparties  and their ability to
meet the terms of the  contracts,  but also of  movements in market value of the
futures  contracts.  The Company is required  to place  amounts on deposit  with
brokers based on the market value of certain  contracts.  These margin  deposits
bear interest based on the rate of certain U.S. Treasury  instruments and are to
be refunded as the market value changes or contracts are closed.

    As of December 31, 1998 and 1997, the Company has contracts outstanding with
a notional principal amount of $18,842,000 and $19,469,000, respectively, all of
which the Company has used to hedge forward sales contracts. The unrealized loss
related to these contracts approximates $1,280,000 at December 31, 1998.

16. Environmental Remediation

    In 1998, the Environmental  Protection Division of the Georgia Department of
Natural  Resources  approved the Company's work plan for the modification of its
waste water treatment  facilities at its Moultrie,  Georgia facility.  Under the
work plan,  which calls for the end of direct  discharge of treated  waste water
and connection to the City of Moultrie sewer system, three settling ponds on the
Company's property would be removed from services and their remaining structural
components  stabilized  and capped in place.  In the fourth quarter of 1998, the
Company recorded $1.85 million of selling,  general and  administrative  expense
related to the  stabilizing  and capping of the  settling  ponds at its Moultrie
facility, which is scheduled to be completed in 2000.

17. Commitments

    At December 31, 1998, the Company has commitments with eleven North American
suppliers  to purchase  101.4  million  pounds of primary  aluminum and aluminum
billet from January 1999 through  December 1999 at current  market prices at the
delivery  dates.  Management  expects that such  quantities  of aluminum will be
utilized  in  the  normal  course  of  operations  during  the  terms  of  these
agreements.

18. Contingencies

    The Company has  received  notice of claims  asserting  potential  liability
under various  federal and state  environmental  laws.  The Company  accrues for
losses associated with  environmental  remediation  obligations when such losses
are probable and reasonably estimable.  Based upon information that is currently
available,  management  does not expect  that the  resolution  of  environmental
claims will have a material  adverse effect on the Company.  However,  given the
inherent uncertainties in evaluating  environmental exposure, it is not possible
to  predict  the amount of future  costs of  environmental  claims  which may be
subsequently determined.  The Company has not anticipated any insurance proceeds
or third-party payments in determining its estimated liability for environmental
remediation.

    The Company is also a party to a number of other lawsuits and claims arising
out of the conduct of its business. Although the ultimate results of lawsuits or
other  proceedings  against  the Company  cannot be  predicted  with  certainty,
management  does not expect  that  these  matters  will have a material  adverse
effect on the Company or its operations.


                                       39

<PAGE>

                SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS

                           WELLS ALUMINUM CORPORATION

                                December 31, 1998

                             (Dollars in Thousands)


<TABLE>
<CAPTION>

             COL. A                 COL. B               COL. C              COL. D       COL. E 
-------------------------------  -----------  --------------------------  ------------  -----------
                                                        Additions             
                                              --------------------------
                                 Balance at    Charged to    Charged to                 Balance at
                                  Beginning     Costs and      Other       Deductions       End
              Description         of Period     Expenses      Accounts                   of Period
-------------------------------  -----------  ------------  ------------  ------------  -----------
<S>                                  <C>           <C>           <C>           <C>          <C>

Year Ended December 31, 1998:

Deducted from asset accounts:
  Allowance for doubtful         $       825  $        150           --   $  (533)(1)   $       442
                                 -----------  ------------  ------------  ------------  -----------
    Total                        $       825  $        150           --   $  (533)      $       442
                                 ===========  ============  ============  ============  ===========

Year Ended December 31, 1997:

Deducted from asset accounts:
  Allowance for doubtful         $     1,170  $        150           --   $ (495)(1)    $       825
                                 -----------  ------------  ------------  ------------  -----------
    Total                        $     1,170  $        150           --   $ (495)       $       825
                                 ===========  ============  ============  ============  ===========

Year Ended December 31, 1996:

Deducted from asset accounts:
  Allowance for doubtful         $      925   $        548            --  $ (303)(1)    $     1,170
                                 -----------  ------------  ------------  ------------  -----------
    Total                        $      925   $        548            --  $ (303)       $     1,170
                                 ===========  ============  ============  ============  ===========
</TABLE>
 
(1) Uncollectible accounts written off, net of recoveries and adjustments.


                                       40

<PAGE>

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

    None.

                                    PART III

ITEM 10.   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

    The  following  table set forth  certain  information  with  respect  to the
individuals who are the directors and executive officers of Wells.

<TABLE>
<CAPTION>
                Name                                              Position
-------------------------------------        -----------------------------------------------------------
<S>                                               <C>
Russell W. Kupiec ....................51     President, Chief Executive Officer and Director
W. Russell Asher .....................56     Senior Vice President, Chief Financial Officer and Director
Lynn F. Brown ........................54     Senior Vice President, Sales and Marketing and Director
Leo A McCafferty .....................61     Vice President, Operations and Director
William J. Milam .....................58     Vice President, Business Selection and Capacity Management
Geoffrey A Nelson ....................58     Vice President, Human Resources
David J. Raymonda ....................41     Controller, Secretary and Treasurer
Elizabeth Varley Camp ................41     Director
Todd Goodwin .........................67     Director
Edward R. Heiser .....................63     Director
Lewis W. van Amerongen .............. 58     Director
</TABLE>

    Each director of the Company  holds office until the next annual  meeting of
the  stockholders  of the Company or until his or her successor has been elected
and  qualified.  Officers  of  the  Company  are  elected  by and  serve  at the
discretion  of the Board of  Directors.  See  "Certain  Relationships  and Other
Transactions."

    Russell W.  Kupiec  joined the Company in April  1991.  Mr.  Kupiec has been
President and Chief Executive Officer since April 1996. From March 1995 to April
1996, he served as Chief  Operating  Officer.  From November 1991 to March 1995,
Mr. Kupiec served as Vice President,  Manufacturing. From April 1991 to November
1991,  he  served  as Vice  President,  Administration.  Mr.  Kupiec  has been a
director of the Company since 1991.

    W.  Russell  Asher,  a certified  public  accountant,  joined the Company in
January 1994 and has been Chief Financial Officer since that time. From December
1991 to  January  1994,  he served as Chief  Financial  Officer  of the  Federal
Emergency  Management  Agency.  Prior  thereto,  Mr.  Asher was Vice  President,
Finance of MB America Inc., a packaging and printing business, and President and
General Manager of AmeriForms Inc., a printing company which was a subsidiary of
MB America Inc. Mr. Asher has been a director of the Company since 1994.

    Lynn F. Brown  joined the  Company in January  1996 and has been Senior Vice
President,  Sales and Marketing  since that time.  From December 1994 to January
1996, he served as Executive Vice President,  Sales and Marketing of Terra Green
Technologies,  a start-up business in the ceramics  industry.  From July 1986 to
December  1994,  Mr.  Brown  was  Business  Manager  of  International   Paper's
Fountainhead  Products Group. Mr. Brown has been a director of the Company since
June 1997.

    Leo A.  McCafferty  joined the  Company  in  October  1995 and has been Vice
President, Operations since July 1996. From October 1995 to July 1996, he served
as Vice President,  Manufacturing. From May 1993 to October 1995, Mr. McCafferty
was  President of Solutions  Et Al, a  consulting  company  engaged in strategic
planning and operations control. From 1986 to May 1993, he was President of PEMS
Service and Repair, a company engaged in ground water treatment and control. Mr.
McCafferty has also held vice president and


                                       41

<PAGE>

general manager positions at Black & Decker  Corporation,  where he was employed
for twenty  years.  Mr.  McCafferty  has been a director  of the  Company  since
December 1997.

    William  J.  Milam  joined  the  Company  in 1971.  Mr.  Milam has been Vice
President,  Sales and Product  Management  since 1991, and prior  thereto,  held
various regional sales management positions.

    Geoffrey A. Nelson  joined the  Company in October  1998 as Vice  President,
Human  Resources.  From March 1997 to October  1998,  he served as Head of Labor
Relations  for  AMP   Incorporated,   a  producer  of  electrical   devices  and
connections, and from September 1993 to March 1997, he was Vice President, Human
Resources for Joyce International,  an office products business.  Mr. Nelson has
27 years of human resource and labor relations experience.

    David J.  Raymonda  joined  the  Company  in  1982.  Mr.  Raymonda  has been
Controller and Secretary of the Company since February 1989 and Treasurer  since
September 1993.

    Elizabeth  Varley Camp has been a Vice  President  at  Goldman,  Sachs & Co.
since August 1997 and has served a director of the Company since July 1987.  Ms.
Varley  Camp  joined GGvA in 1986 and was a Partner of GGvA from 1992 until July
1997.

    Todd  Goodwin  has been a Partner  of GGvA  since  1984 and has  served as a
director of the  Company  since July 1987.  Mr.  Goodwin is a director of Schult
Homes Corporation, The Rival Company, Inc., Johns Manville Corporation and U. S.
Energy Systems, Inc.

    Edward R. Heiser  retired as President  and Chief  Executive  Officer of the
Company in April 1996, a position  which he had held since 1991.  Mr. Heiser has
been a director of the Company since 1991.

    Lewis A. van  Amerongen has been a Partner of GGvA since 1970 and has served
as a  director  of the  Company  since July 1987.  Mr. van  Amerongen  is also a
director of Agrifos LLC and Erickson  Air-Cranes  Co., LLC, two  privately  held
companies.

ITEM 11.   EXECUTIVE COMPENSATION

    The  following  table sets forth the  compensation  earned,  whether paid or
deferred,  to Wells's  Chief  Executive  Officer  and its other four most highly
compensated executive officers (collectively, the "Named Officers") for services
rendered in all  capacities to the Company  during the years ended  December 31,
1998, 1997 and 1996.


                                       42

<PAGE>

<TABLE>
<CAPTION>

                                    Summary Compensation Table
                                    --------------------------
                                                                                           Long-Term
                                                                                          Compensation
                                                                                            Awards
                                                                                           Securities
                                                         Annual Compensation               Underlying
       Name and Principal Position      Year               Salary          Bonus            Options
       ---------------------------      ----            -------------  -------------       ------------
<S>                                      <C>                  <C>            <C>               <C>
Russell W. Kupiec ................      1998            $     233,750  $     132,000              --
  President and                         1997            $     233,750  $   1,434,955           15,000
    Chief Executive Officer             1996            $     187,500  $     175,000            1,300

W. Russell Asher .................      1998            $     144,664  $      75,000              --
  Senior Vice President and             1997            $     140,000  $     991,042           10,000
    Chief Financial Officer             1996            $     130,000  $     110,000            1,000

Lynn F. Brown ....................      1998            $     140,608  $      50,000              --
 Senior Vice President,                 1997            $     136,100  $     167,210            5,000
    Sales and Marketing                 1996            $     130,000  $      50,000              500

Leo A. McCafferty ................      1998            $     140,608  $      52,000              --
  Vice President,                       1997            $     120,900  $     180,000            5,000
    Operations                          1996            $      87,500  $      65,000              --

William J. Milam .................      1998            $     113,000  $      22,000              --
  Vice President,                       1997            $     112,067  $     487,571            1,500
    Sales and Product Management .      1996            $     106,562  $      25,000              --
</TABLE>


OPTION GRANTS IN LAST FISCAL YEAR

    There were no grants of options  made to the Named  Officers  during  fiscal
year 1998.

    The following table provides information on the valuation of options held by
the Named  Officers.  Twenty-five  percent of the  options  granted to the Named
Officers in 1997 will vest and become  exercisable  on each of the first through
the  fourth  anniversaries  of the date of grant. Twenty  five  percent  of the
options held by the Named  Officers  were  eligible for exercise  during  fiscal
1998.

<TABLE>
<CAPTION>

                                        Number of Securities                    Value of Unexercised
                                      Underlying Unexercised                   In-the-Money Options
                                     ptions at Fiscal Year End                 At Fiscal Year End (1)
                                     Exercisable/Unexercisable               Exercisable/Unexercisable
                                     -------------------------               -------------------------
<S>                                             <C>                                     <C>

Russell W. Kupiec ...................         3,750/11,250                         $33,750/$101,250
W. Russell Asher ....................         2,500/7,500                          $22,500/$67,500
Lynn F. Brown .......................         1,250/3,750                          $11,250/$33,750
Leo A. McCafferty ...................         1,250/3,750                          $11,250/$33,750
William J. Milam ....................           375/1,125                           $3,375/$10,125
</TABLE>

(1) The value of the in-the-money options is based upon a market value of $17.00
per share at December 31, 1998. In November  1998,  180,362.5  shares of Class A
common stock were repurchased at $17.00 per share.

PENSION BENEFITS
----------------

    The  following  table  provides the  estimated  annual  retirement  benefits
payable under the Company's pension plan to participating  employees,  including
the Named Officers,  in the  remuneration  and years of service  classifications
indicated.  The  Company is in the  process  of  terminating  its  tax-qualified
benefit  pension plan, which covered most officers and salaried  employees on a
non-contributory basis. Benefits under the plan were curtailed


                                       43

<PAGE>

effective  September  30,  1998.  The  Company  plans  to  implement  a  defined
contribution plan for salaried employees with benefits retroactive to January 1,
1999.

<TABLE>
<CAPTION>

                                      Pension Plan Table

                                                    Years of Service

   Remuneration            10           15            20            25           30          35
------------------  ------------ ------------ -------------- ------------- ------------- ------------
<S>                     <C>          <C>           <C>             <C>          <C>          <C>
$ 100,000 ..........  $ 15,360     $ 23,040      $ 30,720      $ 38,400      $ 46,080      $ 53,760

$ 125,000 ..........  $ 19,200     $ 28,800      $ 38,400      $ 48,000      $ 57,600      $ 67,200

$ 150,000 ..........  $ 23,040     $ 34,560      $ 46,080      $ 57,600      $ 69,120      $ 80,640

$ 175,000 ..........  $ 24,576     $ 36,864      $ 49,152      $ 61,440      $ 73,728      $ 86,016

$ 200,000 ..........  $ 24,576     $ 36,864      $ 49,152      $ 61,440      $ 73,278      $ 86,016
</TABLE>


    Compensation  used in  calculating  the  annual  normal  retirement  benefit
amounts  reflected in the Pension Plan Table is the current  annual base salary.
The normal retirement age for pension plan purposes is age 65.

    The respective years of service credited for pension purposes as of December
31,  1997,  and the  estimated  years of service at age 65 for each of the Named
Officers  are as  follows,  assuming  the  Company  was  not in the  process  of
terminating  the  tax-qualified   defined  benefit  pension  plan  for  salaried
employees:

<TABLE>
<CAPTION>

                                                     Years of Service        Years of Service
                                                   at December 31, 1998    at Normal Retirement
                                                   --------------------    --------------------
<S>                                                       <C>                       <C>
Russell W. Kupiec ............................            7.76                   21.31

W. Russell Asher .............................            5.00                   13.60

Lynn F. Brown ................................            3.00                   14.23

Leo A. McCafferty ............................            3.21                    6.56

William J. Milam .............................           27.53                   33.84
</TABLE>


    The Pension Plan Table reflects the annual benefit payable commencing on the
participant's  65th  birthday  in the form of an annuity  for the  participant's
life. The benefits  reflected in the Pension Plan Table will be offset by 0.486%
of the participant's  Covered  Compensation,  as defined by the Internal Revenue
Service, and any prior plan benefits.

EMPLOYMENT AGREEMENTS
---------------------

    Two of the Named  Officers,  Messrs.  Russell W. Kupiec and W. Russell Asher
have  employment   agreements  with  the  Company.   Among  other  things,  each
arrangement  provides for a term of employment in a specific executive position,
a specified  annual base salary and  participation  in any additional  incentive
compensation  or bonus programs of the Company.  The employment  agreements with
Messrs.  Kupiec  and  Asher  continue  until  December  31,  1999  and  annually
thereafter  unless  otherwise  terminated.  If either Mr. Kupiec or Mr. Asher is
terminated  other than for cause or  disability,  the  Company is  obligated  to
continue  paying the base salary  amount  through the end of the contract  term,
subject  to an offset  for  earnings  from other  full-time  employment,  and to
maintain  benefits for such  executive  through the end of the contract term. If
certain Change in Ownership (as defined in such agreements)  events occur during
the term of these agreements,  the term of employment is automatically  extended
for  three  years  from the date the  executive  is  notified  of the  Change in
Ownership.  In the event of a Change in  Ownership,  the  executive is given the
right to  terminate  his  agreement  if he is  dissatisfied  with his  salary or
performance  review  to be given  approximately  18 months  after the  Change in
Ownership.  If,  after a Change  in  Ownership,  the  executive  terminates  his
employment due to such dissatisfaction or is discharged


                                       44

<PAGE>

other than for cause or disability,  the Company's obligation to continue paying
his base  salary  through  the end of the  contract  term is not  subject to any
offset and the Company is  obligated  to maintain  benefits  for such  executive
through the end of the contract term.

STOCK OPTION PLAN
-----------------

    In June 1997,  the  Company  adopted  and the  stockholders  of the  Company
subsequently  approved the 1997 Stock  Incentive  Plan (the "Plan")  pursuant to
which officers, directors and other key employees of the Company will be granted
stock  options  to  purchase  shares  of  Class  A  common  stock.  The  Plan is
administered by either the Stock Option Committee (the "Committee") of the Board
of Directors or the Board of Directors (the "Board"). The Committee or the Board
will have the discretion to determine the exercise price, the duration and other
terms and  conditions of such options.  The Committee or the Board will have the
authority  to  interpret  and  construe  the  Plan,  and any  interpretation  or
construction  of the  Plan by the  Committee  or the  Board  will be  final  and
conclusive. Twenty five percent of such outstanding options will vest and become
exercisable on each of the first through fourth anniversaries of the date of the
grant. In November 1998, the Company adopted and the stockholders of the Company
subsequently  approved an amendment  to the Plan,  whereby the number of options
available for grant was increased from 65,000 options to 75,650 options.  During
the year ended  December 31, 1998,  13,000 stock  options were granted and 4,250
stock options were canceled, both pursuant to the Plan. As of December 31, 1998,
there were 60,450 options outstanding, none of which had been exercised.

ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

    Wells is authorized to issue 1,100,000.0 shares of Class A common stock, par
value $0.01 per share (the "Common Stock").  As of December 31, 1998,  728,642.5
shares of common stock were issued and outstanding.

    The following table sets forth certain  information as of December 31, 1998,
with respect to the shares of the Common Stock of the Company beneficially owned
by each person or group that is known by the Company to be a beneficial owner of
more than 5% of the outstanding  Common Stock and by all directors and executive
officers of the Company.

<TABLE>
<CAPTION>

                                                            Beneficial Ownership
                Security Ownership                             Number of Shares       Percentage of Total
                ------------------                          --------------------      -------------------
<S>                                                                  <C>                     <C> 
Wells Holdings Limited Partnership(a)
 600 Madison Avenue
 New York, New York 10022.........................               560,000.0                  76.86%
Russell W. Kupiec(b)..............................                38,560                     5.26%
W. Russell Asher(c)...............................                43,625                     5.97%
Lynn F. Brown(d)..................................                 4,187.5                     *
Leo A. McCafferty(e)..............................                 1,250                       *
William J. Milam(f)...............................                12,975                     1.78%
David J. Raymonda(g)..............................                29,750                     4.08%
Todd Goodwin(a)...................................               560,000                    76.86%
Edward R. Heiser(h)...............................                16,000                     2.20%
Lewis van Amerongen(a)............................               560,000                    76.86%
All executive officers and
 directors as a group (11 persons)................               706,347.5                  95.69%
-------------------

</TABLE>

*    Denotes less than 1%.
(a)  Wells  Holdings  Limited   Partnership  ("Wells  Holdings")  is  a  limited
     partnership of which GGvA is the general  partner.  As such, GGvA exercises
     sole voting and investment  power with respect to the shares owned by Wells
     Holdings. Messrs. Goodwin and van Amerongen,  directors of the Company, are
     partners in GGvA,  with the shared power to direct the actions of GGvA, and
     may be deemed to  beneficially  own the shares  owned by Wells  Holdings by
     virtue of their status and rights as such partners. The address for Messrs.
     Goodwin and van  Amerongen  is c/o Wells  Holdings.  Wells  Holdings is the
     successor  limited  partnership to The Fulcrum III Limited  Partnership and
     The Second Fulcrum III Limited Partnership  (collectively,  "Fulcrum III").
     Fulcrum III was a limited  partnership  of which GGvA was the sole  general
     partner.  GGvA has  informed  the Company  that all of the shares  owned by
     Fulcrum III have been transferred to Wells Holdings.
(b)  The address for Mr. Kupiec is c/o the Company. The number of shares held by
     Mr. Kupiec  includes  3,750 shares  issuable  upon exercise of  outstanding
     options.
(c)  The address for Mr. Asher is c/o the Company.  The number of shares held by
     Mr. Asher  includes  2,500 shares  issuable  upon  exercise of  outstanding
     options.
(d)  The address for Mr. Brown is c/o the Company.  The number of shares held by
     Mr. Brown  includes  1,250 shares  issuable  upon  exercise of  outstanding
     options.
(e)  The address for Mr.  McCafferty  is c/o the  Company.  The number of shares
     held by Mr.  McCafferty  includes  1,250 shares  issuable  upon exercise of
     outstanding options. In March 1999, Mr. McCafferty exercised these options.
(f)  The address for Mr. Milam is c/o the Company.  The number of shares held by
     Mr.  Milan  includes  375 shares  issuable  upon  exercise  of  outstanding
     options.
(g)  The address for Mr. Raymonda is c/o the Company.  The number of shares held
     by Mr.  Raymonda  includes 375 shares issuable upon exercise of outstanding
     options.
(h)  The  address for Mr.  Heiser is 33 Gray Heron  Retreat,  Savannah,  Georgia
     31411.


                                       45

<PAGE>


AGREEMENTS WITH STOCKHOLDERS
----------------------------

    In  connection  with the  acquisition  of the  Company in 1987,  the Company
entered into a Stock  Purchase  Agreement  with Fulcrum III.  Subject to certain
restrictions,  Fulcrum III had certain demand and "piggyback" rights to have its
shares of Class A common stock  registered under the Securities Act. The Company
had agreed to pay the costs and expenses associated with two such registrations,
except for  discounts  and  commissions.  As  successor  to Fulcrum  III,  Wells
Holdings has succeeded to these rights.

    In 1988,  the Company  entered into a Stock  Purchase  Agreement (the "Stock
Purchase   Agreement")   with  CVG  Industria   Venezolana  de  Aluminio,   C.A.
("Venalum"),  whereby Venalum purchased 180,362.5 shares of Class A common stock
of the  Company.  The Stock  Purchase  Agreement  provided  that,  upon  certain
issuances  of equity  securities,  Venalum  would have  rights to  maintain  its
percentage  of equity  interest in the  Company's  capital stock by purchasing a
portion of such equity securities.  Subject to certain  conditions,  Venalum had
certain "piggyback" rights to have its shares of Class A common stock registered
under the  Securities  Act.  The  Company  agreed to pay the costs and  expenses
associated   with  two  such   registrations,   except  for  any  discounts  and
commissions.

    In  connection  with  Venalum's  acquisition  of Class A Common  Stock,  the
Company entered into a Shareholders'  Agreement (the  "Shareholders  Agreement")
with  Fulcrum III and  Venalum.  The  Shareholders  Agreement  provides  that if
Fulcrum  III  transfers  its  shares  of  Class A  Common  Stock  under  certain
circumstances,  Venalum may participate in such transfer. The transfer of shares
from  Fulcrum  III  to  Wells  Holdings  did  not  trigger  Venalum's  right  to
participate in such  transaction.  Pursuant to the Shareholders  Agreement,  the
Company  agreed to nominate for  election to the Board of Directors  two persons
designated  by Venalum.  Fulcrum III agreed to vote its shares of Class A Common
Stock so that the two  persons  designated  by  Venalum  shall be elected to the
Board of  Directors,  and  Venalum  agreed to vote its  shares of Class A Common
Stock in favor of the  Company's  slate of nominees for election to the Board of
Directors.

    In October 1998, the Company  entered into a Stock  Repurchase  Agreement to
repurchase  all of the shares of Class A common  stock  owned by Venalum  for an
aggregate  purchase price of $3.1 million.  On November 13, 1998, the repurchase
was  completed,  and as of that date,  Venalum no longer owned any shares of the
common stock of the Company. Accordingly, Venalum no longer has rights under the
Stock Purchase Agreement and the Shareholders Agreement.

ITEM 13.   CERTAIN RELATIONSHIPS AND CERTAIN TRANSACTIONS

    Prior  to  1998,  the  Company  was  party  to  an  agreement  (the  "Supply
Agreement") with Venalum pursuant to which Venalum supplied primary aluminum and
aluminum billet to the Company. This contract accounted for approximately 60-65%
of the aluminum  purchased by the Company  from outside  suppliers.  Prices were
based on the MWTP from the prior month.  The Company  believed that the terms of
the Venalum Agreement were no less favorable to the Company than would have been
obtained in an arms' length transaction.

    The  Supply  Agreement  commenced  in  1988  and  was  renewed  on  numerous
occasions.  During 1997,  negotiations to extend the Venalum  Agreement or enter
into a new supply agreement were not successful. The Supply Agreement expired on
December 31, 1997,  although the last scheduled delivery of primary aluminum and
aluminum  billet  under the Supply  Agreement  was  received  in  January  1998.
Pursuant to the Venalum  Agreement,  the Company  purchased $5.4 million,  $69.6
million and $69.3 million of primary  aluminum and aluminum  billet from Venalum
in 1998, 1997 and 1996, respectively.


                                       46

<PAGE>

    In 1987, the Company entered into an agreement with GGvA,  pursuant to which
GGvA provides  financial  advisory and other  services to the Company.  For such
services,  GGvA was paid an annual  retainer of  $250,000 in 1996 and  1997, and
$350,000  in  1998,  plus  reimbursement  for  its  out-of-pocket  expenses.  In
addition,  GGvA  received a fee of $500,000  for  financial  advisory  and other
services in connection with the Recapitalization in 1997.


                                       47

<PAGE>

                                     PART IV

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

  (a) Financial Statements

      1.   Financial Statements

           The  following  financial  statements  of the Company are included in
           Item 8 of this report:

             -  Report of Independent Auditors
             -  Balance Sheets as of December 31, 1998 and 1997
             -  Statements of Operations  for the years ended December 31, 1998,
                1997 and 1996
             -  Statements of Stockholders'  Equity for the years ended December
                31, 1998, 1997 and 1996
             -  Statements of Cash Flows for the years ended  December 31, 1998,
                1997 and 1996
             -  Notes to the Financial Statements

      2.   Financial Statement Schedules

           The following financial statement schedule of the Company is included
           in Item 8 of this report:

             -  Valuation and Qualifying Accounts and Reserves

           Other  schedules  for  which  provision  is  made  in the  applicable
           accounting  regulations of the SEC are not required under the related
           instruction or are not applicable and, therefore, have been omitted.

  (b) Exhibits

      27.1  Financial Data Schedule.

  (c) Reports on 8-K

      The  Company  did not file any  reports  on Form 8-K during the year ended
      December 31, 1998.


                                       48

<PAGE>

                                   SIGNATURES


    Pursuant to the  requirements  of the  Securities  Exchange Act of 1934, the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned  thereunto  duly  authorized,  in the  City of  Baltimore,  State of
Maryland, on March 30, 1999.

                                              Wells Aluminum Corporation


                                              By: /s/ Russell W. Kupiec
                                                  ---------------------
                                                  Russell W. Kupiec
                                                  President and Chief Executive
                                                    Officer

    Pursuant  to  the   requirements   of  the  Securities  Act  of  1993,  this
registration  statement  has  been  signed  by  the  following  persons  in  the
capacities and on the dates indicated.

<TABLE>
<CAPTION>

          Signature                                   Title                                       Date
--------------------------------         -------------------------------------------    ---------------------
<S>                                                      <C>                                       <C>
 /s/ Russell W. Kupiec                   Principal Executive Officer and Director            March 30, 1999
-------------------------------
Russell W. Kupiec

 /s/ W. Russell Asher                    Chief Financial Officer and Director                March 30, 1999
-------------------------------
W. Russell Asher

 /s/ David J. Raymonda                   Principal Accounting Officer                        March 30, 1999
-------------------------------
David J. Raymonda

 /s/ Lynn F. Brown                       Director                                            March 30, 1999
-------------------------------
Lynn F. Brown

/s/ Leo A. McCafferty                    Director                                            March 30, 1999
-------------------------------
Leo A. McCafferty

/s/ Elizabeth Varley Camp                Director                                            March 30, 1999
-------------------------------
Elizabeth Varley Camp

/s/ Edward R. Heiser                     Director                                            March 30, 1999
-------------------------------
Edward R. Heiser

                                         Director                                            March __, 1999
-------------------------------
Todd Goodwin

                                         Director                                            March __, 1999
-------------------------------
Lewis W. van Amerongen
</TABLE>


                                       49