<PAGE>

<PAGE>
                                 UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

[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       Commission File Number 0-19737

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

For the transition period from ___________ to __________.

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

                               NOEL GROUP, INC.
             (Exact name of registrant as specified in its charter)


<TABLE>
<S>                                                                      <C>
                      DELAWARE                                           13-2649262
(State or other jurisdiction of incorporation or organization)          (I.R.S. Employer Identification No.)
</TABLE>


                  667 Madison Avenue, New York, New York 10021
          (Address of principal executive offices, including zip code)
                                 (212) 371-1400
              (Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:             None

<TABLE>
<S>                                      <C>
Title of each class                      Name or exchange on which registered
      None                                          Not Applicable
</TABLE>

Securities registered pursuant to Section 12(g) of the Act:
                     Common Stock, $.10 par value per share
                                (Title of Class

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

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

The aggregate market value of voting stock held by non-affiliates of the
registrant on March 22, 1999, was approximately $15,161,138. On such date, the
last sale price of registrant's common stock was $1.25 per share. Solely for the
purposes of this calculation, shares beneficially owned by directors and
officers of the registrant and beneficial owners of in excess of 10% of the
registrant's common stock have been excluded, except shares with respect to
which such persons or entities disclaim beneficial ownership. Such exclusion
should not be deemed a determination or admission by registrant that such
individuals or entities are, in fact, affiliates of registrant.

Indicate number of shares outstanding of each of the registrant's classes of
common stock, as of March 22, 1999.

<TABLE>
<CAPTION>
           Class                              Outstanding on March 22, 1999
           -----                              -----------------------------
<S>                                           <C>       
Common Stock, par value $.10 per share        20,567,757
</TABLE>

                      DOCUMENTS INCORPORATED BY REFERENCE:

<TABLE>
<CAPTION>
                                                                        Part of the Form 10-K in to which 
            Document                                                    the Document is Incorporated    
            --------                                                    ----------------------------------
<S>                                                                     <C> 
Definitive proxy Statement to Shareholder for 1999 Annual Meeting       Part III, Items 10, 11, 12 and 13
</TABLE>




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<PAGE>




This Annual Report on Form 10-K contains, in addition to historical information,
certain forward-looking statements including those regarding valuation of Noel's
assets and liabilities, the amounts ultimately to be distributed to shareholders
and Noel's plans for the liquidation or disposition of assets and future plans
of entities in which Noel holds interests. Such statements involve certain risks
and uncertainties. Should one or more of these risks or uncertainties
materialize, actual outcomes may vary materially from those indicated.



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                                     PART I

ITEM 1.  BUSINESS

              (a) General development of business.

        On May 21, 1996, the Board of Directors of Noel Group, Inc. ("Noel" or
the "Company") adopted a Plan of Complete Liquidation and Dissolution (the
"Plan") pursuant to which the assets of Noel will either be distributed in kind
to Noel's shareholders or sold; the proceeds of such sales, after paying or
providing for all claims, liabilities, expenses and other obligations of Noel,
will be distributed to Noel's shareholders together with other available cash;
and thereafter Noel will be dissolved. The Plan was approved by the shareholders
at a Special Meeting of Shareholders held on March 19, 1997.

        Prior to the approval of the Plan, Noel conducted its principal 
operations through small and medium-sized operating companies in which Noel held
controlling or other significant equity interests. As a consequence of the
approval of the Plan, Noel's activities are limited to winding up its affairs,
taking such action as may be necessary to preserve the value of its assets and
distributing its assets in accordance with the Plan.

        On March 27, 1998, Noel distributed pro rata to its shareholders
approximately $14,400,000 in cash at the rate of $0.70 for each share of Noel's
common stock ("Common Stock") issued and outstanding at the close of business on
the March 20, 1998 record date.

        On April 30, 1998, Noel distributed pro rata to its shareholders 
approximately $9,300,000 in cash at the rate of $0.45 for each share of Common 
Stock issued and outstanding at the close of business on the April 22, 1998 
record date.

        On June 8, 1998 pursuant to a Stock Purchase Agreement of the same date,
Noel sold to Brynwood Partners III L.P. ("Brynwood") 3,569,755 shares of common
stock of Lincoln Snacks Company ("Lincoln") at a price of $2.00 per share or
$7,139,510 in the aggregate. Under the Agreement, Noel received $4,500,000 in
cash and a 6% interest bearing note in the principal amount of $2,639,510. The
payment of the note and accrued interest and proceeds of $400,000 for the sale
of the remaining 200,000 Lincoln shares owned by Noel was received in July 1998.

        In June 1998, the stock of Ferrovia Novoeste S.A. ("Novoeste") held by
Noel, and each of the other Novoeste stockholders, was acquired by Ferronorte
Participacoes S.A. ("Ferropar") in exchange for stock in Ferropar. Concurrently
with such exchange, Ferropar acquired all of the outstanding stock of Ferronorte
S.A. Ferrovia Norte Brasil ("Ferronorte") in exchange for stock in Ferropar.
After such exchanges, Noel owned approximately 2.8% of the outstanding stock of
Ferropar. Ferropar is the holding company for Novoeste and Ferronorte. Novoeste
operates the Brazilian western railroad network (SR-10), and Ferronorte operates
the Brazilian railroad network between Mato Grosso and several destinations, and
a port terminal in Sao Paulo, Brazil.

        On August 14, 1998, Noel distributed pro rata to its shareholders
approximately $18,922,000 in cash at the rate of $0.92 for each share of Common
Stock issued and outstanding at the close of business on the July 31, 1998
record date.

        On March 17, 1999, Noel announced the distribution of trust units
representing ownership of Noel's entire holding of 2,026,104 shares of Career
Blazers Inc. ("Career Blazers") common stock to Noel shareholders (the
"Distribution"). The Distribution will be made in accordance with the Plan. The
record date for the Distribution was set at March 29, 1999 and the distribution
date is expected to be April 12, 1999.

PRINCIPAL REMAINING ASSETS OF THE COMPANY

As of March 22, 1999, Noel's principal remaining assets included:

*   Career Blazers Inc.:  2,026,104 shares of common stock, representing
    approximately 11.6% of the outstanding shares of Career Blazers Inc.
    common stock;

*   Carlyle Industries, Inc.: 9,920,908 of Series B preferred stock,
    representing approximately 93% of the outstanding shares of Carlyle
    Industries, Inc. Series B preferred stock; and 

                                       1



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*   Ferronorte Participacoes S.A.: 10,624,886 shares of stock, representing
    approximately 2.8% of the outstanding shares of Ferronorte Participacoes
    S.A. stock.

FACTORS TO BE CONSIDERED WITH RESPECT TO THE DISTRIBUTION OR SALE OF THE
COMPANY'S REMAINING ASSETS

     Set forth below is a brief description of the status of Noel's current
plans to sell or distribute its principal remaining holdings. Except as set
forth below, the Board of Directors and management have not yet determined
whether or when to sell or distribute any of its remaining holdings. The
determination of which holdings will be sold and which will be distributed
in-kind to the Company's shareholders will be based on the judgment of the Board
of Directors and management as to whether the sale or distribution of a
particular holding will result in realization of the highest possible value to
Noel's shareholders and will be based on several factors, including, and not
necessarily in order of priority (i) whether the security in question is
publicly traded; (ii) the anticipated effect on the market price of a
distribution as opposed to a sale; (iii) whether the security in question could
be sold with little disruption to the public market; (iv) whether an orderly
public market exists and would continue to exist after distribution; (v) whether
a distribution or a sale would require registration under the Securities Act of
1933, as amended (the "Securities Act") and the Securities Exchange Act of 1934,
as amended (the "Exchange Act"); (vi) the need to raise cash through sales of
securities to pay corporate taxes payable upon the distribution and sale of the
Company's assets and the amount of additional cash required to be raised; (vii)
the availability of one or more purchasers of the security in a private sale;
(viii) the Board's opinion as to the future prospects of the entity; (ix) the
prices obtainable for such asset in public or privately negotiated transactions;
and (x) with respect to assets to be sold in private transactions, the
availability of purchasers for such assets. Currently, the Company's publicly
traded holdings are thinly traded. Accordingly, a public sale or distribution
thereof could result in a disruption in the public market. As noted above,
pursuant to the Distribution, Noel has announced a distribution to its
shareholders of trust units representing its holdings of Career Blazers Inc.
common stock.

     With respect to securities held by the Company which are expected to be
distributed to shareholders (other than in trust), applicable laws and
regulations of the Securities Exchange Commission (the "Commission") will be
complied with so that all shareholders (with the possible exception of
affiliates of the Company or of the issuer of the securities which are
distributed) will receive securities which will thereafter be freely
transferable by them under applicable Federal securities laws. The securities to
be distributed to the shareholders will have been registered under the Exchange
Act and, if required by applicable law and regulation, the Securities Act.
Accordingly, the issuer of such securities will be subject to substantially the
same reporting and proxy rules as currently apply to the Company. Securities
which under current law and regulation may not be distributed without such
registration will not be distributed unless and until the required registration
has been effectuated. In addition, assuming satisfaction of required eligibility
standards, the Company may seek to cause any of its holdings of securities not
currently listed on a securities exchange or authorized for quotation through
The Nasdaq Stock Market ("Nasdaq") to be so authorized for quotation or listed,
although there can be no assurance that the Company will do so. If any
distributed securities are not authorized for quotation through Nasdaq or listed
on an exchange, the effect may be to render such securities illiquid and/or to
diminish the price realizable upon sale. The sale or distribution of the
Company's holdings and the anticipation of such sale or distribution may, at
least temporarily, reduce the market price of such securities and therefore the
values realized by the shareholders.

     The sale by the Company or the distribution by the Company to its
shareholders of an appreciated asset results in the recognition of taxable gain
by the Company to the extent the fair market value of such asset exceeds the
Company's tax basis in such asset. The proceeds of any such sales are generally
made available to pay (i) the taxes, if any, payable as a result of such sale
and (ii) other expenses incurred in connection with the consummation of the
Plan. The remaining proceeds after payment of such taxes and expenses are
generally made available for cash distributions to the shareholders. The Company
currently believes that it has sufficient cash to pay its current tax
obligations and expenses, although there can be no assurance that this will be
the case. In the event that available cash is insufficient to pay such taxes and
expenses the Company may be required to sell additional assets. The
determination by the Board of Directors as to which additional assets would be
sold to raise the cash to pay any additional taxes and expenses will depend on a
variety of factors, including, those set forth in the preceding paragraph.


                                       2



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CARLYLE INDUSTRIES, INC. 

     Noel currently holds 9,920,908 shares of Series B preferred stock of
Carlyle, representing approximately 93% of the outstanding shares of such Series
B preferred stock (the "Preferred Stock"), or 55% of the aggregate voting power,
with an estimated value as of December 31, 1998 of approximately $10.8 million.
See Footnote 2 of Notes to Financial Statements on page F-11. Under the terms of
Carlyle's charter, dividends are payable upon the Preferred Stock when, as and
if declared by the Carlyle Board of Directors out of legally available funds. In
addition, the Preferred Stock is required to be redeemed by Carlyle in annual
installments beginning March 15, 1995 through March 15, 1999, subject, among
other things, to the extent of legally available funds as determined by the
Board of Directors and the approval of Carlyle's senior lenders, if any. Prior
to March 27, 1997, Carlyle did not make any payments on account of the Preferred
Stock (either dividend or redemption) as Carlyle's lenders declined to approve
such payments. However, as of that date, Carlyle discharged its credit facility.
Consequently, Carlyle is now in default of its obligations to redeem the
Preferred Stock to the extent of its legally available funds. Accrued but unpaid
dividends are added to the redemption value of the Preferred Stock and the total
continues to accrue interest at a compound rate of 6% per annum.


     Carlyle has informed Noel that it intends to fulfill its obligation to the
holders of the Preferred Stock as required by the Company's charter to the
extent Carlyle has cash resources in excess of those required to operate its
business. On June 23, 1998, Carlyle paid $12.5 million to holders of its
Preferred Stock of record as of June 22, 1998. $10.1 million of this amount
represented the original redemption amount and $2.4 million reflected the
increase in redemption amount resulting from accumulated and unpaid dividends.
As of December 31, 1998, the Preferred Stock payment arrearages to Noel
aggregated $8.8 million, including accrued but unpaid preferred dividends of
$2.7 million. Carlyle is currently engaged in discussions with Noel with a view
to satisfying the balance of its obligations to holders of Preferred Stock in
accordance with the terms of Carlyle's charter and consistent with Carlyle's
resources. Discussions include the timing and amount of future payments as well
as the possibility of modifying the terms and condition of the Preferred Stock.
Carlyle has also informed Noel that, as Carlyle believes that it does not
currently have the necessary resources, its ability to make further payments on
account of the Preferred Stock will depend on Carlyle's future cash flow, the
timing of the settlement of the liabilities recorded in its financial
statements, the outcome of the negotiations with Noel described above, the
ability of Carlyle to obtain additional financing and compliance with Carlyle's
new credit facility. In addition, as Carlyle has agreed to notify the Pension
Benefit Guaranty Corporation ("PBGC") prior to making any redemption payments,
Carlyle's decision to make any such payments will depend on the successful
resolution of any issues which may arise with the PBGC relating to Carlyle's
unfunded liability to its defined benefit plan. Carlyle is also exploring
strategic alternatives to redemption of the Preferred Stock.


FERRONORTE PARTICIPACOES, S.A. 

     Noel's wholly-owned subsidiary, Noel Brazil, Inc., holds 10,624,886 shares
of stock in Ferronorte Participacoes, S.A. ("Ferropar") representing 2.8% of the
total outstanding shares of Ferropar. Previously, Noel Brazil, Inc. held
1,200,000 shares of common stock and 5,657,142 shares of preferred stock of
Ferrovia Novoeste, S.A. ("Novoeste"). In June 1998, the stock of Novoeste held
by Noel and the other Novoeste stockholders, was acquired by Ferropar in
exchange for stock in Ferropar. Concurrently with such exchange, Ferropar
acquired all of the outstanding stock of Ferronorte S.A. Ferrovia Norte Brasil
("Ferronorte") in exchange for stock in Ferropar. After such exchanges, Noel
owned the approximately 2.8% of the outstanding stock of Ferropar referenced
above. The estimated value of Noel's interest in Ferropar as of December 31,
1998 was $6.3 million. See Footnote 2 of Notes to Financial Statements on page
F-11. The transfer of Noel's interest in Ferropar is subject to certain
restrictions. Noel does not anticipate a public distribution to its shareholders
of its interest in Ferropar and expects to dispose of its interest therein
through private sales as permitted by Brazilian law and the terms of its
investment therein. In February 1999, Noel engaged a Brazilian investment bank
to sell its interest in Ferropar.


CAREER BLAZERS INC.

     Noel currently holds 2,026,104 shares of common stock of Career Blazers
Inc. ("Career Blazers"), representing 11.6% of the outstanding shares of such
common stock, with an estimated value as of December 31, 1998 of approximately
$10.5 million. See Footnote 2 of Notes to Financial Statements on page F-10. On
March 17, 1999, Noel announced the distribution of trust units representing
ownership of Noel's entire holding of Career Blazers common stock to Noel
shareholders (the "Distribution"). The Distribution will be made in accordance
with Noel's Plan of Complete Liquidation and Dissolution. The record date for
the Distribution was set at March 29, 1999 and the distribution date is expected
to be April 12, 1999.


                                       3



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PRINCIPAL PROVISIONS OF THE PLAN

PURSUANT TO THE PLAN:

     (a) The Company is in the process of distributing pro rata to its
shareholders in-kind, selling, or otherwise disposing of all its assets. The
liquidation is expected to be concluded prior to March 19, 2000 by a final
liquidating distribution either directly to the shareholders or to one or more
liquidating trusts. Any sales of the Company's assets will be made, in private
or public transactions, on such terms as are approved by the Board of Directors.
It is not anticipated that any further shareholder votes will be solicited with
respect to the approval of the specific terms of any sale of assets approved by
the Board of Directors as the Company has been advised by its counsel that such
further votes are not required by the Delaware General Corporate Law ("DGCL").
See "Sales of the Company's Remaining Assets." Reference is made to "Factors to
be Considered with Respect to Distribution or Sale of the Company's Remaining
Assets" for a discussion of the factors to be considered by the Board in making
its determination of which assets will be sold and which will be distributed
in-kind.

     (b) Subject to the payment or the provision for payment of the Company's
obligations, the cash proceeds of any asset sales together with other available
cash will be distributed from time to time pro rata to the holders of the Common
Stock on record dates selected by the Board of Directors with respect to each
such distribution. Only shareholders of record on the record date set for a
particular distribution will receive distributions with respect to such record
date. The Company may establish a reasonable reserve (a "Contingency Reserve")
in an amount determined by the Board of Directors to be sufficient to satisfy
the liabilities, expenses and obligations of the Company not otherwise paid,
provided for or discharged. The net balance, if any, of any such Contingency
Reserve remaining after payment, provision or discharge of all such liabilities,
expenses and obligations will also be distributed to the Company's shareholders
pro rata. The Company's accrued obligations at December 31, 1998 were
approximately $2.6 million. The Company currently has no plans to repurchase
shares of Common Stock from its shareholders. However, if the Company were to
repurchase its shares of Common Stock from its shareholders, such repurchases
would be open market purchases and would decrease amounts distributable to other
shareholders if Noel were to pay amounts in excess of the per share values
distributable in respect of the shares purchased and would increase amounts
distributable to other shareholders if Noel were to pay amounts less than the
per share values distributable in respect of such shares. See "Liquidating
Distributions; Nature; Amount; Timing" and "Contingent Liabilities; Contingency
Reserve; Liquidating Trust" below.

     (c) Any further distributions in-kind of the Company's holdings of
securities will be made pro rata to the holders of Common Stock on record dates
selected by the Board of Directors with respect to each such distribution. Only
shareholders of record on the record date set for a particular distribution will
receive distributions with respect to such record date. A distribution of the
Company's holdings in a security may also be effected by the distribution to
Noel shareholders of interests in a trust holding such security. If securities
held by the Company are to be distributed directly to shareholders (other than
in trust), applicable rules and regulations of the Commission will be complied
with so that all shareholders (with the possible exception of affiliates of the
Company or of the issuer of the securities which are distributed) will receive
securities which will thereafter be freely transferable by them under applicable
Federal securities laws. The securities to be distributed to the shareholders
will have been registered under the Exchange Act and, if required by applicable
law and regulation, the Securities Act. Accordingly, the issuer of such
securities will be subject to substantially the same reporting and proxy rules
as currently apply to the Company. As described under "Principal Remaining
Assets of the Company" only certain of Noel's holdings constitute entities which
are currently subject to the reporting obligations of the Exchange Act.
Securities which under current law and regulation may not be distributed without
such registration will not be distributed unless and until the required
registration has been effectuated. In addition, assuming satisfaction of
required eligibility standards, the Company may seek to cause any of its
holdings of securities not currently listed on an securities exchange or
authorized for quotation on Nasdaq, to be so authorized for quotation or listed,
although there can be no assurance that the Company will do so. If any
distributed securities are not authorized for quotation through Nasdaq or listed
on an exchange, the effect may be to render such securities illiquid and/or to
diminish the price realizable upon sale. In any event, the sale or distribution
of the Company's holdings and the anticipation of such sale or distribution
resulting from the approval of the Plan may reduce, at least temporarily, the
market price of such securities and therefore the values realized by the
shareholders. See "Factors to be Considered with Respect to Distribution or Sale
of the Company's Remaining Assets."


                                       4


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     (d) If deemed necessary by the Board of Directors for any reason, the
Company may, from time to time, transfer any of its unsold assets to one or more
trusts established for the benefit of the then shareholders which property would
thereafter be sold or distributed on terms approved by its trustees. If all of
the Company's assets (other than the Contingency Reserve) are not sold or
distributed prior to March 19, 2000, it is anticipated that the Company would
transfer in final distribution such remaining assets to a trust. The Board of
Directors may also elect in its discretion to transfer the Contingency Reserve,
if any, to such a trust. Any of such trusts are referred to herein as
"liquidating trusts." Notwithstanding the foregoing, to the extent that a
distribution or transfer of any asset cannot be effected without the consent of
a governmental authority, no such distribution or transfer shall be effected
without such consent. In the event of a transfer of assets to a liquidating
trust, the Company would distribute, pro rata to the holders of its Common
Stock, beneficial interests in any such liquidating trust or trusts. It is
anticipated that the interests in any such trusts will not be transferable;
hence, although the recipients of the interests would be treated for tax
purposes as having received their pro rata share of property transferred to the
liquidating trust or trusts and will thereafter take into account for tax
purposes their allocable portion of any income, gain or loss realized by such
liquidating trust or trusts, the recipients of the interests will not realize
the value thereof unless and until such liquidating trust or trusts distributes
cash or other assets to them. The Plan authorizes the Board of Directors to
appoint one or more individuals or entities to act as trustee or trustees of the
liquidating trust or trusts and to cause the Company to enter into a liquidating
trust agreement or agreements with such trustee or trustees on such terms and
conditions as may be approved by the Board of Directors. Approval of the Plan by
the shareholders constituted the approval by such shareholders of any such
appointment and any liquidating trust agreement or agreements. For further
information relating to liquidating trusts, the appointment of trustees and the
liquidating trust agreements, reference is made to "Contingent Liabilities;
Contingent Reserve; Liquidating Trusts."

     (e) The Company will close its stock transfer books and discontinue
recording transfers of shares of Common Stock on the earlier to occur of (i) the
close of business on the record date fixed by the Board of Directors for the
final liquidating distribution, or (ii) the date on which the dissolution
becomes effective under the DGCL (the "Final Record Date"), and thereafter
certificates representing shares Common Stock will not be assignable or
transferable on the books of the Company except by will, intestate succession or
operation of law. After the Final Record Date the Company will not issue any new
stock certificates, other than replacement certificates. See "Listing and
Trading of the Common Stock and Interests in the Liquidating Trust or Trusts"
and "Final Record Date" below.

     (f) A Certificate of Dissolution will be filed with the State of Delaware
dissolving the Company following completion of the foregoing steps or earlier as
determined by the Board of Directors. The dissolution of the Company will become
effective, in accordance with the DGCL upon proper filing of the Certificate of
Dissolution with the Secretary of State or upon such later date as may be
specified in the Certificate of Dissolution. Pursuant to the DGCL, the Company
will continue to exist for three years after the dissolution becomes effective
or for such longer period as the Delaware Court of Chancery shall direct, for
the purpose of prosecuting and defending suits, whether civil, criminal or
administrative, by or against it, and enabling the Company gradually to settle
and close its business, to dispose of and convey its property, to discharge its
liabilities and to distribute to its shareholders any remaining assets, but not
for the purpose of continuing the business for which the Company was organized.

ABANDONMENT; AMENDMENT 

     Under the Plan, the Board of Directors may modify, amend or abandon the
Plan, notwithstanding shareholder approval, to the extent permitted by the DGCL.
The Company will not amend or modify the Plan under circumstances that would
require additional shareholder solicitations under the DGCL or the federal
securities laws without complying with the DGCL and the federal securities laws.

     The Executive Committee of the Board of Directors may exercise all of the
powers of the Board of Directors in implementing the Plan. Accordingly,
references to the Board of Directors herein should be deemed also to refer to
such committee.


LIQUIDATING DISTRIBUTIONS; NATURE; AMOUNT; TIMING 

     Although the Board of Directors has not established a firm timetable for
further distributions to shareholders, other than with respect to Career Blazers
as described herein, the Board of Directors will, subject to exigencies inherent
in winding up the Company's business, make further distributions as promptly as
practicable. The liquidation is expected


                                       5



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<PAGE>


to be concluded prior to March 19, 2000, by a final liquidating distribution
either directly to the shareholders or to a liquidating trust. Except as
described herein, the Board of Directors is currently unable to predict the
precise nature, amount or timing of any further distributions pursuant to the
Plan. The actual nature, amount and timing of, and record date for all further
distributions will be determined by the Board of Directors, in its sole
discretion, and will depend in part upon the Board of Directors' determination
as to whether particular assets are to be distributed in-kind or otherwise
disposed of through sale or other means. Reference is made to "Factors to be
Considered with Respect to Distribution or Sale of the Company's Remaining
Assets" for a discussion of the factors to be considered by the Board in making
its determination of which assets will be sold and which will be distributed
in-kind.

     The Company does not plan to satisfy all of its liabilities and obligations
prior to making further distributions to its shareholders, but instead will
reserve assets deemed by management and the Board of Directors to be adequate to
provide for such liabilities and obligations. See "Contingent Liabilities;
Contingency Reserve; Liquidating Trust." Management and the Board of Directors
believe that the Company has sufficient cash to pay its current and accrued
obligations, without the sale of any of its assets.

     Uncertainties as to the precise value of Noel's remaining assets and the
ultimate amount of its liabilities may materially affect the net values
ultimately distributable to shareholders. Estimated claims, liabilities and
expenses from operations (including operating costs, salaries, income taxes,
payroll and local taxes and miscellaneous office expenses), projected to occur
during execution of the Plan, have been accrued along with expenses for
professional fees and other expenses of liquidation. Management and the Board of
Directors believe that available cash and amounts received on the sale of assets
will be adequate to provide for the Company's obligations, liabilities, expenses
and claims (including contingent liabilities) and to make cash distributions to
shareholders. However, no assurances can be given that this will be the case.
Any increase to the Company's obligations, liabilities, expenses and claims
above the accrued amount will reduce the net assets ultimately available to
shareholders.

SALES OF THE COMPANY'S REMAINING ASSETS 

     The Plan gives the Board of Directors the authority to sell all of the
assets of the Company. Any sales of the Company's remaining assets will be made
on such terms as are approved by the Board of Directors and may be conducted by
competitive bidding, public sales on applicable stock exchanges or
over-the-counter or privately negotiated sales. Any such sales will only be made
after the Board of Directors has determined that any such sale is in the best
interests of the shareholders. It is not anticipated that any further
shareholder votes will be solicited with respect to the approval of the specific
terms of any particular sales of assets approved by the Board of Directors, as
the Company has been advised by its counsel that such further votes are not
required by the DGCL. The prices at which the Company will be able to sell its
various assets will depend largely on factors beyond the Company's control,
including, without limitation, the rate of inflation, changes in interest rates,
the condition of financial markets, the availability of financing to prospective
purchasers of the assets and United States and foreign regulatory approvals. In
addition, the Company may not obtain as high a price for a particular property
as it might secure if the Company were not in liquidation.

     The Board of Directors will not engage in a sale of all or substantially
all of its assets to an affiliate or group of affiliates. At this stage, the
Company cannot exclude the possibility, however, that some of the Company's
assets may be sold to one or more of the Company's officers, directors or
affiliates, but such a transaction will be effectuated only if such transaction
is approved by a disinterested majority of the Board of Directors. There have
been no negotiations regarding any such sale.


CONDUCT OF THE COMPANY FOLLOWING ADOPTION OF THE PLAN 

     As a consequence of the approval of the Plan by Noel's shareholders, Noel's
activities are limited to winding up its affairs, taking such action as may be
necessary to preserve the value of its assets and distributing its assets in
accordance with the Plan. The Company will seek to distribute or liquidate all
of its assets in such manner and upon such terms as the Board of Directors
determines to be in the best interests of the Company's shareholders.

     The Company shall continue to indemnify its officers, directors, employees
and agents in accordance with its certificate of incorporation, as amended, and
by-laws and any contractual arrangements, for actions taken in connection with
the Plan and the winding up of the affairs of the Company. The Company's
obligation to indemnify such persons may be satisfied out of the assets of any
liquidating trust. The Board of Directors and the trustees of any liquidating


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trust, in their absolute discretion, are authorized to obtain and maintain
insurance as may be necessary to cover the Company's indemnification obligations
under the Plan.


CONTINGENT LIABILITIES; CONTINGENCY RESERVE; LIQUIDATING TRUST 


     Under the DGCL the Company is required, in connection with its dissolution,
to pay or provide for payment of all of its liabilities and obligations. The
Company will pay all expenses and fixed and other known liabilities, or set
aside as a Contingency Reserve assets which it believes to be adequate for
payment thereof. The Company is currently unable to estimate with precision the
amount of any Contingency Reserve, which may be required, but any such amount
(in addition to any cash contributed to a liquidating trust, if one is utilized)
will be deducted before the determination of amounts available for distribution
to shareholders.

     The actual amount of the Contingency Reserve will be based upon estimates
and opinions of management and the Board of Directors and derived from
consultations with outside experts and a review of the Company's estimated
operating expenses, including, without limitation, anticipated compensation
payments, estimated investment banking, legal and accounting fees, rent, payroll
and other taxes payable, miscellaneous office expenses and expenses accrued in
the Company's financial statements. There can be no assurance that the
Contingency Reserve in fact will be sufficient. Subsequent to the establishment
of the Contingency Reserve, the Company will distribute to its shareholders any
portions of the Contingency Reserve which it deems no longer to be required.
After the liabilities, expenses and obligations for which the Contingency
Reserve had been established have been satisfied in full, the Company will
distribute to its shareholders any remaining portion of the Contingency Reserve.

     If deemed necessary, appropriate or desirable by the Board of Directors for
any reason, the Company may, from time to time, transfer any of its unsold
assets to one or more liquidating trusts established for the benefit of the then
shareholders which property would thereafter be sold or distributed on terms
approved by its trustees. The Board of Directors and management may determine to
transfer assets to a liquidating trust in circumstances where the nature of an
asset is not susceptible to distribution (for example, interests in intangibles)
or where, in view of the limited trading market for the publicly traded
securities in question, it would not be in the best interests of Noel and its
shareholders for such securities to be distributed directly to the shareholders
at such time. In addition, if all of the Company's assets (other than the
Contingency Reserve) are not sold or distributed prior to March 19, 2000, it is
anticipated that the Company would transfer in final distribution such remaining
assets to a liquidating trust. The Board of Directors may also elect in its
discretion to transfer the Contingency Reserve, if any, to such a liquidating
trust. Notwithstanding the foregoing, to the extent that the distribution or
transfer of any asset cannot be effected without the consent of a governmental
authority, no such distribution or transfer shall be effected without such
consent. The purpose of a liquidating trust would be to distribute such property
or to sell such property on terms satisfactory to the liquidating trustees, and
distribute the proceeds of such sale after paying those liabilities of the
Company, if any, assumed by the trust, to the Company's shareholders. Any
liquidating trust acquiring all the unsold assets of the Company will assume all
of the liabilities and obligations of the Company and will be obligated to pay
any expenses and liabilities of the Company which remain unsatisfied. If the
Contingency Reserve transferred to the liquidating trust is exhausted, such
expenses and liabilities will be satisfied out of the liquidating trust's other
unsold assets.


     The Plan authorizes the Board of Directors to appoint one or more
individuals or entities to act as trustee or trustees of the liquidating trust
or trusts and to cause the Company to enter into a liquidating trust agreement
or agreements with such trustee or trustees on such terms and conditions as may
be approved by the Board of Directors. It is anticipated that the Board of
Directors will select such trustee or trustees on the basis of the experience of
such individual or entity in administering and disposing of assets and
discharging liabilities of the kind to be held by the liquidating trust or
trusts and the ability of such individual or entity to serve the best interests
of the Company's shareholders. It is anticipated that a majority of the trustees
would be required to be independent of Noel's management. Approval of the Plan
by the shareholders constituted the approval by the Company's shareholders of
any such appointment and any liquidating trust agreement or agreements.

     The Company has no present plans to use a liquidating trust or trusts,
except as disclosed herein, but the Board of Directors believes that the
flexibility provided by the Plan with respect to the liquidating trusts to be
advisable. The trust would be evidenced by a trust agreement between the Company
and the trustees. The purpose of the trust would be to serve as a temporary
repository for the trust property prior to its disposition or distribution to
Noel's shareholders. The transfer to the trust and distribution of interests
therein to Noel's shareholders would enable Noel to divest itself of the trust
property and permit Noel's shareholders to enjoy the economic benefits of
ownership thereof. Pursuant to the trust


                                       7



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<PAGE>



agreement, the trust property would be transferred to the trustees immediately
prior to the distribution of interests in the trust to Noel's shareholders, to
be held in trust for the benefit of the shareholder beneficiaries subject to the
terms of the trust agreement. It is anticipated that the interests would be
evidenced only by the records of the trust and there would be no certificates or
other tangible evidence of such interests and that no holder of Common Stock
would be required to pay any cash or other consideration for the interests to be
received in the distribution or to surrender or exchange shares of Common Stock
in order to receive the interests. It is further anticipated that pursuant to
the trust agreements (i) a majority of the trustees would be required to be
independent of Noel's management; (ii) approval of a majority of the trustees
would be required to take any action; (iii) the trust would be irrevocable and
would terminate after, the earlier of (x) the trust property having been fully
distributed, or (y) a majority in interest of the beneficiaries of the trust, or
a majority of the trustees, having approved of such termination, or (z) a
specified number of years having elapsed after the creation of the trust.

     UNDER THE DGCL, IN THE EVENT THE COMPANY FAILS TO CREATE AN ADEQUATE
CONTINGENCY RESERVE FOR PAYMENT OF ITS EXPENSES AND LIABILITIES, OR SHOULD SUCH
CONTINGENCY RESERVE AND THE ASSETS HELD BY THE LIQUIDATING TRUST OR TRUSTS BE
EXCEEDED BY THE AMOUNT ULTIMATELY FOUND PAYABLE IN RESPECT OF EXPENSES AND
LIABILITIES, EACH SHAREHOLDER COULD BE HELD LIABLE FOR THE PAYMENT TO CREDITORS
OF SUCH SHAREHOLDER'S PRO RATA SHARE OF SUCH EXCESS, LIMITED TO THE AMOUNTS
THERETOFORE RECEIVED BY SUCH SHAREHOLDER FROM THE COMPANY OR FROM THE
LIQUIDATING TRUST OR TRUSTS.

     If the Company were held by a court to have failed to make adequate
provision for its expenses and liabilities or if the amount ultimately required
to be paid in respect of such liabilities exceeded the amount available from the
Contingency Reserve and the assets of the liquidating trust or trusts, a
creditor of the Company could seek an injunction against the making of
distributions under the Plan on the grounds that the amounts to be distributed
were needed to provide for the payment of the Company's expenses and
liabilities. Any such action could delay or substantially diminish the cash
distributions to be made to shareholders and/or interest holders under the Plan.


FINAL RECORD DATE 

     The Company will close its stock transfer books and discontinue recording
transfers of shares of Common Stock on the Final Record Date, and thereafter
certificates representing shares of Common Stock will not be assignable or
transferable on the books of the Company except by will, intestate succession or
operation of law. After the Final Record Date the Company will not issue any new
stock certificates, other than replacement certificates. It is anticipated that
no further trading of the Company's shares will occur on or after the Final
Record Date. All liquidating distributions from the Company or a liquidating
trust on or after the Final Record Date will be made to shareholders according
to their holdings of Common Stock as of the Final Record Date. Subsequent to the
Final Record Date, the Company may at its election require shareholders to
surrender certificates representing their shares of the Common Stock in order to
receive subsequent distributions. Shareholders should not forward their stock
certificates before receiving instructions to do so. If surrender of stock
certificates should be required, all distributions otherwise payable by the
Company or the liquidating trust, if any, to shareholders who have not
surrendered their stock certificates may be held in trust for such shareholders,
without interest, until the surrender of their certificates (subject to escheat
pursuant to the laws relating to unclaimed property). If a stockholder's
certificate evidencing the Common Stock has been lost, stolen or destroyed, the
stockholder may be required to furnish the Company with satisfactory evidence of
the loss, theft or destruction thereof, together with a surety bond or other
indemnity, as a condition to the receipt of any distribution.

LISTING AND TRADING OF THE COMMON STOCK AND INTERESTS IN THE LIQUIDATING 
TRUST OR TRUSTS 

     The Common Stock is currently listed for trading on Nasdaq's National
Market. For continued listing, a company, among other things, must have $1
million in net tangible assets (or $4 million if the issuer has sustained losses
from continuing operations and/or net losses in three of its four most recent
fiscal years), $1 million in market value of securities in the public float and
a minimum bid price of $1.00 per share (or, in the alternative, $3 million in
market value of securities in the public float and $4 million of net tangible
assets). If the Company is unable to satisfy Nasdaq's National Market
maintenance criteria in the future, its Common Stock may be delisted therefrom
prior to the Final Record Date. In such event, the Company may seek to list its
securities on Nasdaq's Small Cap Market. However, if it was unsuccessful,
trading, if any, in the Common Stock would thereafter be conducted in the
over-the-counter market


                                       8



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<PAGE>



in the so-called "pink sheets" or the NASD's "Electronic Bulletin Board". As a
consequence of such delisting, an investor would likely find it more difficult
to dispose of, or to obtain quotations as to, the price of the Common Stock.
Delisting of the Common Stock may result in lower prices for the Common Stock
than would otherwise prevail.

     It is anticipated that the interests in a liquidating trust or trusts will
not be transferable, although no determination has yet been made. Such
determination will be made by the Board of Directors and management prior to the
transfer of unsold assets to the liquidating trust and will be based on, among
other things, the Board of Directors and management's estimate of the value of
the assets being transferred to the liquidating trust or trusts, tax matters and
the impact of compliance with applicable securities laws. Should the interests
be transferable, the Company plans to distribute an information statement with
respect to the liquidating trust or trusts at the time of the transfer of assets
and the liquidating trust or trusts may be required to comply with the periodic
reporting and proxy requirements of the Exchange Act. The costs of compliance
with such requirements would reduce the amount which otherwise could be
distributed to interest holders. Even if transferable, the interests are not
expected to be listed on a national securities exchange or quoted through Nasdaq
and the extent of any trading market therein cannot be predicted. Moreover, the
interests may not be accepted by commercial lenders as security for loans as
readily as more conventional securities with established trading markets.


     As shareholders will be deemed to have received a liquidating distribution
equal to their pro rata share of the value of the net assets distributed to an
entity which is treated as a liquidating trust for tax purposes, the
distribution of non-transferable interests could result in tax liability to the
interest holders without their being readily able to realize the value of such
interests to pay such taxes or otherwise.


BUSINESS OF NOEL PRIOR TO ADOPTION OF PLAN 

     Prior to the approval of the Plan by Noel's shareholders on March 19, 1997,
Noel conducted its principal operations through small and medium-sized operating
companies in which Noel held controlling or other significant equity interests.
Noel's current holdings in operating companies include holdings in (i) Career
Blazers, a provider of diversified staffing services to a broad range of
businesses in various industries; (ii) Carlyle, a packager and distributor of
buttons, gifts and craft products; and (iii) Ferropar, a Brazilian corporation,
which holds interests in Brazilian companies operating Brazilian railroad
networks and a port in Sao Paulo, Brazil. As noted herein, Noel expects to
distribute its interest in Career Blazers through a liquidating trust in April
1999.


     Noel was incorporated in New York in December 1969 and reincorporated in
Delaware in December 1986. Noel was originally a closely-held special purpose
investment vehicle until March 1988, when under new management organized by
Louis Marx, Jr., the former Chairman of the Executive Committee, Noel adopted
its strategy of concentrating on the acquisition of control and other
significant equity interests in established operating entities. Noel's principal
office is located at 667 Madison Avenue, New York, New York 10021-8029 and its
telephone number is (212) 371-1400.


     (b) Financial information about industry segments.

     The information required is set forth in Note 19 of Notes to Financial
Statements on page F-25 hereof.


     (c) Narrative description of business.

     The following information relates to Noel's principal remaining operating
companies in which it holds a controlling or substantial interest. The
percentage appearing next to the name of each company indicates the common
equity ownership (or in the case of Carlyle, the percentage of the aggregate
voting power) currently held by Noel.


                                       9


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<PAGE>



                         CARLYLE INDUSTRIES, INC. (55%)

     Carlyle (which prior to March 26, 1997 was known as Belding Heminway
Company, Inc.) and its subsidiaries package and distribute buttons, gifts and
craft products.

     Carlyle was the surviving corporation in a merger (the "Merger") with BH
Acquisition Corporation, a Delaware corporation wholly-owned by Noel. The
Merger, completed on October 29, 1993, was the second step of a transaction
pursuant to which Noel acquired the entire equity interest in Carlyle.

     On March 26, 1997, Carlyle sold the assets and specified liabilities of its
former Thread Division (the "Thread Division") to an affiliate of Hicking
Pentecost PLC ("HP") for an aggregate cash consideration of $54.9 million of
which $3.0 million was placed in escrow, subject to certain post-closing
adjustments, plus the assumption of approximately $6.8 million of liabilities.
The Thread Division was engaged in the manufacturing and marketing of industrial
thread and special engineered yarn used in non-sewing products. As part of the
sale of the Thread Division, the corporate name "Belding Heminway" was
transferred to HP.

     Carlyle's principal executive offices are located at One Palmer Terrace,
Carlstadt, New Jersey; its telephone number is (201) 935-6220. Joseph S.
DiMartino and Herbert Friedman, Noel directors, currently serve on Carlyle's
four member Board of Directors.

     Carlyle's business is conducted principally through two subsidiaries: the
Blumenthal Lansing Company ("Blumenthal"), and Westwater Industries, Inc.
("Westwater"). Blumenthal was formed from the merger of B. Blumenthal & Co.,
Inc., a wholly-owned subsidiary of Carlyle, and Lansing Company, B. Blumenthal's
wholly-owned subsidiary. The corporate name was changed to Blumenthal Lansing
Company on January 1, 1995. Westwater, a Delaware corporation, was formed in
June 1998 to acquire the assets and business of Westwater Enterprises, LP.
Westwater is a wholly owned subsidiary of Carlyle. 

     Set forth below is a description of Carlyle's business substantially as
described in Carlyle's Annual Report on Form 10-K for the Fiscal Year Ended
December 31, 1998 filed with the Commission.

     Acquisitions. On June 30, 1998, the assets and business of Westwater
Enterprises LP were acquired by Westwater, a newly formed wholly-owned
subsidiary of Carlyle. Westwater is an importer and distributor of craft and
gift products for sale to retail and specialty chain stores. Carlyle paid
approximately $3.1 million in cash and assumed $.5 million in bank debt. In
addition, contingent payments of up to $2 million may become payable upon the
achievement of specified earnings levels or the event an entity other than Noel
acquires a more than 50% voting control of Carlyle. The contingent payment
period covers the three years ended December 31, 2000 at which time the
contingent payment period expires. 

     On December 16, 1998 Carlyle's wholly owned subsidiary, Blumenthal acquired
the assets and business of Streamline Industries, Inc. ("Streamline") for
approximately $1.6 million in cash. Streamline packages and distributes a line
of carded buttons and embellishments for sale to retail and specialty chain
stores.

     Products. Carlyle packages and distributes an extensive variety of buttons,
embellishments, gift and craft products to mass merchandisers, specialty chains,
and independent retailers and wholesalers throughout the United States. Products
are sold under the La Mode'r', Le Chic'r', Streamline'r' and Westwater
Enterprises'r' registered trademarks and the Le Bouton, La Petites, Classic,
Boutique and Mill Mountain brand names. Carlyle also produces and distributes
private-label lines one for one of the nation's best-known retailers. Carlyle
markets complementary product lines, including appliques, craft kits, and
fashion and jewelry. 

     Markets. Carlyle's products are sold primarily for use in the home sewing
market where buttons are used for garment construction, replacement, and the
upgrading and/or restyling of ready-to-wear clothing. More modest button usage
is found in craft projects, home decorating, and garment manufacturing on a
small scale and done by dressmakers and other cottage industry consumers. The
market is served by large fabric specialty chains, mass merchandisers, local and
regional fabric specialty chains of 4 to 25 stores, independent fabric stores,
notions wholesalers, and craft stores and chains. During the years ended
December 31, 1998 and 1997 sales to three major customers (Wal-Mart, Jo-Ann
Stores and Hancock Fabrics) accounted for 77% and 78% respectively of Carlyle's
aggregate sales volume. A reduction in sales among any of these customers could
adversely impact the financial condition and results of operations of Carlyle.

                                       10



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     Product Sourcing, Distribution and Sales. The button lines are sourced from
more than 75 button manufacturers around the world, with most buttons coming
from the traditional markets of Holland, Italy, and Asia. Button manufacturers
specialize in different materials (plastic, wood, glass, leather, metal, jewel,
pearl, etc.) and have varying approaches to fashion, coloration, finishing, and
other factors.

     All imported and domestically purchased buttons are shipped to the Lansing,
Iowa facility for carding and distribution to customers. As thousands of button
styles are received in bulk, computerized card printing systems enable
Blumenthal to economically imprint millions of button cards with such necessary
data as style number, price, number of buttons, bar code, country of origin and
care instructions. Carlyle also blister-packages and shrink-wraps some products.
Shipments are made primarily to individual stores with a small percentage to
warehouse locations.

     Carlyle's accounts include major fabric specialty chains, most mass
merchandisers carrying buttons, most regional fabric specialty chains and many
independent stores. Mass merchandisers and specialty chain customers are
characterized by the need for sophisticated electronic support, rapid
turn-around of merchandise and direct-to-store service for hundreds to thousands
of locations nationwide. Carlyle enjoys long-standing ties to all of its key
accounts and the average relationship with its ten largest customers extends
over 20 years. Due to the large account nature of its customer base, most
customer contact is coordinated by management; additional sales coverage is
provided by regional sales managers. Certain retailers are serviced by
independent representatives and representative organizations.

     Competitive Factors. The retail button market is served by several
competitors. Carlyle competes primarily with full-line button packagers and
distributors in the general button market and several smaller competitors in the
promotional button market. Carlyle management believes that the principal bases
for competition are product innovation, range of selection, brand names, price,
display techniques and speed of distribution.

     Carlyle management believes that retail button distribution depends on
trends in the home-sewing market, which Carlyle management believes is mature.
The retail customer base for buttons has changed substantially over the past two
decades as department stores and small independent fabric stores have been
replaced by mass merchandisers and specialty retail chains which have continued
to consolidate recently through mergers and store closings. In response to this
trend, Carlyle has broadened its button product line to include embellishments
and novelty buttons used now in the craft industry which is not viewed as a
mature market.


     The bulk of Carlyle's revenues are derived in the United States. In 1998,
less than 1% of revenues related to export sales. Inventory levels remain
relatively constant throughout the year. Carlyle's policies related to
merchandise return and payment terms are in accordance with industry standards.

     Employees; Labor Relations. Carlyle has approximately 140 employees, none
of whom is covered by a collective bargaining agreement. Carlyle management
believes relations with employees are satisfactory.

     Properties. Carlyle operates from a 104,000 square foot packaging and
distribution facility located in Lansing, Iowa which is owned by Carlyle.
Corporate headquarters and divisional management, sales and marketing, product
development, fashion and purchasing are headquartered in a 7,307 square foot
office facility in Carlstadt, New Jersey which is leased by Carlyle. Carlyle
management believes that Carlyle's facilities are in good condition and adequate
for Carlyle's present and reasonably foreseeable future needs.


     Carlyle also owns a former dye facility located in Emporia, Virginia, which
facility is leased to the purchaser of Carlyle's former Home Furnishings'
Division under a triple net fifty-year lease with a nominal base rent. In
addition, Carlyle also owns two facilities no longer used in operations: a
100,000 square foot former production facility at Watertown, Connecticut of
which approximately 48,000 square feet are leased to unrelated third parties and
a former production facility at North Grosvenordale, Connecticut.

LEGAL PROCEEDINGS 

     General. To the best of Carlyle's knowledge, Carlyle is not currently a
party to any significant litigation except as indicated below.

     Environmental Matters. Carlyle is subject to a number of federal, state and
local environmental laws and regulations, including those concerning the
treatment, storage and disposal of waste, the discharge of effluents into

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waterways, the emissions of substances into the air and various health and
safety matters. In addition, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ("CERCLA") and comparable
state statutes generally impose joint and several liability on present and
former owners and operators, transporters and generators for remediation of
contaminated properties regardless of fault. These parties are typically
identified as "potentially responsible parties" or PRPs.


     Several years ago a property, owned by the Carlyle Manufacturing Company,
Inc. ("CM") located at 30 Echo Lake Road in Watertown, Connecticut was being
investigated by the United States Environmental Protection Agency ("EPA") for
possible inclusion on the National Priorities List promulgated pursuant to
CERCLA but no such listing has yet occurred. A Site Inspection conducted at this
location detected certain on-site soil and groundwater contamination, as well as
contamination of nearby water. This site is listed on the Connecticut State
Hazardous Waste Disposal Site list, but remediation activity has not been
required by the Connecticut Department of Environmental Protection ("CTDEP").


     CM owns an inactive facility located in North Grosvenordale, Connecticut at
which soil contamination has been found. Carlyle reported this contamination to
the CTDEP in 1989 and is presently working with the CTDEP to define remedial
options for the site, which it expects will focus primarily on removal and
possible stabilization of contaminated soil onsite. Carlyle estimates the cost
of remediation at this site to be approximately $100,000 based upon information
on the costs incurred by others in remediating similar contamination at other
locations. As the actual cost of remediation at this site will depend on the
real extent of soil contamination and the remediation options approved for this
site in the future by the CTDEP, no assurances can be given that the actual cost
will not be higher than Carlyle's current estimate.


     In or about June 1992, Carlyle received notice from the EPA that Carlyle,
Belding Corticelli Thread Company ("BCTC") and CM had been identified, along
with 1,300 other parties, as PRP's in connection with the alleged release of
hazardous substances from the Solvents Recovery Superfund Site in Southington,
Connecticut (the "SRS site").


     Carlyle settled its alleged liability in connection with the SRS sites by
paying $1,626, along with other PRP's, to perform the Remedial Investigation and
Feasibility Study ("RIFS") and two Non-Time Critical Removal Actions ("NTCRA")
at the SRS site. The RIFS and the first NTCRA (except for certain maintenance
activities) have been completed. BCTC and CM have been allocated .03% and 1.19%,
respectively, of costs incurred to date, based on their alleged volume of waste
shipped to the SRS site. At this time it is not possible to predict when the EPA
will issue its "Record of Decision" concerning the final remedy at the SRS site.
Carlyle is unable, at this time, to estimate the ultimate cost of the remedy
for this site.

     By letter dated January 21, 1994, the EPA gave notice to CM that it had 
been identified as a PRP along with about 335 other parties in connection with 
the alleged release of hazardous waste at the Old Southington Landfill Superfund
site located in Southington, Connecticut (the "OSL site"). The EPA's claim is
predicated on the allegation that certain waste sent to the SRS site prior to
October 1967 was commingled and transshipped to the OSL site.

     On September 3, 1996, CM entered into an agreement (with the EPA and other
members of the SRS PRP Group) to settle its liability in connection with the
First Operable Unit of work ("OU#1") at the OSL site for $2,000. The OU#1
Consent Decree was entered in June, 1998 by the United States District Court for
the District of Connecticut.

     In September 1997, Pratt and Whitney and the Town of Southington proposed a
de minimis settlement which would allow CM and certain other members of the SRS
PRP Group (as well as certain Direct Shippers) to settle their future OSL site
liability for a sum certain (subject to certain reservation of rights by the
U.S.). Under this proposal, CM's required payment is approximately $3,300. CM
has accepted the de minimis offer. The Consent Decree in connection with the
above de minimis settlement will be lodged with the federal court in the near
future.


     By letter dated October 30, 1987, the Department of Environmental
Protection of the State of New Jersey ("DEP") notified Carlyle that CM, together
with 122 parties, had been identified as a party responsible for cleanup costs
and damage claims paid in connection with the Chemical Control Corporation
hazardous waste site located in Elizabeth, New Jersey (the "CCC site"). A
settlement between CM and other members of the Chemical Control Responsible
Party Group, on the one hand, and the DEP and the New Jersey Spill Compensation
Fund, on the other hand, was finalized in December 1998. The amount paid by CM
was $142,219.

                                       12



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     By third-party summons and complaint dated November 27, 1991, CM was named
as a third-party defendant in an action pending in the United States District
Court for the District of Rhode Island entitled United States v. Davis. In
addition to CM, approximately 60 other companies were joined as third-party
defendants. Amended third-party complaints have named additional third-party
defendants. The third-party complaint against CM alleges claims for contribution
under CERCLA, common law indemnification and state law contribution. The
third-party complaint alleges that CM (and the majority of the other third-party
defendants) shipped waste to the CCC site, which waste was commingled and then
shipped to the Davis Liquid Waste site located in Smithfield, Rhode Island.


     CM has entered into an agreement to settle liability in connection with the
above claims for payment of the sum of $200,000. The Consent Decree was approved
in 1998 by the Federal District Court.

     The estimates provided above do not include costs that Carlyle or its
subsidiaries may incur for consultants or attorney's fees or for administrative
expenses in connection with their participation as part of the PRP group at the
SRS and OSL sites. The reserve Carlyle has established for environmental
liabilities, in the amount of $1.7 million, represents Carlyle's best current
estimate of the costs of addressing all identified environmental problems,
including the obligations of Carlyle and its subsidiaries relating to the
Remedial Investigation and two Non-Time Critical Removal Actions at the Solvents
Recovery Superfund site, based on Carlyle's review of currently available
evidence, and takes into consideration Carlyle's prior experience in remediation
and that of other companies, as well as public information released by EPA and
by the PRP groups in which Carlyle or its subsidiaries are participating.
Although the reserve currently appears to be sufficient to cover these
environmental liabilities, there are uncertainties associated with environmental
liabilities, and no assurances can be given that Carlyle's estimate of any
environmental liability will not increase or decrease in the future. The
uncertainties relate to the difficulty of estimating the ultimate cost of any
remediation that may be undertaken, including any operating costs associated
with remedial measures, the duration of any remediation required, the amount of
consultants' or attorneys' fees that may be incurred, the administrative costs
of participating in the PRP groups, and any additional regulatory requirements
that may be imposed by the federal or state environmental agencies.

     Noel does not believe, based on current applicable environmental law, that
it will be responsible for any of Carlyle's environmental liabilities. However,
in view of the rapidly developing environmental laws, no assurance can be given
at this time that Noel would not have such responsibility nor, if such liability
existed, can any determination be made of the amount thereof. Any finding of
liability on the part of Noel would reduce the amount available for distribution
to Noel's shareholders. In addition, in the event that the amount of any such
liability exceeded the amount of Noel's assets (and the assets of any
liquidating trust), the shareholders could be required to return some or all
amounts previously distributed in liquidation.


     In January 1997, the Pension Benefit Guarantee Corporation ("PBGC")
notified Carlyle that it was considering whether the sale of the Thread Division
would create an obligation under ERISA to immediately fund, in whole or in part,
Carlyle's unfunded liability to its defined benefit plan. In February 1997, at
the request of the PBGC, Carlyle agreed to provide the PBGC with at least 30
days advance notice of any proposed dividend, stock redemption, stockholder
buyback or other distribution to shareholders of any class of equity which is
projected to occur at any time prior to March 31, 2002. In consideration of such
agreement, the PBGC agreed not to take action solely with respect to the
proposed sale transaction. In December 1997, Carlyle notified the PBGC that it
intends to redeem $10 million of preferred stock as soon after year end as is
practicable, but only to the extent of legally available funds as determined by
the board of directors and if appropriate bank financing has been satisfactorily
obtained. Following such notice, the PBGC indicated that it would not take any
action with respect to such payments. If the PBGC takes the position that
Carlyle should fund, in whole or in part, the unfunded liability to the defined
benefit plan, after receiving notice of a proposed dividend, stock redemption,
stockholder buyback or other distribution to shareholders, and if such position
were upheld, the ability of Carlyle to take any such proposed action would be
adversely affected. Carlyle's unfunded liability to its deferred benefit plan is
recorded at $.4 million on as of December 31, 1998, when measured in accordance
with financial accounting standards. Based on an actuarial estimate, the
obligation to transfer cash in the event of a termination would be $3.3 million
in excess of the balance sheet liability. Were the plan to be terminated or were
the PBGC to require that the plan be funded according to different standards,
Carlyle's obligation to transfer cash to the plan could be higher than this
amount. Any actual amounts transferred in the event of a plan termination, would
depend on PBGC action and market conditions at the time of transfer and could
differ significantly from this estimate.

                                       13



<PAGE>
<PAGE>



     Noel received a letter from the PBGC dated August 15, 1996 stating that the
PBGC believed that a "controlled group" existed between Noel and Carlyle. The
letter indicated that the PBGC would like to discuss the pending Plan of
Liquidation and its impact on the Carlyle pension plan. Noel submitted a
memorandum to the PBGC setting forth Noel's position that a controlled group did
not exist between Noel and Carlyle. In the event that the PBGC's belief was
correct, Noel could in certain circumstances be jointly and severally liable for
obligations of Carlyle with respect to its pension plan including the
obligations referred to above.


     Escrow Agreement. In connection with the sale of the Thread Division to an
affiliate of HP, $3.0 million of the proceeds were placed in escrow. Pursuant to
a written indemnity, and under a reservation of rights, Carlyle had assumed the
defense and indemnity of Barbour Threads, Inc. ("Barbour"), as the successor in
interest to Danfield Threads, Inc., Barbour Industries, Inc. and Blue Mountain
Industries, Inc. and an individual, H.D. Whitlow ("Whitlow"), in an adversary
proceeding which relates to a Chapter 11 reorganization, In re Needlecraft
Industries, Inc. ("Needlecraft"), Case No. LA 97-41233 LF. Carlyle had no role
in the bankruptcy or the prosecution of Barbour's claims against Needlecraft and
other counsel represents Barbour for that purpose.

     In the adversary proceeding, Needlecraft originally sought compensatory
damages of $600,000 and punitive damages of $1,000,000, reformation of contract,
and declaratory relief from Barbour for alleged breach of an oral contract,
detrimental reliance, and negligent and intentional interference with
prospective economic advantage. At a hearing in January 1998, the Bankruptcy
Court dismissed the claims against Whitlow.

     On February 9, 1999, the Court permitted Needlecraft to file an amended
complaint that added new claims, among other things, for alleged resale price
maintenance, price discrimination, disparagement/trade libel, and unfair
competition and increased the compensatory damages claimed to $8.1 million. On
February 24, 1999, Carlyle notified HP and the defendants in the litigation that
it is rejecting the claim for indemnification and will no longer fund the
defense. On March 1, 1999, HP and Barbour disputed Carlyle's rejection of their
claim for indemnification and made a new claim for indemnification based on the
amended complaint.

     By letter dated February 8, 1999, the CTDEP notified Carlyle that it is
CTDEP's position that Carlyle and the buyer of the Thread Division filed an
inappropriate form in connection with the transfer of certain Connecticut
property as part of the sale of the Thread Division. The CTDEP has asserted that
an alternate form and an environmental condition assessment is required. Carlyle
has notified HP and Barbour that Carlyle believes that compliance with the
CTDEP's requirements are their responsibility. HP and Barbour have responded by
demanding indemnity under an agreement dated, as of December 12, 1996, whereby
Carlyle sold its Thread Division (the "Thread Division Agreement").


     In a complaint filed in the United States District Court, District of New
Jersey, by Liberty Fabrics Rotterdam B.V. ("Liberty") against Barbour and
Danfield Threads, Inc. Liberty has alleged, among other things, breaches of a
distributorship agreement by Barbour and tortious interference by Barbour with
Liberty's agreements with third parties (the "Liberty Claim"). The amount of the
damages sought by Liberty is not currently known, but is alleged to be in excess
of $75,000. HP and Barbour have asserted that Carlyle is obligated by the Thread
Division Agreement to indemnify them against cost and liability of the Liberty
Claim. Carlyle has rejected the claim for indemnification.


     Carlyle expects that if it disagreements with HP and Barbour are not
otherwise resolved, the dispute will be resolved in an arbitration proceeding
pursuant to the Thread Division Agreement.


                     FERRONORTE PARTICIPACOES, S.A. (2.8%)

     Ferronorte Participacoes, S.A. ("Ferropar") is the holding company for
Ferrovia Novoeste S.A. ("Novoeste") and Ferronorte S.A. Ferrovia Norte Brasil
("Ferronorte"). Ferronorte operates the Brazilian railroad network between Mato
Grosso and several destinations, and a port terminal in Sao Paulo, Brazil.
Novoeste operates the Brazilian western railroad network (SR-10).


     In March 1996, Novoeste was the successful bidder, at approximately $63.6
million, for the concession for the operation of the Brazilian federal
railroad's western network. The purchase of the network consisted of a 30-year
concession and a lease of the federal railroad's equipment. The western network
links Bauru, in Sao Paulo state, with Corumba on the Bolivian border, and covers
approximately 1,000 miles of track.


                                       14



<PAGE>
<PAGE>


     In June 1998, the stock of Novoeste held by Noel, and each of the other
Novoeste stockholders, was acquired by Ferropar in exchange for stock in
Ferropar. Concurrently with such exchange, Ferropar acquired all of the
outstanding stock of Ferronorte in exchange for stock in Ferropar. After such
exchanges, Noel owned approximately 2.8% of the outstanding stock of Ferropar.
Ferropar is the holding company for Novoeste and Ferronorte. Novoeste operates
the Brazilian western railroad network (SR-10), and Ferronorte operates the
Brazilian railroad network between Mato Grosso and several destinations, and a
port terminal in Sao Paulo, Brazil.


     In February 1999, Noel engaged a Brazilian investment bank to sell its
interest in Ferropar.

                          CAREER BLAZERS INC. (11.6%)


     Career Blazers is the successor by merger in December 1997 of subsidiaries
of Staffing Resources, Inc., a provider of diversified temporary staffing
services to a broad range of businesses in various industries throughout the
Northeastern, Mid-Atlantic, Southeastern, Southwestern and Rocky Mountain
regions of the United States, and Career Blazers Personnel Services, Inc. and
its affiliated companies ("CBPS Inc."). At the time of the merger, CBPS Inc.
operated primarily in the Northeastern United States and provided temporary,
temporary to permanent and permanent placement services in the clerical, legal
and higher-end office support areas as well as training services. Career Blazers
offers training, temporary and permanent staffing services through a network of
approximately 184 staffing branches and 72 training locations (including
company-owned, licensed and franchised operations) across the Northeastern,
Mid-Atlantic, Southeastern, Southwestern and Rocky Mountain regions of the
United States, as well as Canada and Puerto Rico.

        On March 17, 1999, Noel announced the distribution of trust units
representing ownership of Noel's entire holding of Career Blazers common stock
to Noel shareholders (the "Distribution"). The Distribution will be made in
accordance with Noel's Plan of Complete Liquidation and Dissolution. The record
date for the Distribution was set at March 29, 1999 and the distribution date is
expected to be April 12, 1999.

     Under the terms of the Distribution, Noel shareholders will receive units
representing approximately one-tenth of a share of Career Blazers common stock
for each share of Noel common stock held by them. The trust units will be
recorded on the books of the trust and will not be represented by certificates
or other documents sent to shareholders. The trust is being created in lieu of
the outright distribution of Career Blazers stock for several principal reasons,
including the limited float of Career Blazers stock and the current lack of
tradability of the shares of Career Blazers common stock currently held by Noel.
As conditions in the future warrant, the trust is expected to distribute the
shares to unit owners or sell the shares in the market, in a private placement
or in an underwritten public offering, or a combination of these options.

     (d) Financial information about foreign and domestic operations and export
sales.

     Not material.

ITEM 2. PROPERTIES.

     Noel's executive offices occupy approximately 5,100 square feet in an
office building located in New York, New York pursuant to a sublease agreement,
which expires in September 1999. In the event the liquidation is not complete by
September 1999, Noel may request an extension of the sublease. For descriptions
of certain principal properties of Noel's operating companies, see "Narrative
Description of Business" above. The managements of both Noel and Carlyle
believe that the properties owned or leased by each such company are adequate
for the conduct of their respective businesses for the foreseeable future.


ITEM 3. LEGAL PROCEEDINGS.

     Other than as described under "Business of the Company", there are no
pending material legal proceedings to which Noel or any of its subsidiaries or
principal operating companies is a party or to which any of their property is
subject, other than ordinary routine litigation incidental to their respective
businesses.


                                       15


<PAGE>
<PAGE>



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

     None.


                                    PART II

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

(a) Market Information.

     Noel's Common Stock trades on Nasdaq's National Market under the symbol
NOEL. The following table sets forth the range of high and low sales prices for
shares of Common Stock for each fiscal quarter during 1998 and 1997 as reported
by NASDAQ.

<TABLE>
<CAPTION>
                       1998                  High             Low
                       ----                  ----             ---
                 <S>                       <C>               <C>   
                 First Quarter (1)         $3.250            $2.625
                 Second Quarter (2)         2.750             2.063
                 Third Quarter (3)          2.813             1.375
                 Fourth Quarter             1.438             0.875

<CAPTION>
                      1997                   High             Low
                      ----                   ----             ---
                 <S>                       <C>               <C>   
                 First Quarter             $7.500            $6.375 
                 Second Quarter(4)          6.625             3.125 
                 Third Quarter(5)           4.375             3.875 
                 Fourth Quarter(6)          4.125             3.218 

</TABLE>

(1) Reflects the distribution of $0.70 cash per share on March 27, 1998. 
(2) Reflects the distribution of $0.45 cash per share on April 30, 1998. 
(3) Reflects the distribution of $0.92 cash per share on August 14, 1998.
(4) Reflects the distribution of shares of HealthPlan Services Corporation
("HealthPlan") Common Stock on April 25, 1997, valued at $2.643 per share of
Noel Common Stock. 
(5) Reflects the distribution of shares of HealthPlan Common
Stock on October 6, 1997 (September 25, 1997, ex-dividend date), valued at
$.4244 per share of Noel Common Stock. 
(6) Reflects the distribution of shares of Carlyle Common Stock on December 1, 
1997, valued at $.1501 per share of Noel Common Stock.

     (b) Holders.

     As of March 22, 1999, 20,567,757 shares of Common Stock were issued and
outstanding and were held of record by approximately 92 persons, including
several holders who are nominees for an undetermined number of beneficial
owners. Noel believes that there are approximately 1,200 beneficial owners of
Common Stock.

     (c) Dividends.

     Pursuant to the Plan, Noel's remaining assets will either be distributed in
kind to Noel's shareholders or sold; the proceeds of sale, after paying or
providing for all claims, liabilities, expenses and other obligations of Noel,
will be distributed to Noel's shareholders together with other available cash;
and thereafter Noel will be dissolved. The value of any further liquidating
distributions will depend on a variety of factors including, among others, the
actual market prices of any securities distributed in kind, the proceeds of the
sale of any of Noel's assets and the actual timing of distributions.

     On March 27, 1998, Noel distributed pro rata to its shareholders
$14,397,000 in cash at the rate of $0.70 for each share of Common Stock issued
and outstanding at the close of business on the March 20, 1998 record date.


                                       16


<PAGE>
<PAGE>



     On April 30, 1998, Noel distributed pro rata to its shareholders $9,255,000
in cash at the rate of $0.45 for each share of Common Stock issued and
outstanding at the close of business on the April 22, 1998 record date.

     On August 14, 1998, Noel distributed pro rata to its shareholders
$18,922,000 in cash at the rate of $0.92 for each share of Common Stock issued
and outstanding at the close of business on the July 31, 1998 record date.


ITEM 6. SELECTED FINANCIAL DATA.

     The selected historical financial information for each of the Company's
last five fiscal years and for the three months ended March 31, 1997 are derived
from the historical financial statements of Noel and should be read in
conjunction with Noel's Financial Statements and related notes included
elsewhere in this Form 10-K. (Dollars in thousands, except per share amounts)

<TABLE>
<CAPTION>
                              December 31,       March 31,          Years Ended December 31,
                             1998      1997        1997         1996(1)      1995(1)      1994(2)
                             ----      ----        ----         ------       ------       -------
<S>                         <C>        <C>       <C>           <C>          <C>           <C>     
Revenue                       N/A       N/A     $38,473       $189,325     $181,709      $119,121

Operating income (loss)       N/A       N/A     $(4,684)      $  9,194     $(29,451)     $(12,731)

Loss from continuing 
  operations                  N/A       N/A     $(1,309)      $ (3,105)    $(15,581)     $ (9,453)

Basic earnings per
 share from continuing
 operations (3)               N/A       N/A     $ (0.06)      $  (0.15)    $  (0.77)     $  (0.47)

Total assets              $37,048   $88,912         N/A       $230,521     $239,757      $313,980

Long-term debt                $0        $0          N/A       $ 60,983     $ 69,197      $ 75,734

Stockholders' equity          N/A       N/A         N/A       $ 97,360     $ 92,920      $100,269

Net assets in liquidation $34,408   $83,561         N/A            N/A          N/A           N/A

Net assets in liquidation
 per share                  $1.67   $  4.06         N/A            N/A          N/A           N/A

</TABLE>


---------------
(1)     Includes the results of Carlyle for the full period and reflects the
        results of HealthPlan Services under the equity method of accounting.

(2)     Includes the results of HealthPlan Services from September 30, 1994, 
        the date of its acquisition.  Carlyle is included in the balance sheet
        at December 31, 1994.

(3)     Earnings per share amounts prior to 1997 have been restated to comply
        with Financial Accounting Standards No. 128.  See Notes to Financial
        Statements.

As a result of the adoption of the Plan, Noel has adopted the liquidation basis
of accounting for all periods subsequent to March 31, 1997. See Note 1 of Notes
to Financial Statements on page F-9.

See Note 11 of Notes to Financial Statements on page F-17 for factors that
affect the comparability of the information presented above.


                                       17


<PAGE>
<PAGE>




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

     The following discussion and analysis of financial condition and results of
operations of Noel Group, Inc. ("Noel") and its consolidated subsidiaries
(collectively the "Company") should be read in conjunction with the Company's
Financial Statements and Notes to Financial Statements.

LIQUIDITY AND CAPITAL RESOURCES:

     On December 31, 1998, Noel had cash and cash equivalents and short-term
investments of approximately $3.4 million. The future cash needs of Noel will be
dependent on the implementation of the Plan. It is management's intention that
Noel's existing liquid assets will be available to fund Noel's working capital
requirements and to meet its other obligations through the remainder of the
liquidation period. Pursuant to the Plan, subject to the payment or the
provision for payment of the Company's obligations, the cash proceeds of any
asset sales together with other available cash will be distributed from time to
time pro rata to the holders of the Common Stock on record dates selected by the
Board of Directors with respect to each such distribution. Noel believes that
its cash and cash equivalents and short-term investments are sufficient to fund
its working capital requirements through the completion of the Plan.

     A projected tax asset will be realized at the time that the 1999 Federal
income tax return is filed by carrying back the projected taxable loss in 1999
to 1997. The amount of the income tax refund would be subject to audit
adjustment by the IRS.

     In February 1998, Noel received a $3.5 million refund of estimated taxes
paid during 1997. On March 27, 1998, Noel paid a liquidating distribution of
$0.70 per outstanding share of Common Stock to shareholders of record at the
close of business on the March 20, 1998 record date, for a total of $14.4
million.

     On April 1, 1998, Noel was repaid $10.5 million, the face amount of a note
from Paragon Corporate Holdings, Inc. Noel had received this note as partial
payment for the sale of its interest in Curtis in November 1997.

     On April 30, 1998, Noel paid a liquidating distribution of $0.45 per
outstanding share of Common Stock to shareholders of record at the close of
business on the April 22, 1998 record date, for a total of approximately $9.3
million.

     On June 6, 1998, Noel received $4.5 million as partial payment for the sale
of its holding in Lincoln.

     On June 23, 1998, Noel received $11.6 million from the redemption of
9,391,929 shares of Carlyle preferred stock and $2.2 million of accrued
dividends.

     On August 14, 1998, Noel paid a liquidating distribution of $0.92 per
outstanding share of Common Stock to shareholders of record at the close of
business on the July 31, 1998 record date, for a total distribution of
approximately $18.9 million.

     Sources of potential liquidity include the sale or refinancing of current
holdings, dividends and preferred stock redemptions from current holdings.
Noel does not currently receive, nor expect to receive in the immediate future,
cash dividends from any of its holdings.

GOING-CONCERN BASIS STATEMENTS

RESULTS OF OPERATIONS:

OVERVIEW

     Noel's equity in HealthPlan Services', Novoeste's and Staffing Resources'
income or loss for the period ended March 31, 1997 and the year ended December
31, 1996, is included in income or loss from equity investments. The
consolidated selling, general, administrative and other expenses include
salaries, employee benefits, rent and other routine overhead expenses of the
Company, including legal, accounting and consulting fees. The following year to
year comparisons are based on the Company's consolidated results. An analysis of
each subsidiary is included in the comparison of segments section.


                                       18



<PAGE>
<PAGE>


     Noel's share of the income of HealthPlan Services for the three months
ended March 31, 1997 was $1.0 million, and its share of the losses of Novoeste
and Career Blazers was $.9 million and $.4 million, respectively.

     Noel and each of its subsidiaries file a separate federal income tax
return. As a result, the income tax provisions recorded by certain subsidiaries
cannot be offset by the losses reported by other entities on the Company's
consolidated financial statements.


THREE MONTHS ENDED MARCH 31, 1997 VERSUS MARCH 31, 1996 


     Sales decreased by $4.6 million to $38.5 million primarily due to decreased
sales at Carlyle of $7.3 million, offset by increased sales at Curtis
Industries, Inc. ("Curtis") of $2.7 million. Cost of sales decreased by $3.9
million to $20.7 million from $24.6 million in 1996, primarily due to decreased
cost of sales at Carlyle of $5.5 million offset by increased cost of sales at
Curtis of $1.5 million. Selling, general, administrative and other expenses
increased by $.5 million to $17.2 million in 1997 from $16.7 million in 1996.
Other income increased by $8.8 million primarily due to a gain recognized by
Noel in 1997 on the sale of 1.3 million shares of HealthPlan Common Stock,
offset by greater losses at Carlyle and Curtis of $5.3 million and $.6 million,
respectively. Provision for income taxes increased $9.8 million due to increased
tax provisions at Noel and Carlyle of $4.6 million and $5.2 million,
respectively.

COMPARISON OF SEGMENTS:

THREE MONTHS ENDED MARCH 31, 1997 VERSUS MARCH 31, 1996

INDUSTRIAL THREADS AND BUTTONS (CARLYLE)

     As a result of its sale on March 26, 1997 (see Footnote 11 to Notes to
Financial Statements on F-17), only two months of operating results from
Carlyle's thread division are included in the first quarter of 1997 as compared
to three full months during 1996.

     Sales during the first quarter of 1997 totaled $14.7 million as compared
with $22.0 million during the first quarter of 1996. Sales in the consumer
product segment decreased to $8.4 million as compared with $11.7 during the same
period in 1996. Sales in the industrial product segment decreased to $6.3
million as compared with $10.3 million during the first quarter of 1996. The
decrease in both segment's sales was attributable to the sale of Carlyle's
thread division. 

     The gross margin during the first quarter of 1997 totaled $4.2 million or
29.0% as compared with $6.1 million or 27.7% during the first quarter of 1996.
Gross margin in the consumer product segment totaled $3.1 million or 36.9% as
compared to $3.7 million or 31.5% in the first quarter of 1996. Gross margin in
the industrial product segment totaled $1.2 million or 18.5% as compared with
$2.4 million or 23.4% during the first quarter of 1996. The decrease in both
segment's gross margin dollars was primarily attributable to the sale of the
thread division.


     Selling, general, and administrative expenses totaled $2.6 million as
compared with $3.6 million during the same period in 1996. Selling, general, and
administrative expenses in the consumer product segment totaled $1.1 million
during the first quarter of 1997 as compared with $1.2 million during the first
quarter of 1996. Selling, general and administrative expenses in the industrial
product segment totaled $1.5 million during the first quarter of 1997 as
compared with $2.5 million during the first quarter of 1996. The decrease in
these expenses was primarily attributable to the sale of the thread division.


FASTENERS AND SECURITY PRODUCTS DISTRIBUTION (CURTIS) 


     On May 13, 1996, Curtis acquired certain assets of the Mechanics Choice
business of Avnet, Inc. for $6.5 million. Mechanics Choice is a distributor,
selling industrial maintenance and repair operations products similar to the
existing Curtis product line offering.


     Sales for the first quarter of 1997 increased $2.7 million or 16.1% to
$19.5 million from $16.8 million in the first quarter of 1996. Sales from the
Mechanics Choice division accounted for the increase.

     The gross margin percentage decreased to 64.6% in 1997 from 68.9% in 1996.
Lower margins incurred by the Mechanics Choice division are responsible for the
majority of the first quarter decline.


                                       19


<PAGE>
<PAGE>


     For the first quarter of 1997, selling, general and administrative
expenses, net of the Internal Revenue Service ("IRS") settlement discussed
below, increased $.9 million from the comparable 1996 quarter. The majority of
the first quarter increase is due to the added selling and distribution costs of
the Mechanics Choice division.


     Following a field examination in 1995, the IRS alleged that as a result of
certain tax law changes enacted in 1989 and 1991 Curtis' expense reimbursement
policy for the field sales force did not meet the definition of an accountable
plan, and thus contended all reimbursed expenses for 1993 and 1994 should be
treated as taxable wages. In April 1997, Curtis reached a settlement with the
IRS in connection with the expense reimbursement policy requiring the payment of
$1.0 million of taxes for 1993 through 1996. A $.9 million charge to record this
settlement, net of reserves, was recorded in the first quarter of 1997.


SNACK FOODS (LINCOLN)


     On June 6, 1995, Lincoln entered into an exclusive distribution agreement
with Planters Company, a division of Nabisco, Inc. ("Planters"), commencing on
July 17, 1995, for the sales and distribution of Fiddle Faddle and Screaming
Yellow Zonkers ("the Products"). Under the agreement, Planters is required to
purchase a minimum number of cases during each year ending on June 30. Lincoln
sells the Products to Planters at prices which are less than historical selling
prices. Planters in turn is responsible for the sales and distribution of the
Products to its customers and therefore Lincoln does not have any selling,
marketing or distribution costs on the Products. The financial impact of the
agreement versus historical results is a reduction in revenue and gross profit
which is offset by reduced selling, marketing and distribution costs.


     On February 28, 1997, this agreement was amended, extending its term until
December 31, 1997, at which time the distribution arrangement terminated.
Although the amendment and extension contained provisions designed to effect a
smooth transfer of the distribution business back to Lincoln, there can be no
assurance as to the long-term effects of this transition.

     Sales of $4.3 million for the quarter ended March 31, 1997, were equal to
sales in the corresponding period of 1996. Sales to Planters represented
approximately 68% and 64% of sales for the quarter ended March 31, 1997, and
1996, respectively.

     Gross profit decreased $.1 million to $.9 million for the three months of
1997 versus $1.0 million in the corresponding period of 1996 due to the mix of
products sold.


ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 


     Noel's investment in Ferropar is denominated in Brazilian Reals and is
subject to foreign currency exchange risk. Since the merger transaction occurred
in June 1998, the Reals per Dollar exchange rate has declined by approximately
35%. Consequently, as of March 22, 1999, the carrying value of $6.3 million
represents an approximate discount of 38% to the Real value established in the
merger transaction.


     Noel's investment in Carlyle preferred stock has a stated interest rate of
6% and is currently due. While the redemption value is fixed and not subject to
changes in interest rates, the value that Noel would received in a sale
transaction would be negatively impacted if interest rates were to rise in the
future.


     Following the distribution of trust units to Noel shareholders representing
Noel's interest in Career Blazers on April 12, 1999, Noel will no longer be
subject to the market risks associated with the Career Blazers common stock
which trades over the counter. As conditions in the future warrant, the trust is
expected to distribute the shares to the unit owners or sell the shares in the
market, in a private placement or in an underwritten public offering, or a
combination of these options.


     See Footnote 2 of Notes to Financial Statements for a more detailed
discussion of market risk as it relates to Noel's holdings.


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. 

     Certain of the information required is set forth under the captions
"Statement of Net Assets in Liquidation", "Statement of Changes in Net Assets in
Liquidation," "Consolidated Balance Sheet," "Consolidated Statements of


                                       20


<PAGE>
<PAGE>



Operations," "Consolidated Statements of Cash Flows," "Consolidated Statements
of Changes in Stockholders' Equity" and "Notes to Consolidated Financial
Statements" on pages F-1 through F-26 hereof. See also the Noel Group, Inc.
Financial Statement Schedule included elsewhere herein.

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

     None.







                                       21


<PAGE>
<PAGE>




                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. 

     The information required with respect to directors and the information
required by Rule 405 of Regulation S-K is set forth under the caption "Election
of Directors" in the Company's definitive Proxy Statement to be filed pursuant
to Regulation 14A and is incorporated herein by reference. 


     The executive officers of the Company are as follows: 

<TABLE>
<CAPTION>
                                                                 Officer
Name                     Position(s)                    Age      Since
----                     ----------                     ---      -----
<S>                      <C>                            <C>      <C> 
Stanley R. Rawn, Jr.     Chief Executive Officer         71      March 1995
Todd K. West             Vice President - Finance,       38      August 1990
                         Chief Financial Officer and
                         Secretary
</TABLE>

     There is no arrangement or understanding between any director or executive
officer and any other person pursuant to which he was selected as a director or
officer. Directors hold office until the next Annual Meeting of Shareholders and
until their successors have been elected and qualified. The executive officers
of the Company are elected at the Annual Meeting of the Board of Directors
immediately following the Annual Meeting of Shareholders and hold office until
their successors have been elected and qualified or their earlier resignation or
removal. No family relationship currently exists among any of the executive
officers and directors of the Company.


                            BIOGRAPHICAL INFORMATION


     Stanley R. Rawn, Jr. became Chief Executive Officer of Noel effective March
1995. Mr. Rawn served as a director of Noel and its predecessor company from
1969 until January 1987 and has served as a director of Noel since June 1990.
From November 1985 until May 1992, Mr. Rawn was Chairman and Chief Executive
Officer and a director of Adobe Resources Corporation, an oil and gas
exploration and production company which merged into Santa Fe Energy Resources,
Inc. in May 1992. Mr. Rawn is a Senior Managing Director and a director of Swiss
Army'r' Brands, Inc. ("Swiss Army"), the exclusive United States and Canadian
importer and distributor of Victorinox Original Swiss Army Officers' knives and
professional cutlery, as well as the marketer of Swiss Army watches and other
products. Mr. Rawn is also a director of Hudson River Capital LLC, an LBO
partnership, a director of Victory Ventures LLC, a venture capital partnership,
a director of Paradyme Corporation, a professional employee organization, a
director of First International Oil Corporation and a director of Career
Blazers. Mr. Rawn has served on the Board of The Jet Propulsion Laboratory since
1976 and has been a Trustee of the California Institute of Technology since
1974.


     Todd K. West has served as Vice President-Finance since August 1990, as
Secretary since November 1991 and as Chief Financial Officer since January 1993.
Mr. West also served as Treasurer and Chief Financial Officer from August 1990
until November 1991. Mr. West joined The Prospect Group, Inc., a company which
prior to its adoption of a Plan of Complete Liquidation and Dissolution in 1990
and subsequent dissolution in 1997, conducted its major operations through
subsidiaries acquired in leveraged buyout transactions, in September 1988 and
served as Assistant Vice President-Finance, Assistant Treasurer and Assistant
Secretary from February 1989 until November 1990, when he became Vice
President-Finance, Chief Financial Officer, Treasurer and Secretary of Prospect.
Mr. West became a certified public accountant in 1987.

ITEM 11. EXECUTIVE COMPENSATION.

     The information required is set forth under the captions "Management
Compensation" and "Certain Transactions" in the Company's definitive Proxy
Statement to be filed pursuant to Regulation 14A and is incorporated herein by
reference.

                                      22



<PAGE>
<PAGE>

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

     The information required is set forth under the caption "Security Ownership
of Certain Beneficial Owners" in the Company's definitive Proxy Statement to be
filed pursuant to Regulation 14A and is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     The information required is set forth under the caption "Certain
Transactions" in the Company's definitive Proxy Statement to be filed pursuant
to Regulation 14A and is incorporated herein by reference.


                                    PART IV

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

         (a) 
         (1) - (2)  Financial statements and financial statement schedules. 

     The consolidated financial statements and financial statement schedules
listed in the accompanying Index to Financial Statements and Financial Statement
Schedules are filed as part of this annual report.

     (b) Reports on Form 8-K.

         Not applicable.


                                       23



<PAGE>
<PAGE>




                                   SIGNATURES

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

                                NOEL GROUP, INC.
                                (Registrant)

                                By /s/ Stanley R. Rawn, Jr.
                                ----------------------------
                                   Stanley R. Rawn, Jr.
                                   Chief Executive Officer

                               Date: March 29, 1999

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

/s/ Stanley R. Rawn, Jr.                                   March 29, 1999
----------------------------------
Stanley R. Rawn, Jr.
Chief Executive Officer;
Director (Principal Executive Officer)


/s/ Todd K. West                                           March 29, 1999
----------------------------------
Todd K. West
Vice President-Finance, Chief Financial Officer
and Secretary (Principal Financial Officer and
Principal Accounting Officer)


/s/ Joseph S. DiMartino                                    March 29, 1999
----------------------------------
Joseph S. DiMartino
Director


/s/ Herbert M. Friedman                                    March 29, 1999
----------------------------------
Herbert M. Friedman
Director


/s/ James K. Murray, Jr.                                   March 29, 1999
----------------------------------
James K. Murray, Jr.
Director


/s/ Samuel F. Pryor, III                                   March 29, 1999
----------------------------------
Samuel F. Pryor, III
Director


/s/ James A. Stern                                         March 29, 1999
----------------------------------
James A. Stern
Director



                                      A-1


<PAGE>
<PAGE>


                                NOEL GROUP, INC.
                          INDEX TO FINANCIAL STATEMENTS
                                       AND
                          FINANCIAL STATEMENT SCHEDULES

                               ITEM 14(a)(1) - (2)

<TABLE>
<CAPTION>
                                                                                                   Reference
                                                                                                   ---------
<S>                                                                                                <C>
Report of Independent Public Accountants ..........................................................    F-2

NOEL GROUP, INC.:
        Statements of Net Assets in Liquidation
          December 31, 1998 and 1997 ..............................................................    F-3

        Statements of Changes in Net Assets in Liquidation
          For the Year Ended December 31, 1998 and for the Nine Months Ended December 31, 1997.....    F-4

NOEL GROUP, INC. AND SUBSIDIARIES:
        Consolidated Statements of Operations
          For the Three Months Ended March 31, 1997 and for the Year Ended
          December 31, 1996 .......................................................................    F-5

        Consolidated Statements of Cash Flows
          For the Three Months Ended March 31, 1997 and for the Year Ended
          December 31, 1996 .......................................................................    F-6

        Consolidated Statements of Changes in Stockholders' Equity
          For the Three Months Ended March 31, 1997 and for the Year Ended
          December 31, 1996 .......................................................................    F-8

        Notes to Financial Statements .............................................................    F-9

HEALTHPLAN SERVICES CORPORATION AND SUBSIDIARIES:
        Report of Independent Certified Public Accountants ........................................   F-27

STAFFING RESOURCES, INC.:
        Report of Independent Accountants .........................................................   F-28

Schedule
   No.
--------
II      Valuation and Qualifying Accounts
          For the Year Ended December 31, 1996 ....................................................    S-1
</TABLE>

Financial statement schedules not included in this report have been omitted
because they are not applicable or the required information is shown in the
financial statements or the notes thereto.

                                      F-1

<PAGE>
<PAGE>


REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

TO THE STOCKHOLDERS AND BOARD OF DIRECTORS OF NOEL GROUP, INC.

We have audited the accompanying consolidated statements of operations, changes
in stockholders' equity and cash flows of Noel Group, Inc., a Delaware
Corporation, and subsidiaries, for the period from January 1, 1997 to March 31,
1997 and for the year ended December 31, 1996. We also have audited the
statement of net assets in liquidation as of December 31, 1998 and 1997, and the
related statement of changes in net assets in liquidation for the year ended
December 31, 1998 and for the period from April 1, 1997 to December 31, 1997.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits. We did not audit the consolidated financial statements of
HealthPlan Services Corporation ("HPS") and Staffing Resources, Inc.
("Staffing"), the investments which are reflected in the accompanying financial
statements using the equity method of accounting in 1996. The equity in HPS's
net loss is $.5 million for 1996. The equity in the net loss of Staffing is $1.2
million for 1996. The financial statements of HPS and Staffing were audited by
other auditors whose reports thereon have been furnished to us and our opinion,
insofar as it relates to the amounts included for HPS and Staffing in 1996 is
based solely on the reports of the other auditors.

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

As described in Note 1 to the financial statements, the shareholders of Noel
Group, Inc. approved a plan of complete liquidation and dissolution on March 19,
1997, and the Company commenced carrying out the plan shortly thereafter. As a
result, the Company has changed its basis of accounting for periods subsequent
to March 31, 1997, from the going-concern basis to the liquidation basis.
Accordingly, the carrying values of the remaining assets as of December 31, 1998
and 1997, are presented at estimated realizable value and liabilities are
presented at estimated settlement amounts.

In our opinion, based on our audits and the reports of other auditors, the
statements of operations, changes in stockholders' equity and cash flows
referred to above present fairly, in all material respects, the results of
operations and cash flows of Noel Group, Inc. and subsidiaries for the period
from January 1, 1997 to March 31, 1997, and for the year ended December 31,
1996, Noel Group, Inc.'s net assets in liquidation as of December 31, 1998 and
1997, and the changes in its net assets in liquidation for the year ended
December 31, 1998 and the period from April 1, 1997 to December 31, 1997, in
conformity with generally accepted accounting principles applied on the basis
described in the preceding paragraph.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the index to
consolidated financial statements is the responsibility of the Company's
management and is presented for purposes of complying with the Securities and
Exchange Commission's rules and is not part of the basic consolidated financial
statements. This schedule has been subjected to the auditing procedures applied
in the audits of the basic consolidated financial statements and, in our
opinion, fairly states, in all material respects, the financial data required to
be set forth therein in relation to the basic consolidated financial statements
taken as a whole.

                                           Arthur Andersen LLP
New York, New York
March 23, 1999

                                      F-2

<PAGE>
<PAGE>


                         PART 1 - FINANCIAL INFORMATION

ITEM 1. - FINANCIAL STATEMENTS
                                NOEL GROUP, INC.
                     STATEMENTS OF NET ASSETS IN LIQUIDATION
                               (Liquidation Basis)
                (Dollars in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                              December 31,
                                                         1998             1997
                                                         ----             ----
<S>                                                  <C>              <C>
ASSETS

Cash and cash equivalents                               $   250         $ 3,493
Short-term investments                                    3,151           9,697
                                                        -------         -------
Total cash and short-term investments                     3,401          13,190


Investments (Note 2)                                     27,826          58,183
Income taxes (Note 4)                                     5,500           5,134
Other assets (Note 2)                                       321          12,405
                                                        -------         -------
Total assets                                             37,048          88,912
                                                        -------         -------
LIABILITIES

Accounts payable                                           --               281
Accrued expenses (Note 5)                                 2,640           5,070
                                                        -------         -------
Total liabilities                                         2,640           5,351
                                                        -------         -------
Net assets in liquidation                               $34,408         $83,561
                                                        =======         =======
Number of common shares outstanding                  20,567,757      20,567,757
                                                    ===========     ===========
Net assets in liquidation per outstanding share           $1.67           $4.06
                                                          =====           =====
</TABLE>



   The accompanying notes are an integral part of these financial statements.

                                      F-3

<PAGE>
<PAGE>


                                NOEL GROUP, INC.
               STATEMENTS OF CHANGES IN NET ASSETS IN LIQUIDATION
                               (Liquidation Basis)
                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                                                                  For the Nine
                                                     For the Year Ended           Months Ended
                                                     December 31, 1998          December 31, 1997
                                                     -----------------          -----------------
<S>                                                  <C>                        <C>
Net assets in liquidation at January 1                   $  83,561

Net assets in liquidation at April 1 (Note 6)                                     $ 158,353

Changes in estimated liquidation values of assets and
   liabilities (Note 3)                                     (6,579)                  (9,001)

Liquidating distributions (Note 8)                         (42,574)                 (65,791)
                                                         ---------                ---------
Net assets in liquidation at December 31                 $  34,408                $  83,561
                                                         =========                =========
</TABLE>



   The accompanying notes are an integral part of these financial statements.



                                      F-4

<PAGE>
<PAGE>


                        NOEL GROUP, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                              (Going-Concern Basis)
                (Dollars in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                          For the Three Months       For the Year Ended
                                                          Ended March 31, 1997       December 31, 1996
                                                          --------------------       ------------------
<S>                                                       <C>                        <C>
REVENUE:
     Sales                                                       $ 38,473              $189,325

COSTS AND EXPENSES:
     Cost of sales                                                 20,711               106,426
     Selling, general, administrative and other expenses           17,220                69,246
       Loss on disposal of Carlyle's thread division                4,364                  --
       Depreciation and amortization                                  862                 4,459
                                                                  -------               -------
                                                                   43,157               180,131
                                                                  -------               -------
Operating income (loss)                                            (4,684)                9,194
                                                                  -------               -------

OTHER INCOME (EXPENSE):
       Gain on sale of HealthPlan Services Corporation
         (Note 11)                                                 15,098                  --
       Other income (Note 14)                                         237                   599
       Loss from equity investments                                  (354)               (4,707)
       Interest expense                                            (1,670)               (7,970)
       Minority interest                                              501                (1,363)
                                                                  -------               -------
                                                                   13,812               (13,441)
                                                                  -------               -------
Income (Loss) from continuing operations before income
   taxes                                                            9,128                (4,247)
Benefit (Provision) for income taxes (Note 15)                    (10,437)                1,142
                                                                  -------               -------
Loss from continuing operations                                    (1,309)               (3,105)
Income from disposal of discontinued operations                      --                     448
                                                                  -------               -------
            Net loss                                             $ (1,309)             $ (2,657)
                                                                  =======               =======

BASIC EARNINGS PER SHARE FROM:
      Continuing operations                                        $(0.06)               $(0.15)
      Discontinued operations                                        0.00                  0.02
                                                                   ------                ------
            Net loss                                               $(0.06)               $(0.13)
                                                                   ======                ======
Weighted average shares outstanding                            20,402,891            20,189,647
                                                               ==========            ==========
</TABLE>



   The accompanying notes are an integral part of these financial statements.


                                      F-5

<PAGE>
<PAGE>


                        NOEL GROUP, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                              (Going-Concern Basis)
                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                                                  For the Three Months        For the Year Ended
                                                                  Ended March 31, 1997         December 31, 1996
                                                                  --------------------        ------------------
<S>                                                               <C>                         <C>
Cash Flows from Operating Activities:
       Net Loss                                                           $(1,309)                 $(2,657)

Adjustments to reconcile net loss to net cash
provided from (used for) operating activities:
       Loss from equity investments                                           354                    4,707
       Depreciation and amortization                                        1,260                    6,873
       Net (gain) loss on securities                                      (15,098)                      85
       Provisions for doubtful accounts and valuation of
       inventories                                                            174                      (40)
       (Benefit) Provision for deferred income taxes                       (2,664)                   2,729
       Gain on property and equipment                                         --                      (131)
       Minority interest, net                                                (501)                   1,363
       Loss on disposal of Carlyle's thread division                        4,364                      --
       Income from disposal of discontinued operations                        --                      (448)
       Other, net                                                              86                      530

Changes in certain assets and liabilities, net of
acquisitions:
       Accounts receivable.                                                  (521)                  (2,885)
       Inventories                                                           (673)                  (1,101)
       Trade accounts payable                                                 406                       53
       Income taxes payable                                                 8,493                      --
       Accrued compensation and benefits                                     (430)                    (209)
       Other, net                                                           3,251                   (5,534)

          Discontinued operations                                          (3,141)                  (1,331)
                                                                           ------                   ------
                 Total adjustments                                         (4,640)                   4,661
                                                                           ------                   ------
Net cash provided from (used for) operating activities                     (5,949)                   2,004
                                                                           ------                   ------
</TABLE>



                                                                     (continued)


   The accompanying notes are an integral part of these financial statements.


                                      F-6

<PAGE>
<PAGE>


                        NOEL GROUP, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                              (Going-Concern Basis)
                             (Dollars in thousands)
                                   (continued)

<TABLE>
<CAPTION>
                                                                  For the Three Months        For the Year Ended
                                                                  Ended March 31, 1997         December 31, 1996
                                                                  --------------------        ------------------
<S>                                                               <C>                         <C>
Cash Flows From Investing Activities:
       Payments for companies purchased, net of cash                                    
               acquired                                                       --                      (6,716)
       (Purchases) Sales of short-term investments, net                     (2,752)                    9,399
       Sales (Purchases) of investments                                     78,324                    (8,084)
       Sales of discontinued operations                                       --                       8,190
       Purchases of property, plant and equipment                             (787)                   (4,313)
       Sales of property, plant and equipment                                 --                       2,175
       Other, net                                                             (148)                   (1,653)
                                                                            ------                    ------
Net cash provided from (used for) investing activities                      74,637                    (1,002)
                                                                           -------                  --------
Cash Flows From Financing Activities:
       Borrowings from revolving credit line and long-
               term debt                                                    41,121                   135,441
       Repayments of revolving credit line and long-term
       debt                                                                (76,698)                 (144,528)
       Issuance of common stock, net                                           910                       --
       Change in other long-term liabilities                                    90                    (1,287)
       Other, net                                                              (19)                      (95)
                                                                           -------                  --------

Net cash used for financing activities                                     (34,596)                  (10,469)
                                                                           -------                  --------
Effect of exchange rates on cash                                               (38)                      138
                                                                           -------                  --------
Net increase (decrease) in cash and cash equivalents                        34,054                    (9,329)
Cash and cash equivalents at beginning of period                             1,117                    10,446
                                                                           -------                  --------
Cash and cash equivalents at end of period                                 $35,171                    $1,117
                                                                           =======                  ========
</TABLE>



   The accompanying notes are an integral part of these financial statements.

                                      F-7


<PAGE>

<PAGE>


                        NOEL GROUP, INC. AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
 FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND THE YEAR ENDED DECEMBER 31, 1996
                              (Going-Concern Basis)
                                 (In thousands)


<TABLE>
<CAPTION>
                                                              Accumulated  
                         Common Stock  Capital in                Other         Treasury Stock
                                       Excess of  Accumulated Comprehensive                      Stockholders'    Comprehensive
                        Shares  Amount Par Value   Deficit    Income (Loss)     Shares   Amount   Equity          Income (Loss)
                        ------  ------ ---------   -------    -------------     -----    ------   ------         --------------
<S>                     <C>     <C>     <C>        <C>        <C>              <C>      <C>      <C>               <C>
Balance, January 1,
  1996 ................  20,203  $2,020  $204,466  $(112,466)      $(613)         11     $(487)    $92,920

Net loss...............    --      --        --       (2,657)        --           --        --      (2,657)        $(2,657)

Cumulative translation
 adjustment............    --      --        --         --           132          --        --         132             132
                                                                                                                   --------
Comprehensive loss......                                                                                           $(2,525)
                                                                                                                   ========
Subsidiary stock 
transactions (Note 11)..   --      --       7,004       --           --           --        --       7,004

Purchase of treasury
 stock..................   --      --        --         --           --           24      (204)       (204)

Issuance of common
 stock..................     19       2       163       --           --           --        --         165
                         ------  ------  --------  ----------      -----          --      -----    -------
Balance, December 31,
 1996................... 20,222   2,022   211,633   (115,123)       (481)         35      (691)     97,360

Net Loss ..............    --      --        --       (1,309)        --           --        --      (1,309)        $(1,309)

Unrealized holding
 gains ................    --      --        --         --           908          --        --         908             908

Cumulative translation
 adjustment ...........    --      --        --         --           (38)         --        --         (38)            (38)
                                                                                                                   --------
Comprehensive loss...                                                                                              $  (439)
                                                                                                                   ========
Subsidiary stock
 transactions
 (Note 11).............    --      --          48       --           --           --        --          48

Issuance of common
 stock ................     233      24     1,610       --           --           --        --       1,634
                         ------  ------  --------  ----------      -----          --      -----    ------- 
Balance, March 31,
 1997..................  20,455  $2,046  $213,291  $(116,432)      $ 389          35     $(691)    $98,603
                         ======  ======  ========  ==========      =====          ==      =====    =======
</TABLE>



   The accompanying notes are an integral part of these financial statements.

                                      F-8

<PAGE>
<PAGE>


                                NOEL GROUP, INC.
                          NOTES TO FINANCIAL STATEMENTS


     This Report on Form 10-K contains, in addition to historical information,
certain forward-looking statements, including those regarding valuation of
assets and liabilities. Such statements, including, as more fully set forth
below, those relating to management's estimates of the net value of the
Company's assets in liquidation, involve certain risks and uncertainties,
including, without limitation, those risks and uncertainties discussed below.
Should one or more of these risks or uncertainties materialize, actual outcomes
may vary materially from those indicated.

LIQUIDATION BASIS STATEMENTS

1.   PLAN OF COMPLETE LIQUIDATION AND DISSOLUTION

     On March 19, 1997, the shareholders of Noel Group, Inc. ("Noel") approved a
Plan of Complete Liquidation and Dissolution (the "Plan"), which had been
adopted by Noel's Board of Directors on May 21, 1996. Under the Plan, Noel is
being liquidated (i) by the sale of such of its assets as are not to be
distributed in kind to its shareholders, and (ii) after paying or providing for
all its claims, obligations and expenses, by cash and in-kind distributions to
its shareholders pro rata and if required by the Plan or deemed necessary by the
Board of Directors, by distributions of its assets from time to time to one or
more liquidating trusts established for the benefit of the shareholders, or by a
final distribution of its then remaining assets to a liquidating trust
established for the benefit of the shareholders.

     As a result of the adoption of the Plan by the shareholders, Noel adopted
the liquidation basis of accounting as of April 1, 1997. Under the liquidation
basis of accounting, assets are stated at their estimated net realizable values
and liabilities are stated at their anticipated settlement amounts. See Note 2
for a specific discussion of the methods used to determine estimated net
realizable values of investments.

     The valuation of assets and liabilities necessarily requires many estimates
and assumptions and there are substantial uncertainties in carrying out the
provisions of the Plan. The actual value of any liquidating distributions will
depend upon a variety of factors including, but not limited to, the actual
market prices of any securities distributed in-kind when they are distributed,
the actual proceeds from the sale or other disposition of any of Noel's assets,
the ultimate settlement amounts of Noel's liabilities and obligations, actual
costs incurred in connection with carrying out the Plan, including
administrative costs during the liquidation period and the actual timing of
distributions.

     The valuations presented in the accompanying Statements of Net Assets in
Liquidation represent management's estimates, based on present facts and
circumstances, of the net realizable values of assets and costs associated with
carrying out the provisions of the Plan based on the assumptions set forth in
the accompanying notes, which assumptions management believes to be reasonable,
based on present facts and circumstances. The actual values and costs are
expected to differ from the amounts shown herein and could be higher or lower
than the amounts recorded. Accordingly, it is not possible to predict the
aggregate net values ultimately distributable to shareholders and no assurance
can be given that the amount to be received in liquidation will equal or exceed
the price or prices at which Noel Common Stock has generally traded or is
expected to trade in the future.

2.   INVESTMENTS AND OTHER ASSETS

     Investments:

     Investments are recorded at their estimated net realizable values in
liquidation. This valuation may not be reflective of actual amounts obtained
when and if these investments are distributed or of prices that might be
obtained in actual future transactions. Because of the inherent uncertainty of
the valuation of securities both

                                      F-9

<PAGE>
<PAGE>

where a public market exists and where it does not exist, the estimated net
realizable values in liquidation shown may materially differ from the actual
amounts which may be received in the future.

     For investments where a public market exists, and the entity is subject to
the periodic reporting requirements of the Securities Exchange Act of 1934, as
amended, the estimated net realizable values in liquidation are calculated by
multiplying the market price by the number of common shares owned without
adjustment for whether the shares owned are registered for sale, any other
restriction on transfer, control premiums, or whether the market has sufficient
liquidity to support the sale of the volume of securities owned at the quoted
prices. This valuation methodology applied only to Lincoln Snacks Company
("Lincoln") at December 31, 1997.

     The components of investments are as follows (dollars in thousands):

<TABLE>
<CAPTION>
                                                                December 31,
                                                             1998         1997
                                                             ----         ----
<S>                                                        <C>          <C>
Career Blazers Inc. ("Career Blazers")                     $10,535(a)   $22,287

Carlyle Industries, Inc. ("Carlyle")                        10,788(b)    21,000

Ferronorte Participacoes, S.A. ("Ferropar")                  6,302(c)     8,000

Lincoln                                                         --        5,890(d)

Other holdings                                                 201        1,006
                                                           -------      -------
Total investments at estimated liquidation basis amounts   $27,826      $58,183
                                                           =======      =======
</TABLE>

(a)  Noel owns 2,026,104 shares (11.6%) of Career Blazers common stock which are
     recorded at $5.20 per share, the weighted average trading price of the
     442,100 shares of Career Blazers common stock which traded in December
     1998. For the reasons discussed below, Noel management has determined that
     this weighted average price is the best indicator of value as of December
     31, 1998. Approximately one year has passed since the merger of Staffing
     Resources, Inc. and Career Blazers Personnel Services, Inc. occurred which
     provided the basis for the $11.00 per share valuation at December 31, 1997
     and the trading volume of 442,100 shares in December 1998 represented a
     significant increase from prior months' volumes. During 1998, Career
     Blazers financial statements have been publicly available and the Career
     Blazers common stock traded in a range of $2.00 to $7.00 and the weighted
     average trading price for the second half of 1998 was approximately $5.30.
     The trading range through March of 1999 was between $4.125 and $6.375.

     The valuation at December 31, 1998, which is based on the trading market
     for Career Blazers, may not be reflective of actual amounts obtained when
     this investment is distributed, or of prices that might be obtained in an
     actual future transaction. The trading market for Career Blazers is
     limited, Career Blazers is not subject to periodic reporting requirements
     under the Securities Exchange Act of 1934, as amended, and Noel's shares of
     Career Blazers are not registered to trade in this market.

     Career Blazers recorded service revenue of approximately $427,332,000 and
     $380,589,000 in 1998 and 1997, respectively.

     On March 17, 1999, Noel announced the distribution of trust units
     representing ownership of its entire holding of Career Blazers common stock
     on April 12, 1999 to Noel shareholders of record on March 29, 1999.

     Career Blazers, headquartered in New York and Dallas, is a leading provider
     of integrated staffing and training services, operating through 170 branch
     office in 18 states. The present company was created in December 1997 by
     the merger of Career Blazers Personnel Services, Inc. and Staffing
     Resources, Inc.

                                      F-10

<PAGE>
<PAGE>


(b)  Noel's investment in Carlyle comprises 9,920,908 shares of Carlyle series B
     preferred stock with a redemption value of $9,920,908 and accrued dividends
     of approximately $2,723,000 at December 31, 1998. The shares of Carlyle
     preferred series B stock are recorded based on management's assessment of a
     variety of market factors including, an evaluation of the projected
     operating results of Carlyle. As of December 31, 1998, Carlyle is in
     default on its obligation to Noel to redeem approximately $6,059,000 of the
     liquidation preference of its preferred stock as well as accumulated unpaid
     dividends of approximately $2,723,000 to the extent of its legally
     available funds.

     Because of the unique characteristics of the investment in Carlyle and
     non-marketability of the Carlyle preferred stock, the valuation of this
     investment is highly judgmental and subject to an unusual degree of
     uncertainty. The eventual amount realized in an actual transaction may be
     substantially less than the recorded value. Also, for various reasons,
     included those stated below, there may be delays in realizing Noel's
     holding of Carlyle preferred stock.

     On June 23, 1998, Carlyle redeemed 9,391,929 shares of its preferred stock
     which Noel held along with accrued dividends of $2,211,521 for a total
     payment of $11,603,450. The redeemed shares were valued at approximately
     $10,212,000 on the December 31, 1997, Statement of Net Assets in
     Liquidation. Carlyle financed this redemption with newly obtained bank
     financing.

     Carlyle recorded net sales of approximately $23,801,000 and $19,641,000 and
     net income of $2,021,000 and net loss of $7,835,000 in 1998 and 1997,
     respectively.

     Noel and Carlyle are engaged in discussions with a view of satisfying
     Carlyle's remaining obligations to the holders of the preferred stock in
     accordance with the terms of its charter and consistent with its resources.
     Discussions have dealt with the amount and timing of payments and possible
     modifications of the terms of the preferred stock. Any such modifications
     would require the agreement of Carlyle and the holders of the preferred
     stock. Carlyle has informed Noel that it intends to fulfill its obligations
     to its preferred shareholders, as required by Carlyle's charter, to the
     extent that Carlyle has cash resources in excess of those required to
     operate its business. Carlyle has also informed Noel that, as Carlyle
     believes that it does not currently have such excess resources, its ability
     to make payments on account of the preferred stock in the future will
     depend on Carlyle's future cash flow, the timing of the settlement of the
     liabilities recorded on its financial statements, the outcome of its
     discussions with Noel described above, the ability of Carlyle to obtain
     additional financing and compliance with Carlyle's new credit facility
     which presently permits only specified payment amounts, including 25% of
     "excess cash flow", as defined in the agreement.

     The Carlyle board of directors is continuing its review of Carlyle's
     strategic alternatives, including, among other things, the sale of Carlyle
     through merger, sale of stock or otherwise, possible acquisitions by
     Carlyle and possible refinancing. Any such transaction and/or the
     discussions between the companies may result in the modification of the
     terms of the preferred stock or in the acceleration of the redemption of
     the preferred stock and/or the reduction in the total amounts eventually
     received by Noel for its holdings of Carlyle preferred stock.

     In addition, Carlyle has agreed to notify the Pension Benefits Guaranty
     Corporation ("PBGC") prior to making any dividend or redemption payments.
     Carlyle's decision to make any such payments will depend on the successful
     resolution of any issues which may arise with the PBGC relating to
     Carlyle's unfunded liability to its benefit plan.

     Carlyle is a packager and distributor of buttons, gifts and craft products.

(c)  Noel owns 10,624,886 shares of Ferropar which are recorded at a 60%
     discount to the third party valuation, which was determined at the time of
     the reorganization of Novoeste S.A. and Ferronorte, S.A. Ferrovia Norte
     Brasil to form Ferropar in June 1998. The discount percentage reflects
     illiquidity and the risks of operating in Brazil, including foreign
     currency risk. Since the merger transaction occurred, the Reals per Dollar
     exchange rate has declined by approximately 35%. Consequently, as of March
     22, 1999, the

                                      F-11

<PAGE>
<PAGE>

     carrying value of $6.3 million represents an approximate discount of 38% to
     the Real value established in the merger transaction. While the level of
     uncertainty related to the Brazilian economy has increased, there have been
     no events at Ferropar, which Noel is aware of, which indicate the need for
     an additional discount, however, Noel cannot predict how future
     developments to Brazil's economy or to the exchange rate would impact the
     value of this investment. At December 31, 1997, this investment was
     recorded at cost.

     Ferropar holds two concessions to operate privatized railroads in Brazil.
     Realization of this investment is dependent upon a sale by Noel of its
     interest in Ferropar. In February 1999, Noel engaged a Brazilian investment
     bank to sell its shares. A sale is projected for the second quarter of
     1999. The actual amount realized for this investment could be lower or
     higher than the amount recorded.

(d)  In June 1998, Noel sold 3,769,755 shares of Lincoln common stock to
     Brynwood Partners III, LP for total proceeds of $7,540,000. The value
     recorded at December 31, 1997 is based on the closing market price of
     Lincoln common stock on that date.

     Other Assets:

     The components of other assets are as follows (dollars in thousands):

<TABLE>
<CAPTION>
                                                                December 31,
                                                             1998         1997
                                                             ----         ----
<S>                                                          <C>         <C>
Note receivable for Curtis Industries, Inc. sale             $ --        $10,454

TDX distribution receivable (Note 8)                           --            892

Other                                                         321          1,059
                                                             ----        -------
                                                             $321        $12,405
                                                             ====        =======

     On November 6, 1997, an agreement was signed merging Curtis Industries,
Inc. ("Curtis") with a subsidiary of Paragon Corporate Holdings, Inc. Under the
agreement, Noel received $14,712,000 for its entire holding of Curtis,
comprising $4,258,000 in cash and a note for $10,454,000, which was included in
other assets at December 31, 1997.

3.   CHANGES IN ESTIMATED LIQUIDATION VALUES OF ASSETS AND LIABILITIES

     The changes in the estimated liquidation values of assets and liabilities
are as follows (dollars in thousands):


</TABLE>
<TABLE>
<CAPTION>
                                                                For the Year   For the Nine Months
                                                                    Ended             Ended
                                                                 December 31,     December 31,
                                                                 ------------     ------------
                                                                     1998             1997
                                                                     ----             ----
<S>                                                               <C>              <C>
Increase (decrease) in realized investment values, net             $  3,310         $ (4,963)

(Decrease) increase in unrealized investment values, net            (13,671)           3,284

To adjust estimated accrued expenses                                   (631)          (2,185)

To adjust estimated income taxes                                      4,413              679

To adjust other assets                                                   --             (364)
                                                                   --------          -------
Total adjustments                                                    (6,579)          (3,549)

To reflect impact of settlement of options and warrants (Note 7)         --           (5,452)
                                                                   --------          -------
                                                                   $ (6,579)         $(9,001)
                                                                   ========          =======

</TABLE>

                                      F-12

<PAGE>
<PAGE>


4.   INCOME TAXES

     The income tax asset at December 31, 1998 and 1997, reflects the
liquidation basis of accounting. Estimated income taxes are calculated at a 35%
rate on the taxable income and losses which would be generated if the assets
were realized and liabilities settled at the amounts shown on the financial
statements. This estimate is subject to significant variation if, among other
things, the actual values of assets distributed, sold or otherwise disposed of
varies from current estimates. The income tax asset is projected to be realized
through the filing of the 1998 and 1999 tax returns and assumes that Noel's
liquidation will be completed by December 31, 1999. The bulk of the projected
tax asset will be realized by carrying back the projected taxable loss in 1999
to 1997. Events subsequent to December 31, 1998, may limit Noel's ability
to carry back the projected 1999 loss due to the change in ownership provisions
of Section 382 of the Internal Revenue Code. The amount of the income tax
refund would be subject to audit adjustment by the IRS.

     The components of the income tax asset are as follows (dollars in
thousands):
<TABLE>
<CAPTION>
                                                               December 31,
                                                            1998        1997
                                                            ----        ----
<S>                                                         <C>       <C>
Net unrealized capital loss (gain)                          $5,002    $   (222)

Net realized capital gain                                     (139)    (16,130)

Realizable net operating loss carryforwards                    145       3,280

Loss from the settlement of recorded liabilities               490       8,442
                                                            ------    --------
Net income tax asset (liability)                             5,498      (4,630)

Estimated taxes paid and refund carryforwards                    2       9,764
                                                            ------    --------
Net income tax asset                                        $5,500    $  5,134
                                                            ======    ========
</TABLE>

     Noel had additional net operating loss carryforwards of approximately
$8,133,000 at December 31, 1998, which expire from 2004 through 2012. Noel has
undergone "ownership changes" within the meaning of Section 382 of the Internal
Revenue Code of 1986, as amended. Consequently, future utilization of these
Federal tax loss carryforwards is significantly limited. If Noel's assets and
liabilities are realized at the values recorded at December 31, 1998, these
carryforwards will not be realizable because Noel will not generate future
taxable income.

     In 1998, Noel received refunds of estimated Federal income tax payments
totaling $4,046,000.

5.   ACCRUED EXPENSES

     Accrued expenses include estimates of costs to be incurred in carrying out
the Plan and provisions for known liabilities. These costs include a provision
for costs to be incurred in connection with the distribution, sale or other
disposition of Noel's investments including legal and investment banking fees
and salaries and related expenses of officers and employees assigned to effect
the distribution, sale or other disposition of specific investments.

                                      F-13

<PAGE>
<PAGE>


     The components of accrued expenses are as follows (dollars in thousands):

<TABLE>
<CAPTION>
                                                              December 31,
                                                           1998         1997
                                                         -------      -------
<S>                                                       <C>         <C>
Salaries and benefits                                     $1,063      $2,414

Rent and other expenses                                      544       1,147

Professional fees                                            391         823

Other, net                                                   642         686
                                                          ------      ------
                                                          $2,640      $5,070
                                                          ======      ======
</TABLE>

     The actual costs incurred could vary significantly from the related accrued
expenses due to uncertainty related to the length of time required to complete
the Plan, the exact method by which each of Noel's assets will be realized and
contingencies.

     For the year ended December 31, 1998, Noel's cash operating expenses
exceeded the return on its cash and cash equivalents and short-term investments
by $3,420,000. Cash operating expenses exclude payments made to settle
preexisting contractual obligations which have been accrued.

     Noel's cash operating  expenses for the year ended  December 31, 1998 and
for the nine month period ended December 31, 1997,  were as follows (dollars
in thousands):

<TABLE>
<CAPTION>
                                             Year Ended        Nine Months Ended
                                         December 31, 1998     December 31, 1997
                                         -----------------     -----------------
<S>                                      <C>                   <C>
Salaries and benefits                            $1,952              $3,924

Rent and other office expenses                      968               1,679

Insurance                                           305                 499

Professional fees                                   667                 695
                                                 ------              ------
                                                 $3,892              $6,797
                                                 ======              ======
</TABLE>

6. ADJUSTMENTS FROM GOING-CONCERN TO LIQUIDATION BASIS OF ACCOUNTING

     The adjustments from stockholders' equity on the going-concern basis to net
assets in liquidation on the liquidation basis of accounting at March 31, 1997,
were as follows (dollars in thousands):

<TABLE>
<S>                                                                    <C>
Stockholders' equity at March 31, 1997, (Going-Concern Basis)          $ 98,603
                                                                       --------

To increase investments to estimated net realizable values               71,307

To increase liabilities to anticipated settlement amounts                (8,939)

To adjust other assets                                                   (2,618)
                                                                       --------
Total adjustments                                                        59,750
                                                                       --------
Net assets in liquidation at March 31, 1997, (Liquidation Basis)       $158,353
                                                                       ========
</TABLE>

                                      F-14

<PAGE>
<PAGE>

7.   OPTIONS AND WARRANTS

     On July 7, 1997, as authorized by the Stock Option and Compensation
Committee of the Board of Directors, Noel settled 2,840,107 options and warrants
outstanding for the purchase of Noel Common Stock. As a result of the settlement
and exercise of the options and warrants, Noel issued 146,718 shares of Noel
Common Stock, transferred 108,570 shares of HealthPlan Services Corporation
("HPS") common stock, paid $10,537,000 in cash for payroll taxes and settlement
amounts and received $722,000 in cash exercise proceeds. Noel's federal income
tax benefit for the compensation expense related to the settlement was
approximately $4,363,000.

8.   LIQUIDATING DISTRIBUTIONS

     On April 25, 1997, Noel distributed 3,754,675 shares of HPS common stock
valued at $14.375 per HPS share for a total value of $53,974,000 to Noel
shareholders of record on April 18, 1997. The distribution rate was 0.1838631 of
a share of HPS common stock per share of Noel Common Stock and the value of the
distribution was $2.6430 per share of Noel Common Stock.

     On October 6, 1997, Noel distributed 412,601 shares of HPS common stock
valued at $21.1565 per HPS share for a total value of $8,729,000 to Noel
shareholders of record on September 29, 1997. The distribution rate was 0.02006
of a share of HPS common stock per share of Noel Common Stock and the value of
the distribution was $.4244 per share of Noel Common Stock.

     On December 1, 1997, Noel distributed 2,205,814 shares of Carlyle common
stock valued at $1.40 per Carlyle share for a total value of $3,088,000 to Noel
shareholders of record on November 21, 1997. The distribution rate was .107246
of a share of Carlyle common stock per share of Noel Common Stock and the value
of the distribution was $.1501 per share of Noel Common Stock.

     On March 27, 1998, Noel distributed $0.70 per outstanding Noel share for a
total value of $14,397,000 to shareholders of record at the close of business on
March 20, 1998.

     On April 30, 1998, Noel distributed $0.45 per outstanding Noel share for a
total amount of $9,255,000 to shareholders of record at the close of business on
April 22, 1998.

     On August 14, 1998, Noel distributed $0.92 per outstanding Noel share for a
total amount of $18,922,000 to shareholders of record at the close of business
on July 31, 1998.

     On March 17, 1999, Noel announced the distribution of trust units
representing ownership of its entire holding of 2,026,104 shares of Career
Blazers common stock on April 12, 1999 to Noel shareholders of record on March
29, 1999.

9.   COMMITMENTS AND CONTINGENCIES

     Certain of Noel's holdings are involved in various legal proceedings
generally incidental to their businesses. While the result of any litigation
contains an element of uncertainty, management believes that the outcome of any
known, pending or threatened legal proceeding or claim, or all of them combined,
will not have a material adverse effect on Noel's financial position.

                                      F-15

<PAGE>
<PAGE>


GOING-CONCERN BASIS STATEMENTS

10.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

GENERAL:

     Prior to the approval of the Plan, Noel conducted its principal operations
through small and medium-sized companies in which Noel held controlling or other
significant equity interests.

Consolidation:

     The consolidated financial statements include the accounts of Noel and its
subsidiaries, Carlyle, Curtis, and Lincoln, (collectively the "Company"), after
the elimination of significant intercompany transactions. Noel's equity in HPS'
results is included in income (loss) from equity investments on the consolidated
statements of operations.

Cash and Cash Equivalents and Short-term Investments:

     The Company considers all highly liquid investments with a maturity of
three months or less, at the date of acquisition, to be cash equivalents.
Carrying amounts of short-term investments approximate fair value.

Investments in Debt and Equity Securities:

     The Company's marketable securities and its other investments in equity
securities that have readily determinable fair values are classified as
available-for-sale securities. The equity method of accounting is used for (i)
common equity investments in which the Company's voting interest is from 20%
through 50%, (ii) for investments where Noel's voting interest is below 20% but
Noel has the ability to exercise significant influence over an investee and
(iii) for limited partnership investments. The cost method of accounting is used
for common equity investments in which the Company's voting interest is less
than 20% for which fair values are not readily determinable and for which
significant influence cannot be exercised. A non-temporary decline in the value
of any equity or cost basis investment is expensed at the time such decline is
identified.

Use of Estimates:

     The preparation of financial statements in conformity with generally
accepted accounting principles requires the Company to make estimates and
assumptions. These estimates and assumptions affect the reported amounts of
assets and liabilities, the disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from these
estimates.

Property, Plant and Equipment:

     Depreciation is provided primarily using the straight-line method over the
estimated useful lives of the related assets as follows:

<TABLE>
<S>                                        <C>
 Machinery and equipment                   3 - 25 years
 Buildings and leasehold improvements      7 - 35 years
 Furniture and fixtures                    3 - 30 years
</TABLE>

     Leasehold improvements are depreciated using the straight-line method over
the lives of the related leases or their estimated useful lives, whichever are
shorter. The cost of repairs and maintenance is charged to expense as incurred,
while renewals and betterments are capitalized.

                                      F-16

<PAGE>
<PAGE>


Intangible Assets:

     Intangible assets, primarily costs in excess of the fair value of net
assets acquired, are being amortized using the straight-line method over periods
ranging from 3 to 30 years.

Foreign Currency Translation:

     Revenue and expenses are translated at average exchange rates throughout
the period. Adjustments resulting from translation are recorded as a separate
component of stockholders' equity. Gains and losses resulting from foreign
currency transactions are recognized in the results of operations in the period
incurred.

Revenue:

     Revenue from product sales is recorded at the time of shipment.

Other Income:

     Interest income is accrued and reported as earned only to the extent that
management anticipates such amounts to be collectible. Accrued interest is
evaluated periodically and an allowance for uncollectible interest income is
established when necessary.

Basic Earnings per Share:

     In 1997, the Financial Accounting Standards Board issued Statement No. 128,
"Earnings per Share." SFAS No. 128 replaced the calculation of primary and fully
diluted earnings per shares with basic and diluted earnings per share. Basic
earnings per share excludes the dilutive effects of options, warrants, and
convertible securities. Diluted earnings per share gives effect to all dilutive
securities that were outstanding during the period. All earnings per share
amounts have been presented or restated to conform to the SFAS No. 128
requirements. Diluted earnings per share have not been presented since the
computation would be antidilutive.

Comprehensive Income (Loss):

     In 1998, the Company adopted Statement of Financial Accounting Standards
No. 130, "Reporting Comprehensive Income," ("SFAS No. 130"), which requires
companies to report all changes in equity during a period, except those
resulting from investment by owners and distributions to owners, in a financial
statement for the period in which they are recognized. The Company has chosen
to disclose Comprehensive Income, which encompasses net income, foreign
currency translation adjustments and unrealized holding gains, in the
Consolidated Statements of Shareholders' Equity. Prior years have been
restated to conform to the SFAS No. 130 requirements.

11.  INVESTMENTS AND ACQUISITIONS

Ferrovia Novoeste, S.A.

     On March 5, 1996, a consortium led by Noel and Chase Capital Partners,
formerly Chemical Venture Partners, purchased by auction the concession for the
Brazilian federal railroad's western network for approximately $63.6 million.
The purchase of the network consists of a 30-year concession and a lease of the
federal railroad's equipment. Noel invested $8.0 million for approximately 34%
of the concession holder, Ferrovia Novoeste, S.A., ("Novoeste"), which began
operating the railroad on July 1, 1996.

     Summarized financial information for Novoeste is as follows (dollars in
thousands):


<TABLE>
<CAPTION>
                                    Three Months Ended       Six Months Ended
                                      March 31, 1997        December 31, 1996
                                    ------------------      -----------------
<S>                                 <C>                     <C>
Revenue from services                    $ 6,858                 $ 17,498

Operating costs and expenses              $7,877                 $ 19,959

Net loss                                 $(2,705)                $ (7,350)
</TABLE>




                                      F-17


<PAGE>

<PAGE>

Staffing Resources, Inc.

     On July 31, 1995, Noel received 1,026,104 shares of common stock of
Staffing Resources, Inc. ("Staffing Resources") a company which merged into
Career Blazers in December 1997, as payment for its $8,190,000 face value
subordinated note from Brae Group, Inc. ("Brae Note"), plus accrued interest of
$3,097,000. Noel recognized a gain of $6,598,000 on the payment of the Brae
Note.

     On November 15, 1995, Noel purchased an additional 1,000,000 shares of
Career Blazers common stock for $11,000,000 in a private placement offering.

     During 1996, Noel began accounting for Staffing Resources under the equity
method of accounting and recorded an equity loss of $1,174,000 representing its
share of Staffing Resources' losses from July 31, 1995, the date of Noel's
acquisition of the Staffing Resources shares, through December 31, 1996.
Staffing Resources issued additional common shares in 1996 and 1995, diluting
Noel's common ownership percentage to approximately 16%. These share issuances
were recorded as subsidiary stock transactions by Noel with an increase of
$1,199,000, net of taxes of $618,000, recorded directly to capital in excess of
par value in 1996.

     Summarized financial information for Career Blazers is as follows (dollars
in thousands):

<TABLE>
<CAPTION>
                                                Three Months Ended                Year Ended
                                                  March 31, 1997               December 31, 1996
                                                -------------------            -----------------
<S>                                              <C>                            <C>
Revenue from services                                 $73,711                        $300,898

Operating costs and expenses                          $74,370                        $297,978
 
Net loss                                              $(1,527)                        $(2,405)
</TABLE>

HealthPlan Services Corporation

     Pursuant to a Stock Purchase Agreement dated September 2, 1994, by and
among The Dun & Bradstreet Corporation, its wholly-owned subsidiary Dun &
Bradstreet Plan Services, Inc., Noel, HPS, formerly GMS Acquisition Company, and
certain other investors, HPS purchased all of the outstanding stock of
HealthPlan Services, Inc. for a cash purchase price of $19,000,000, excluding
$1,309,000 of related expenses, and the assumption of designated liabilities.
Noel and other investors capitalized HPS with $20,000,000 and arranged a
$20,000,000 line of credit to support working capital requirements. The
acquisition was accounted for as a purchase. The excess of the allocated
purchase price over the fair value of the net tangible assets acquired,
$30,730,000, was recorded as goodwill and is being amortized over a 25 year
period.

     On May 19, 1995, HPS completed an initial public offering of 4,025,000
newly issued common shares, raising net proceeds of $50,806,000. Following HPS'
initial public offering and Noel's exchange of its entire holding of HPS
preferred stock and accrued dividends into common equity, Noel's common equity
ownership percentage of HPS decreased from approximately 58% to approximately
42%. The offering was recorded as a subsidiary stock transaction by Noel with an
increase of $14,421,000, net of taxes of $1,012,000, recorded directly to
capital in excess of par value. Following Noel's exchange of its holding of HPS
preferred stock, Noel's holding of HPS common stock increased to 5,595,846
shares.

     During 1996, Noel's ownership percentage of HPS was further diluted to
approximately 37% when HPS issued 1,561,067 common shares related to the
acquisition of two new operating units. These and other share issuances were
also recorded as subsidiary stock transactions by Noel, with an increase of
$5,792,000, net of taxes of $2,984,000, recorded directly to capital in excess
of par value.

     On February 7, 1997, pursuant to an agreement dated December 18, 1996 by
and among Noel, Automated Data Processing, Inc. ("ADP") and HPS, Noel sold to
ADP 1,320,000 shares of its common stock of HPS for an


                                      F-18

<PAGE>
<PAGE>

aggregate purchase price of $26,400,000 in cash. Following the transaction,
Noel's ownership percentage of HPS decreased to approximately 26%.

       Summarized financial information for HPS is as follows (dollars in
       thousands):

<TABLE>
<CAPTION>
                                     Three Months Ended            Year Ended
                                       March 31, 1997           December 31, 1996
                                       ---------------          -----------------
<S>                                   <C>                       <C>
Revenue from services                      $73,593                   $191,493

Operating costs and expenses               $67,355                   $199,314

Net income (loss)                           $2,799                    $(6,716)
</TABLE>

     After performing a review for impairment of long-lived assets related to
each of HPS' acquired businesses and applying the principles of measurement
contained in FASB 121, HPS recorded a charge against earnings of $13,700,000 in
the third quarter of 1996, representing approximately 7.6% of HPS' pre-charge
goodwill. This charge was attributable to impairment of goodwill recorded on the
acquisitions made in 1995. Any further significant declines in HPS' projected
net cash flows, with respect to such acquisitions, may result in additional
write-downs of remaining goodwill.

     Starting in 1994, HPS pursued contracts with state-sponsored health care
purchasing alliances, initially in Florida, and in 1995 and 1996, in North
Carolina, Kentucky, and Washington. HPS incurred substantial expenses in
connection with the start-up of these contracts, and, through December 31, 1996,
the alliance business was unprofitable. HPS recorded a pre-tax charge related to
these contracts in the amount of $2,600,000 in the third quarter of 1996
resulting from increased costs and lower than anticipated revenues in Florida
and North Carolina.

     In the third quarter of 1996, HPS recorded a charge of $1,400,000 to
reflect the cost of exiting certain excess office space and terminating
employees.

Carlyle Industries, Inc.

     On July 21, 1993, BH Acquisition Corporation ("BH Acquisition"), a wholly
owned subsidiary of Noel, concluded a tender offer (the "Offer") for the
outstanding common stock of Carlyle at $30.25 per share in cash. Following the
Offer, on October 29, 1993, BH Acquisition owned 72.8% of the outstanding shares
and was merged with and into Carlyle (the "Merger"). The Offer and the Merger
are referred to together as the "Acquisition".

     The Acquisition was financed by a $41,500,000 equity contribution from Noel
and by borrowings from a group of banks. The total purchase price including
banking, advisory and other fees, and shares acquired following the Offer was
approximately $64,500,000.

     The Acquisition was accounted for as a purchase. The excess of the
allocated purchase price over the fair value of the net tangible assets
acquired, $40,000,000, was recorded as goodwill and is being amortized over a 30
year period.

     In February 1994, Noel spun off its entire common equity interest in the
recapitalized Carlyle to Noel stockholders at a rate of .175434 new Carlyle
share for every Noel share held.

     In December 1994, Noel exchanged $18,813,000 of preferred stock and
$3,216,000 of accrued dividends for 2,205,814 shares or 30% of Carlyle's
outstanding common stock. Noel retained voting control through its remaining
holding of Carlyle preferred stock. Because Noel had both a substantial common
equity interest and voting control of Carlyle as of December 31, 1994, Carlyle
was consolidated as of that date.


                                      F-19

<PAGE>
<PAGE>


     On March 26, 1997, pursuant to an asset purchase agreement dated as of
December 12, 1996, Carlyle sold its thread division to Hicking Pentecost PLC for
aggregate cash consideration of approximately $54,900,000, subject to
adjustment, plus the assumption of certain liabilities. The estimated loss on
disposal on the sale of this division was $11,300,000, but the actual loss
recorded could differ significantly from this estimate depending on the
resolution of certain contingencies. The net proceeds from this sale were used
to pay off Carlyle's outstanding bank indebtedness. Accordingly, Carlyle
currently has no outstanding bank indebtedness.

Curtis Industries, Inc.

     On August 17, 1992, Noel purchased newly-issued equity securities of Curtis
for $15,000,000 for approximately 65% of Curtis' equity. The acquisition was
accounted for as a purchase. The excess of the allocated purchase price over the
fair value of the net tangible assets acquired, $17,592,000, was recorded as
goodwill and is being amortized over a 30 year period. On November 13, 1995,
Curtis sold its retail division to SDI Operating Partners, LP, ("SDI") in order
to focus on its automotive and industrial division.

     In May 1996, Curtis acquired certain assets of the Mechanics Choice
business of Avnet, Inc. for approximately $6,600,000. Mechanics choice is a
distributor, selling industrial maintenance and repair operations products
similar to the existing product line Curtis offers. The acquisition was
accounted for as a purchase by Curtis. The excess of the allocated purchase
price over the fair value of net tangible assets acquired, $2,900,000 was
recorded as goodwill and is being amortized over a 20 year period.

Lincoln Snacks Company

     On August 31, 1992, Lincoln purchased certain assets of the Lincoln Snack
Company, a division of Sandoz Nutrition Corporation. The purchase price, which
was paid in cash, was $13,000,000, including expenses. The acquisition was
accounted for as a purchase. The excess of the allocated purchase price over the
fair value of the net tangible assets acquired, $3,528,000, was recorded as
goodwill and is being amortized over a 30 year period.

     On January 14, 1994, Lincoln completed an initial public offering of
2,472,500 shares of newly issued common stock which raised $9,593,000 for
Lincoln, net of expenses. At the time of the offering, Noel converted its entire
holding of shares of Lincoln preferred stock and accrued dividends for 1,728,755
shares of Lincoln common stock.

     Noel's interest in Lincoln's common equity was approximately 58% following
the offering. The offering was recorded as a subsidiary stock transaction by
Noel, with an increase of $2,438,000 recorded directly to capital in excess of
par value.

12. LEASES

     The Company's rent expense for the period ended March 31, 1997 and for the
year ended December 31, 1996 was $486,000, and $2,438,000, respectively.

13. STOCK BASED COMPENSATION

     In the first quarter of 1995, Noel issued a total of 1,120,000 warrants to
certain Noel officers. Each warrant represents the right to purchase one share
of Noel Common Stock. Warrants were issued to purchase 800,000 and 320,000
shares at $5.00 and $5.625 per share, respectively, the trading price of Noel
Common Stock on the date that the warrants were granted. The weighted average
grant-date fair value of these warrants was $2.01 and $2.22, respectively, using
the Black-Scholes option-pricing model with risk-free interest rates of 7.8% and
7.04%, respectively, expected lives of 3 years, expected volatility of 48%, and
no expected dividends. The warrants vest 50% at issuance, 75% after one year and
100% after two years and expire ten years after the date of grant.



                                      F-20

<PAGE>
<PAGE>

     Noel adopted a stock option plan in 1988 (as amended, the "1988 Plan") and
in 1995 (the "1995 Plan"; and together with the 1988 Plan, the "Employee Plans",
each being an Employee Plan), providing for the grant of options to purchase up
to an aggregate of 2,000,000 shares and 1,000,000 shares, respectively, of
Noel's Common Stock. Options under the Employee Plans may be granted to
employees of Noel and its subsidiaries, including officers who are directors,
and any other persons who perform substantial services for or on behalf of Noel,
or any of its subsidiaries, affiliates or any entity in which Noel has an
interest. Each option granted under either Employee Plan terminates no later
than ten years from the date of grant. Options issued under either Employee Plan
may be either incentive options or non-incentive options.

     Non-incentive options have been granted under the 1988 Plan at the fair
market value on the date of grant. No options have been granted under the 1995
Plan. Non-incentive options previously granted to employees under the 1988 Plan
generally vest over a four-year period, so that 20% of the option is exercisable
immediately and an additional 20% of the option becomes exercisable on each of
the first four anniversaries of the date of grant. Non-incentive options
previously granted to non-employees under the 1988 Plan generally vest
immediately. Non-incentive options previously granted under the 1988 Plan
generally terminate ten years after the date of grant or, in the case of
employees, one year after the termination of the status with Noel which
qualified the option holder to receive such option, if earlier.

     Incentive options granted under either Employee Plan may only be exercised
while an option holder is employed by Noel or one of its subsidiaries or within
three months after the termination of employment, to the extent that the right
to exercise such incentive option had accrued at the time of termination. The
terms of incentive options, none of which has been granted under either Employee
Plan, are subject to additional restrictions.

     In 1995, Noel adopted a non-employee directors' stock option plan (the
"Directors' Plan"), providing for the grant of non-incentive options to purchase
an aggregate of 50,000 shares of Noel Common Stock to directors who are not
employees of Noel. Under the Directors' Plan each non-employee director serving
as a director immediately following the 1995 Annual Meeting of Shareholders, who
had not previously been granted an option to purchase Noel Common Stock under
any of Noel's stock option plans, was granted a fully vested option to purchase
8,334 shares of Common Stock at an exercise price per share equal to the fair
market value on the date of shareholder approval of the plan (the "Plan Approval
Date"). Every individual who becomes a director after the Plan Approval Date,
who has not previously been granted options to purchase shares of Common Stock
under any of Noel's stock option plans and who is not an employee of Noel, shall
be granted a vested option to purchase 8,334 shares of Noel Common Stock, to
have an exercise price equal to the fair market value on the date of grant. Each
option granted under the Directors' Plan terminates no later than 10 years from
the date of grant.

     Share and price information for the 1988 Plan, the 1995 Plan and the
Directors' Plan is as follows: 

<TABLE>
<CAPTION>
                                                                                    Weighted Average
                                                  Number of      Option Price           Exercise
                                                   Shares          per Share             Price
                                                   ------          ---------             -----
<S>                                               <C>            <C>                 <C>  
Outstanding, January 1, 1996                      1,977,793      5.25 - 45.00            8.289

Exercised                                           (24,352)            8.355            8.355

Outstanding, December 31, 1996                    1,953,441      5.25 - 45.00            8.289

Exercised                                          (233,334)            8.355            8.355

Outstanding, March 31, 1997                       1,720,107      5.25 - 45.00            8.279

Available for grant, March 31, 1997               1,072,207
</TABLE>

     See Note 7 for a description of the settlement of the outstanding options
and warrants.



                                      F-21

<PAGE>
<PAGE>


     Noel applies APB Opinion No. 25 and related Interpretations in accounting
for its plans. Had compensation expense for the three months ended March 31,
1997, and for the year ended December 31, 1996 option and warrant grants of Noel
been determined consistent with FASB Statement No. 123 "Accounting for Stock
Based Compensation"("SFAS 123"), net loss and basic net loss per share for the
three months ended March 31, 1997, and for the year ended December 31, 1996
would approximate the pro forma amounts below (dollars in thousands, except per
share amounts): 
     
<TABLE>
<CAPTION>
                                                       1997                               1996
                                                       ----                               ----
                                            As Reported    Pro Forma        As Reported       Pro Forma
                                            -----------    ---------        -----------       ---------
<S>                                         <C>            <C>              <C>               <C>
 Net loss                                     $(1,309)      $(1,405)         $(2,657)          $(3,040)
                                              =======       =======         ========           =======

 Basic net loss per share                      $(0.06)       $(0.07)          $(0.13)           $(0.15)
                                               ======        ======           ======            ======
</TABLE>

     The effects of applying SFAS 123 in this pro forma disclosure are not
indicative of future amounts. SFAS 123 does not apply to awards prior to 1995.



                                      F-22

<PAGE>
<PAGE>


14.  OTHER INCOME (EXPENSE)

     Other income consists of the following (dollars in thousands):

<TABLE>
<CAPTION>
                                                                Three Months Ended              Year Ended
                                                                 March 31, 1997             December 31, 1996
                                                                 ---------------            -----------------
<S>                                                             <C>                         <C>
Interest income                                                      $ 308                         $ 856

Gain (Loss) on sale of non-marketable securities                        (7)                          (85)

Other                                                                  (64)                         (172)
                                                                     -----                         -----
                                                                     $ 237                         $ 599
                                                                     =====                         =====
</TABLE>

     Income (Loss) from equity investments consists of the following (dollars in
thousands):

<TABLE>
<CAPTION>
                                              Three Months Ended               Year Ended
                                                March 31, 1997              December 31, 1996
                                                --------------              -----------------
<S>                                           <C>                          <C>
HPS                                                  $ 964                       $ (500)

Novoeste                                              (927)                      (3,066)

Career Blazers                                        (356)                      (1,174)

Other                                                  (35)                          33
                                                     -----                      -------
                                                     $(354)                     $(4,707)
                                                     =====                      =======
</TABLE>


15. INCOME TAXES

     The components of the benefit (provision) for income taxes are as follows
(dollars in thousands):

<TABLE>
<CAPTION>
                                                            Three Months Ended                 Year Ended
                                                              March 31, 1997               December 31, 1996
                                                              ---------------              -----------------
<S>                                                         <C>                            <C>
Current tax benefit (expense):

 Federal                                                       $ (8,780)                       $ 4,063

 State                                                             (717)                          (195)

 Foreign                                                             (6)                           (63)
                                                               --------                        -------
                                                               $ (9,503)                       $ 3,805
                                                               ========                        =======

Deferred tax benefit (expense):

Federal                                                          $ (516)                       $(2,484)

State                                                              (418)                          (179)
                                                                -------                        -------
                                                                 $ (934)                       $(2,663)
                                                                =======                        =======
</TABLE>


                                                        F-23

<PAGE>
<PAGE>

     A reconciliation of the Company's income tax benefit (provision) and the
amount computed by applying the statutory tax rate of 34% to loss before income
taxes is as follows (dollars in thousands):


<TABLE>
<CAPTION>
                                                            Three Months Ended                 Year Ended
                                                              March 31, 1997                December 31, 1996
                                                              --------------                -----------------
<S>                                                         <C>                             <C> 
Tax benefit (provision) at statutory rates                            $ (3,104)                       $ 1,444

State and local, net of Federal benefit                                   (742)                          (231)

Minority interest                                                          170                           (463)

Losses generating no current benefit                                      (324)                           --

Amortization and write-off of excess
   purchase costs                                                       (6,349)                          (485)

Benefit from book loss carryforward                                         --                            879

Other                                                                      (88)                            (2)
                                                                      --------                        -------
Benefit (Provision) for income taxes                                  $(10,437)                       $ 1,142
                                                                      ========                        =======
</TABLE>


16. RETIREMENT PLANS

     The Company sponsors a number of defined contribution retirement plans.
Participation in these plans is available to substantially all employees. The
Company's contributions to these plans are based on a percentage of employee
contributions. The expense of these plans for the year ended December 31, 1996
totaled $763,000.

     Carlyle and Curtis sponsor defined benefit pension plans. Carlyle's plan
covers substantially all of its employees and requires no contributions from
employees. Benefits are based on years of service and compensation levels within
these years. Carlyle's plan was frozen as of December 31, 1994, after which no
new employees were eligible to join the plan. Additionally, employees covered
under Carlyle's plan will not receive any additional accruals for service
rendered after December 31, 1994. Curtis' plan covers former manufacturing
employees who were members of UAW Local 70, based on years of service. Both
plans fund pension costs as required by ERISA. The projected unit cost method is
used to determine both pension costs and funding requirements for the plans. The
net periodic pension costs included in the statement of operations for the year
ended December 31, 1996 was a benefit of $109,000.

17. POSTRETIREMENT BENEFITS

     Carlyle provides certain health and life insurance benefits for eligible
retirees and their dependents. Curtis provides health care benefits for retired
members of UAW Local 70. Both plans are not funded and pay the costs of benefits
as incurred. The net periodic postretirement benefit costs included in the
statements of operations for the years ended December 31, 1996 is not material.



                                      F-24

<PAGE>
<PAGE>



18. SUPPLEMENTAL CASH FLOWS INFORMATION

     Non-cash investing and financing activities are as follows (dollars in
thousands):

<TABLE>
<CAPTION>
                                                                              Three Months Ended       Year Ended
                                                                                March 31, 1997      December 31, 1996
                                                                              ------------------    -----------------
<S>                                                                           <C>                   <C>
Increase in investment in HPS related to share issuances                             $   74             $  8,776
                                                                                     ======             ========

Increase in investment in Career Blazers related to share issuances                  $  --              $  1,817
                                                                                     ======             ========

Interest paid                                                                        $2,003             $  7,883
                                                                                     ======             ========

Income taxes paid                                                                    $   41             $    784
                                                                                     ======             ========
</TABLE>

19. INDUSTRY SEGMENT INFORMATION

     The Company is classified into three business segments. Summarized
financial information by business segment for the periods of Noel's consolidated
control is as follows (dollars in thousands):

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
                                                Operating       Identifiable      Depreciation and        Capital
1997                            Sales        income (loss)         assets           amortization       expenditures
-------------------------------------------------------------------------------------------------------------------
<S>                           <C>              <C>                 <C>                    <C>               <C>
Fasteners & Security
Products Distribution         $19,513           $  (73)                N/A              $  565               $589

Snack Foods                     4,310               43                 N/A                 188                 55

Industrial Threads &
Buttons                        14,650           (2,763)                N/A                 489                143

Noel - Investments                 --               --                 N/A                  --                 --

Noel - Corporate                   --           (1,891)                N/A                  18                 --
                              -------          --------                                 ------               ----
                              $38,473          $(4,684)                                 $1,260               $787
                              =======          ========                                 ======               ====
</TABLE>


<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
                                               Operating        Identifiable      Depreciation and        Capital
1996                            Sales        income (loss)         assets           amortization       expenditures
-------------------------------------------------------------------------------------------------------------------
<S>                               <C>            <C>               <C>                  <C>             <C>
Fasteners & Security
Products Distribution        $ 77,072           $ 4,331            $49,806              $2,537             $3,120

Snack Foods                    23,648             1,471             13,158                 796                164

Industrial Threads &
Buttons                        88,605            11,131             85,160               3,462              1,003

Noel - Investments                 --                --             68,026                  --                 --

Noel - Corporate                   --            (7,739)            14,371                  78                 26
                             --------            ------           --------              ------             ------
                             $189,325            $9,194           $230,521              $6,873(1)          $4,313
                             ========            ======           ========              ======             ======
</TABLE>


                                      F-25

<PAGE>
<PAGE>


      (1)Amounts include $398,000 and $2,414,000 which were included in cost of
         sales for the period ended March 31, 1997 and the year ended December
         31, 1996.

     The snack foods segment had one customer that accounted for approximately
68% and 49% of sales in 1997 and 1996, respectively. The Company's revenue and
assets attributable to operations outside of the United States are not
significant.

20. QUARTERLY FINANCIAL DATA
     (Unaudited, dollars in thousands, except per share amounts)


<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
Quarters Ended                                March 31,           June 30,      September 30,      December 31,

1996
---------------------------------------------------------------------------------------------------------------
<S>                                               <C>                <C>              <C>                 <C>
Revenue                                      $  43,119          $  47,139        $  50,266           $  48,801

Operating Income                                   824              1,862            3,372               3,136

Income (Loss) from continuing operations          (297)               717           (3,016)               (509)

Income from discontinued operations                 42                 --              290                 116

Net income (loss)                                 (255)               717           (2,726)               (393)

Basic earnings per share from:

  Continuing operations                          (0.01)              0.03            (0.15)              (0.02)

  Discontinued operations                           --                 --             0.02                 --

  Net income (loss)                              (0.01)              0.03            (0.13)              (0.02)

Diluted earnings per share from:

   Continuing operations                           N/A               0.03              N/A                 N/A

   Discontinued operations                         N/A                 --              N/A                 N/A

   Net income (loss)                               N/A               0.03              N/A                 N/A
</TABLE>


     All earnings per share amounts have been restated to comply with Statement
of Financial Accounting Standards No. 128, "Earnings per Share".



                                      F-26

<PAGE>
<PAGE>


               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors
and Stockholders of
HealthPlan Services Corporation

In our opinion, the consolidated statement of operations and cash flows of
HealthPlan Services Corporation and its subsidiaries (the "Company") (not
presented separately herein) present fairly, in all material respects, 
the results of their operations and their cash flows for the year in the
period ended December 31, 1996, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audit. We conducted our audit in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for the
opinion expressed above.

/s/ PricewaterhouseCoopers LLP

Price Waterhouse LLP
Tampa, Florida
March 14, 1997




                                      F-27

<PAGE>
<PAGE>


                        REPORT OF INDEPENDENT ACCOUNTANTS

To the Shareholders and Board
of Directors of Staffing Resources, Inc.:

     We have audited the accompanying consolidated balance sheet of Staffing
Resources, Inc. as of December 31, 1996, and the related consolidated statements
of operations, changes in shareholders' equity and cash flows for the year then
ended. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated statements based on our audit.

     We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated 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 audit provides a reasonable basis
for our opinion.

     In our report dated March 31, 1997, we expressed a qualified opinion on the
1996 consolidated financial statements because of a scope limitation related to
December 31, 1996 accounts receivable from one customer, the uncollected balance
of which was approximately $1,209,000 at March 28, 1997. As described in Note
20, the Company has obtained previously unavailable financial information on
this customer as of December 31, 1996 and March 29, 1997, and based on this
information has provided an additional $600,000 allowance for this accounts
receivable as of December 31, 1996 and has restated its 1996 consolidated
financial statements to reflect this provision. Accordingly, our present opinion
on the 1996 consolidated financial statements, as present herein is different
from that expressed in our previous report.

     In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Staffing Resources, Inc. as of December 31, 1996 and the consolidated results of
its operations and its cash flows for the year then ended, in conformity with
generally accepted accounting principles.

     As discussed in Note 17 to the consolidated financial statements, during
the year ended December 31, 1996, the Company changed its method of accounting
for staff employees' vacation accruals and adjusted its previously reported
December 31, 1995 retained earnings for this change in accounting and for
understatements of its workers' compensation claim accrual and its accounts
payable.


/s/ PricewaterhouseCoopers LLP


Dallas, Texas
[MARCH 31, 1997, EXCEPT FOR NOTE 20
AS TO WHICH THE DATE IS JULY 3, 1997]




                                      F-28

<PAGE>
<PAGE>

                                                                    SCHEDULE II

                       Noel Group, Inc. and Subsidiaries
                       Valuation and Qualifying Accounts
                      For the Year Ended December 31, 1996
                             (Dollars in thousands)

<TABLE>
<CAPTION>
Column A                                Column B                       Column C                           Column D        Column E
                                                                      Additions
                                                     -------------------------------------------------
                                                        (1)              (2)                 (3)
                                                                                           Acquisition                             
                                         Balance      Charged to                       Cost Allocated      Payments                
                                        Beginning      Costs and   Charged to Other       to Assets          and         Balance at
             Description                of Period      Expenses        Accounts           Purchased        Charges    End of Period
             -----------                ---------      --------        --------           ---------        ---------  ------------
<S>                                     <C>            <C>              <C>               <C>              <C>        <C>
Year Ended December 31, 1996
Allowance for doubtful accounts          $ 2,013        $   724          $    -            $     -         $   907(a)    $ 1,830
Allowance for returns and discounts      $   854        $ 1,181          $    -            $     -         $   147(a)    $ 1,888
Inventory reserve                                                                                          $   641(a)           
                                         $ 3,113        $   274          $  135            $ 1,800         $   974(b)    $ 3,707

</TABLE>
     ----------------
     (a) Write-offs
     (b) Dispositions



                                        S-1

<PAGE>
<PAGE>


                                INDEX OF EXHIBITS
<TABLE>
<CAPTION>
Item No.                                   Item Title                                                    Exhibit No.
<S>                                        <C>                                                           <C>
(2)                                        Plan of acquisition, reorganization,
                                           liquidation or succession:
                                           (A)    Stock Purchase Agreement dated as of                                            
                                                  December 18, 1996 by and among Noel                                             
                                                  Group, Inc., Automatic Data Processing,                                         
                                                  Inc. and HealthPlan  Services                                                   
                                                  Corporation.                                               (a)
                                           (B)    Plan of Complete Liquidation and                                                
                                                  Dissolution of Noel Group, Inc.                            (b)
(3)                                        Articles of Incorporation and By-Laws.
                                           (A)    Certificate of Incorporation, as                                                
                                                  amended.                                                   (c)
                                           (B)    Composite copy of the Certificate of                                            
                                                  Incorporation, as amended.                                 (d)
                                           (C)    By-Laws, as amended and restated.                          (e)
(4)                                        Instruments defining the rights of security                                            
                                           holders, including indentures:                                                         
                                           (A)    Excerpts from Certificate of                                                    
                                                  Incorporation, as amended.                                 (c)
                                           (B)    Excerpts from By-Laws, as amended and                                           
                                                  restated.                                                  (e)
(9)                                        Voting Trust Agreements:  None
(10)                                       Material Contracts:
                                           (A) Stock Purchase Agreement dated June 8,
                                           1998 by and among Brynwood Partners III L.P.                                           
                                           and Noel Group, Inc.                                              (k)
                                           (B) Letter Agreement dated March 1,  1996, as                                          
                                           amended, by and between  Noel Group, Inc. and                                          
                                           Karen Brenner  with respect to Ms. Brenner's                                           
                                           employment by Noel                                                (f)
                                           (C) Letter Agreements dated March 9, 1995 by
                                           and between Noel Group, Inc. and William L.
                                           Bennett.                                                          (e)
                                           (D) Sublease Agreement dated January 1, 1995
                                           by and between The Prospect Group, Inc. and
                                           Noel Group, Inc.                                                  (f)
                                           (E) Life Insurance Agreement dated July 27,
                                           1995 between Noel Group, Inc. and Howard M.
                                           Stein as Trustee u/a dated June 10, 1993
                                           between Joseph  S. DiMartino, Grantor and                                              
                                           Howard M. Stein, Trustee.                                         (f)
                                           (F) Assignment of Life Insurance Policy as                                             
                                           Collateral dated as of July 27, 1995 by Howard                                         
                                           M. Stein as Trustee u/a dated June 10, 1993                                            
                                           between Joseph S. DiMartino, Grantor and                                               
                                           Howard M. Stein, Trustee, to Noel Group, Inc.                     (f)
                                           (G) Life Insurance Agreement dated as of May                                           
                                           17, 1995 between Noel Group, Inc. and Karen                                            
                                           Brenner.                                                          (g)
                                           (H) Assignment of Life Insurance Policy as                                             
</TABLE>



<PAGE>
<PAGE>


<TABLE>
<S>                                        <C>                                                           <C>

                                           Collateral dated as of May 17, 1995 by Karen                                           
                                           Brenner to Noel Group, Inc.                                       (g)
                                           (I) Tax Allocation Agreement dated as of                                               
                                           January 20, 1995 by and between Noel Group,                                            
                                           Inc. and Carlyle Industries, Inc.                                 (f)
                                           (J) Tender and Option Agreement dated November                                         
                                           13, 1995 by and among Blount, Inc., S.O.C.                                             
                                           Corporation, Noel Group, Inc. and The                                                  
                                           Forschner Group, Inc.                                             (h)
                                           (K) Asset Purchase Agreement dated as of
                                           December 12, 1996 among Carlyle Industries,
                                           Inc., certain of its subsidiaries, Hicking
                                           Pentecost PLC and its subsidiary HP                                                    
                                           Belt-Acquisition Corporation.                                     (i)
                                           (L)Agreement and Plan of Merger dated November                                         
                                           6, 1997 among Paragon Corporate Holdings,                                              
                                           Inc., Curtis Acquisition Corp. and Curtis                                              
                                           Industries, Inc.                                                  (j)
(11)                                       Statement re computation of per share earnings                                         
                                           is not required because the relevant                                                   
                                           computations can be clearly determined from                                            
                                           the material contained in the financial                                                
                                           statements included herein.                                                            
(12)                                       Statements re Computation of Ratios: Not                                               
                                           Applicable.                                                                            
(13)                                       Annual Report to security holders: Not                                                 
                                           Applicable.                                                                            
(16)                                       Letter re Change in Certifying Accountant: Not                                         
                                           Applicable.                                                                            
(18)                                        Letter re Change in Accounting Principles:                                            
                                           Not Applicable.                                                                        
(21)                                       Subsidiaries of the registrant.                                  (21)
(22)                                       Published Report re Matters Submitted to Vote                                          
                                           of Security Holders: Not Applicable.
(23)                                       Consents: None
(24)                                       Power of Attorney: Not Applicable.
(27)                                       Financial Data Schedule                                          (27)
(99)                                       Additional Exhibits: None
</TABLE>
-------------------------
(a)      This exhibit was filed as an exhibit to the Company's Current Report on
         Form 8-K dated February 7, 1997 and is incorporated herein by
         reference.
(b)      This exhibit was filed as an exhibit to the Company's Proxy Statement
         for the Special Meeting of Shareholders held on March 19, 1997 and is
         incorporated herein by reference.
(c)      These exhibits were filed as exhibits to the Company's Registration
         Statement on Form S-1, Registration No. 33-44178, effective January 29,
         1992, and are incorporated herein by reference.
(d)      These exhibits were filed as exhibits to the Company's Annual Report on
         Form 10-K for the fiscal year ended December 31, 1992, and are
         incorporated herein by reference.
(e)      These exhibits were filed as exhibits to the Company's Annual Report on
         Form 10-K for the fiscal year ended December 31, 1994, and are
         incorporated herein by reference.
(f)      These exhibits were filed as exhibits to the Company's Annual Report on
         Form 10-K dated December 31, 1995, and are incorporated herein by
         reference.
(g)      These exhibits were filed as exhibits to the Company's Quarterly Report
         on Form 10-Q for the quarter ended September 30, 1995 are incorporated
         herein by reference.
(h)      This exhibit was filed as an exhibit to the Company's Current Report on
         Form 8-K dated December 29, 1995, and is incorporated herein by
         reference.
(i)      This exhibit was filed as an exhibit to the Proxy Statement for the
         Special Meeting of Stockholders of Carlyle

<PAGE>
<PAGE>

         Industries, Inc. (f/k/a Belding Heminway Company, Inc.) held on
         March 26, 1997, and is incorporated herein by reference.
(j)      This exhibit was filed as an exhibit to Company's Current Report on
         Form 8-K dated December 1, 1997 and is incorporated herein by
         reference.
(k)      This exhibit was filed as an exhibit to the Company's Current Report on
         Form 8-K dated June 8, 1998 and is incorporated herein by reference.

                            STATEMENT OF DIFFERENCES

 The registered trademark symbol shall be expressed as..................'r'

<PAGE>