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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

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

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

                   For the fiscal year ended December 31, 1997

                                       OR

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

            For the transition period from ___________ to ___________

                        Commission File Number: 333-31071

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



                 Maryland
     (State or Other Jurisdiction of                           35-1139550
      Incorporation or Organization)                        (I.R.S. Employer
                                                           Identification No.)
     809 Gleneagles Court, Suite 300
           Baltimore, Maryland                                    21286
(Address of Principal Executive Offices)                       (Zip Code)


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

                                   -----------

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

              As of March 30,  1998,  the  registrant  had 909,005.0  shares of
Common Stock outstanding.


<PAGE>

                                TABLE OF CONTENTS


<TABLE>
<CAPTION>
                                                                                                                Page

<S>                                                                                                               <C>
PART I ............................................................................................................1
  Item 1. Business ................................................................................................1
  Item 2. Properties ..............................................................................................9
  Item 3. Legal Proceedings .......................................................................................9
  Item 4. Submission of Matters to a Vote of Security Holders ....................................................10
PART II ..........................................................................................................10
  Item 5. Market for Registrant's Common Equity and Related Stockholder Matters ................................. 10
  Item 6. Selected Financial Data ................................................................................10
  Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations ..................11
  Item 8. Financial Statements and Supplementary Data ............................................................20
  Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ...................40
PART III .........................................................................................................40
  Item 10.   Directors and Executive Officers of the Registrant ..................................................40
  Item 11.   Executive Compensation ..............................................................................42
  Item 12.   Security Ownership of Certain Beneficial Owners and Management ......................................45
  Item 13.   Certain Relationships and Related Transactions ......................................................47
PART IV ..........................................................................................................47
  Item 14.   Exhibits, Financial Statement Schedules, and Reports on Form 8-K ....................................47
SIGNATURES .......................................................................................................49
</TABLE>


<PAGE>

                                     PART 1.

ITEM 1.      BUSINESS

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

THE COMPANY

     Wells Aluminum Corporation was incorporated in Maryland in November 1967 as
the successor to an aluminum extrusion business which began in the early 1950's.
Gibbons,  Goodwin,  van Amerongen  ("GGvA") is the sole general partner of Wells
Holdings  Limited  Partnership,  which  currently owns 61.6% of the  outstanding
shares of the Company's  common  stock.  As a result,  GGvA has the  controlling
interest in the  Company and has the power to elect a majority of the  directors
of the Company and to control all matters  submitted to the  stockholders of the
Company,  including approving business  combinations  involving the Company. CVG
Industria Venezolana de Aluminio,  C.A. ("Venalum"),  a nationally owned company
in Venezuela,  has a significant minority interest in the Company, holding 19.8%
of the outstanding shares of the Company's common stock.

     Wells is a custom extruder,  finisher and fabricator of soft alloy aluminum
products,  principally for the building/construction,  transportation,  consumer
durables and equipment/electrical markets. In addition to the production of mill
finished extrusions,  the Company's  operations include painting,  anodizing and
fabrication,   which  enables  the  Company  to  provide  its   customers   with
assembly-ready   aluminum   components  and  assemblies.   The  Company  shipped
approximately  154.9 million pounds of aluminum  extrusions in 1997, an increase
of 16.5 million  pounds,  or 11.9%,  over the 1996  shipments  of 138.4  million
pounds.

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

     The Company sells its products to approximately 800 customers  primarily in
the    building/construction,     transportation,    consumer    durables    and
equipment/electrical  markets. In 1997, the Company's top ten customers received
approximately  39% of the Company's  shipped volume in pounds sold, with the top
twenty-five  customers  accounting  for  approximately  59%. For 1997, no single
customer  accounted  for more that 10% of the  Company's  net sales  measured in
dollars.

     The Company  focuses on long-term  customer  relationships  to maintain and
enhance its business prospects.  Approximately  two-thirds of the Company's 1997
sales in  extrusion  pounds  shipped  were  made to  customers  that  have  been
customers of the Company for more than ten years.  The Company believes that its
relatively  stable  customer  base is  attributable,  in part,  to the Company's
ability to provide a high level of customer service,  engineering  expertise and
quality products at competitive prices.


                                       1
<PAGE>

PRODUCTS

     Through its regional  plant system,  Wells is able to produce a broad range
of extruded,  finished and fabricated aluminum products used by its customers in
the manufacture of their end products. In 1997, over 90% of the products sold by
the Company were  designed and  manufactured  according to  individual  customer
specifications. The Company believes that the large share of customized products
sold by the Company can be  attributed to the Company's  product  quality,  high
level of  customer  service,  the  coordination  between  its  sales  force  and
engineering  staff  at each  plant,  engineering  design  capabilities,  and its
extensive extrusion, finishing and fabrication capabilities.

     Building/Construction

     In the  building/construction  market, the Company produces  extrusions and
fabricated products for residential and commercial window and door frames, storm
doors, vents and louvers,  railings,  stadium seating systems,  patio enclosures
and  a  variety  of  architectural  specialty  applications.  The  Company  also
manufactures and markets a proprietary line of sliding patio doors and a line of
commercial  entrance  doors  and  storefront  systems.  In  1997,  shipments  to
customers in the  building/construction  market represented approximately 45% of
the   Company's   total  pounds  sold.  Of  the  pounds  sold  in  this  market,
approximately 60% were shipped to customers in the residential  segment with the
remaining pounds being shipped to customers in the commercial segment.

     Transportation

     In  the  transportation   market,  the  Company  produces   extrusions  and
fabricated  products for truck cabs,  commercial  truck  trailers,  recreational
vehicles, utility trailers and automotive accessories. The Company also produces
a number of complex  assemblies,  including  complete door frames and structural
sub frames for use in Class 8 truck tractors and complete window  assemblies for
use in  school  buses  and  delivery  vans.  In 1997,  approximately  23% of the
Company's  total pounds sold were  shipped to  customers  in the  transportation
market.

     Consumer Durables

     In the  consumer  durables  market,  the Company  produces  extrusions  and
fabricated   products  for  a  wide  variety  of  applications,   including  the
manufacture of golf carts,  high-end  office  furniture and pleasure  boats.  In
1997,  shipments  to  customers  in the  consumer  durables  market  represented
approximately 9% of the Company's total pounds sold.

     Equipment/Electrical

     In the  equipment/electrical  market,  the Company produces  extrusions and
fabricated  products  for  applications  such  as  electrical  distribution  and
commercial lighting systems,  material handling systems, and industrial guarding
and fixturing systems.  In 1997,  approximately 9% of the Company's total pounds
sold were shipped to customers in the equipment/electrical market.

     Distributors

     For the distributor  market,  the Company produces  extruded products which
the distributors then resell to manufacturers,  contractors and other industrial
end  users.  The  Company's  focus in the  distribution  market is on  producing
application  specific  components,  which are sold via  specialty,  value  added
distributors.   The  Company  does  not  regularly   participate  in  the  stock
shape/metal service center portion of the distribution market. Thus, the Company
believes that the end use of products  produced for distributors and then resold
tends to parallel the uses of customers  which the Company serves  directly.  In
1997, shipments to distributors  represented  approximately 14% of the Company's
total pounds sold.

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<PAGE>

MANUFACTURING

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

     Casting

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

     Extrusion

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

     Finishing

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

     Fabrication

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

                                        3

<PAGE>

step  assembly for a truck cab, to a curved and fully formed trim cap for use on
an office  partition,  to a panel van window assembly  complete with glass.  The
Company's fabrication operations are attractive to those customers interested in
outsourcing  certain  manufacturing in order to better control  operating costs,
manage  inventory,   accommodate   growth,  or  more  sharply  focus  their  own
operations.    The   Company's   fabrication   operations   provide   additional
opportunities  to enhance  profit  margins and help  protect the  business  from
market penetration by other competitors.

     Backlog

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

RAW MATERIALS

     Wells'  principal raw material for aluminum  extrusions is aluminum billet,
the majority of which the Company produces at its own casting facility. The main
materials  used in the  production  of billet  are  primary  aluminum  ingot and
aluminum scrap. In 1997, the Company purchased  approximately 68% of its primary
aluminum requirements pursuant to a long-term supply agreement with Venalum (the
"Venalum  Agreement").  The  Company  believes  that the  terms  of the  Venalum
Agreement,  which expired on December 31, 1997,  reflected market conditions and
were no less  favorable  to the  Company  than  could  have been  obtained  from
unrelated companies. Over 60% of the aluminum scrap required in 1997 was sourced
from the Company's own manufacturing  processes.  The remaining requirements for
primary ingot and scrap were purchased from a variety of metal and scrap brokers
and dealers.

     The Company and Venalum were unable to reach  agreement  on  extending  the
Venalum  Agreement  or on  entering  into  a  new  long-term  supply  agreement.
Consequently,  for 1998,  the Company has  secured  commitments  with four North
American suppliers to purchase primary aluminum for its casting  requirements at
current  market  prices at the delivery  dates.  Over 60% of the aluminum  scrap
required for 1998 is expected to be sourced from the Company's own manufacturing
processes.  The Company  believes  that its remaining  requirements  for primary
ingot and scrap are  readily  available  in the open market from metal and scrap
brokers and dealers.

     Aluminum Cost Recovery

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

CAPITAL IMPROVEMENTS

     Capital  expenditures for 1997 totaled $3.0 million,  with  expenditures of
$1.4  million  on  extrusion  press   upgrades,   $0.8  million  on  cast  house
improvements, and $0.4 million on additional fabrication capabilities. Since the
middle of 1995, the Company has focused its capital investment on technology and
productivity  improvements  in extrusion  and casting that support the Company's
marketing initiatives. These investments generally have

                                        4

<PAGE>

expected  paybacks of less than 18 months and have  increased  capacity  without
requiring  the  acquisition  of major new  equipment.  The Company has also made
extensive  investments in automated,  centralized  information  systems with all
facilities  on-line on a real time basis.  The  capabilities  include  automated
order  entry and  pricing,  automated  die  selection  and  billet  requirements
planning, automated production scheduling and detailed job costing.

     The Company plans to make capital  expenditures of $4.5 million in 1998 and
$3.5 million annually from 1999 through 2002. The Company intends to continue to
expand capacity by upgrading its equipment rather than purchasing  expensive new
equipment.  Over the next five years,  the Company plans to update and modernize
two extrusion presses per year,  increasing  extrusion capacity by 10% per press
and reducing scrap  generated in the process by 1.5%. The Company  believes that
by upgrading its extrusion presses, the Company receives 90% of the productivity
benefits  realized by replacing  equipment but at 50% of the capital  investment
required. In 1998, the Company will upgrade and modernize the homogenizing ovens
at its casting  facility which is expected to expand  capacity by 5% and improve
the  metallurgical  properties  of the  aluminum  billet cast.  Improved  billet
quality will improve  extrusion  press  productivity  and reduce the quantity of
scrap  generated  in the  extrusion  process.  The  Company  is  also  investing
selectively  in advanced  computer  isothermal  control  equipment.  The Company
estimates that this technology improvement can increase extrusion press capacity
by 11%.

SALES AND MARKETING

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

      Two regional sales  managers,  located in the Southeast and Midwest,  have
day-to-day  responsibility  for  directing  the  sales  force  and  implementing
agreed-to  market and customer  strategies.  The regional  sales  managers  work
hand-in-hand  with the operations  managers at each plant location to coordinate
customer service and tailor their sales activities to meet the business needs of
the plants.  This  arrangement  allows field sales and  operations  personnel to
react to changing market  conditions,  while  facilitating a uniform approach to
the market and the  reassignment  of production  requirements  among plants when
warranted to maintain customer service or plant utilization. The Company employs
12  direct   sales   persons   and   utilizes  10   independent   manufacturers'
representatives for its extrusion and fabrication  businesses.  The Company also
utilizes a number of specialty representatives for its patio door and commercial
doors businesses. Compensation for the direct sales force is comprised of salary
plus performance-based bonuses.

     The  Company  has   implemented  a  program  to  upgrade  its  field  sales
organization,  which is expected to be completed in 1998.  Key elements  include
increasing the responsibility of sales managers and  representatives for account
strategy  development  and  forecasting,  providing easy access to the Company's
central data bases via portable laptop  computers,  adding  additional  employed
sales personnel, and tying sales manager compensation to account profitability.

     Customer Service

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

                                        5

<PAGE>

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

     Pricing and Hedging Programs

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

     Forward sales  contracts,  which accounted for  approximately  40% of total
pounds sold by the Company in 1997, are "take or pay" agreements negotiated with
long-standing  customers.  These  contracts  fix the  sales  price at which  the
Company agrees to sell and the customer agrees to purchase a specified  quantity
of  aluminum  extrusions  in the  future.  These  contracts  typically  cover  a
substantial  portion  of the  customer's  requirements  for a three to six month
period.  The fixed  sales price is based on the price at which  aluminum  can be
hedged for future delivery plus a conversion spread to cover operating costs and
provide a profit margin.

     The  Company  also  offers to  long-standing  customers  a formula  pricing
mechanism  which  adjusts  pricing  monthly based on aluminum  price  movements.
Monthly  price changes are based on the Midwest  Transaction  Price Average (the
"MWTP"),  plus a negotiated spread covering  conversion costs and profit margin.
Formula  pricing  allows the Company to stay current  with the aluminum  market,
balancing   upward  and  downward   movements  on  a  monthly  basis.  In  1997,
approximately  40% of total  pounds  sold  were  sold by the  Company  using the
formula pricing mechanism.

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

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

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

     Product Delivery

     Wells  distributes  approximately 80% of its products through its own fleet
of 30  tractors  and 142  trailers.  All of the  Company's  tractors  are leased
whereas all of its trailers are owned. The Company believes that its selected

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<PAGE>

use  of  its  tractor-trailer  fleet  enhances  the  level  of  service  to  its
long-standing  customers by enabling more timely delivery with less damage.  The
Company also uses motor common carriers for certain hauls, such as partial truck
loads and  situations  where no back haul of aluminum  scrap is available,  when
cost effective.

COMPETITION

     The U.S. aluminum  extrusion market is fragmented and highly competitive in
that there are over 100  extruders  who operate more than 170  extrusion  plants
with more than 450 extrusion  presses.  The Company believes that competition is
regionally  oriented and that aluminum extrusion end users are typically looking
for "local" plants with a strong focus on customer  service and a reputation for
fair market pricing. In addition, competition is based on delivery time, quality
and  specialty  engineering/design/production  capabilities.  The  Company  also
believes  that a regional  network of plants is  important to large end users in
order to meet the needs of their multi-plant  locations and to ensure continuity
of sourcing.

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

     Material Substitution

     A factor potentially  affecting the Company's future operating  performance
is material substitution.  Other materials,  such as vinyl and rolled steel, may
be used as  substitutes  for aluminum  extrusions  in certain  markets and under
certain  circumstances.  In recent years,  vinyl,  with its  penetration  of the
residential  window and door market,  has been the most commonly used substitute
for aluminum extrusions. Industry forecasts indicate that the movement away from
aluminum in this market has slowed and that aluminum should essentially maintain
its unit  volume  (though  not its market  share in the window and door  market)
through the end of the  1990's.  In areas  where the  Company  does  significant
business,  such as window  components  for the modular and mobile home segments,
which represented approximately 12% of pounds sold by the Company in 1997, vinyl
is not a good substitute due to cost and strength limitations.  Rolled steel may
be another  substitute  for aluminum when aluminum  costs rise to such an extent
that  rolled  steel   becomes  a  viable   economic   alternative   for  certain
manufacturing needs. However, the Company estimates its participation in markets
which may utilize rolled steel to be  approximately 2% of the pounds sold by the
Company in 1997. An increase in the use of substitutes  for aluminum  extrusions
could have a material  adverse effect on the financial  condition and operations
of the Company.

EMPLOYEES

     As of December 31, 1997,  Wells employed 1,366 full time employees,  758 of
whom are covered by collective  bargaining  agreements at five plant  locations.
These collective bargaining agreements are with local unions of the United Steel
Workers  of  America,   representing   workers  at  two  plant  locations,   the
International  Brotherhood  of  Teamsters,  representing  workers  at two  plant
locations,  and the  International  Union of United  Automobile,  Aerospace  and
Agricultural  Implement Workers (the "UAW"),  representing  workers at one plant
location.  The Company's  collective  bargaining  agreements  are  independently
negotiated at each plant location and expire on a staggered basis.

     The Company believes that its labor relationships with employees, union and
non-union, are satisfactory. The Company did not experience any union activities
resulting  in work  slowdowns  or work  stoppages  during  the past five  years.
However, in late February 1998, the Company's  collective  bargaining  agreement
with the local union

                                        7

<PAGE>

of the UAW expired,  and shortly  thereafter,  the local union  initiated a work
stoppage at the affected  plant.  In late March 1998,  the Company and the local
union of the UAW reached  agreement on a new  collective  bargaining  agreement.
During the work stoppage, the Company operated the affected plant using salaried
personnel from within the Company and temporary employees. The work stoppage did
not have a material adverse effect on the financial  performance of the Company.
However,  the Company  cannot provide  assurances  that there will be no further
work  stoppages in the future which could have a material  adverse effect on the
financial performance of the Company.

ENVIRONMENTAL MATTERS

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

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

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

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

     Environmental Issues

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


                                        8

<PAGE>

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

PATENTS AND TRADEMARKS

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

ITEM 2.      PROPERTIES

     Wells has seven  production  facilities,  which enable the Company to serve
customers effectively in markets in the East, Midwest and Southeast, as follows.
None of the owned  properties is subject to an  encumbrance  that is material to
the Company's operations.
<TABLE>
<CAPTION>

                                                                                   Site                       Facilities
                                                                          -----------------------      -----------------------
             Location                          Operations                    Acres      Own/Lease      Sq. Ft.       Own/Lease
             --------                          ----------                    -----      ---------      -------       ---------


<S>                                 <C>                                   <C>       <C>                  <C>         <C>
     Monett, Missouri               Extrusion, painting,                  21.1      Owned                185,000     Owned
                                    casting                                0.3      Leased

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

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

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

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

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

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


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

ITEM 3.      LEGAL PROCEEDINGS

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

     IRS Audit

     The U.S. Internal Revenue Service (the "IRS") has concluded its examination
of the  Company's  federal  income tax returns for its fiscal  years ended 1994,
1995 and 1996. The IRS disallowed  certain accrued  expenses


                                        9

<PAGE>

for the three years  involved,  and assessed  income  taxes due plus  applicable
interest in an amount which did not materially affect the financial condition of
the Company.

ITEM 4.      SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

     Wells held its annual meeting of  stockholders  on December 17, 1997 during
which the  stockholders  voted on:  (1) the  election  of ten  directors  of the
Corporation  to serve until the 1998 annual  meeting of  stockholders  and until
their respective successors are duly elected and qualified, (2) the amendment of
the  charter  of  the  Company  set  forth  in the  Articles  of  Amendment  and
Restatement,  (3) the adoption of the Company's 1997 Stock  Incentive  Plan, and
(4) the  appointment of Ernst & Young LLP as the Company's  auditors to serve at
the  discretion  of the Board of  Directors.  The  directors  nominated and duly
elected are Russell W. Kupiec, W. Russell Asher, Lynn F. Brown, Elizabeth Varley
Camp, Elena de Costas, Todd Goodwin,  Edward R. Heiser, Leo A. McCafferty,  Jr.,
Lewis W. van Amerongen and Estrella Vidal. The stockholders approved all actions
presented to them at the annual meeting.

                                     PART II

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

     Wells' common stock is not registered  under the Securities Act of 1993, as
amended,  and is not traded on any organized  securities  market.  In 1997,  the
Company paid a special cash dividend of $62.00 per share,  or $56.0 million,  to
the holders of its common stock.

ITEM 6.      SELECTED FINANCIAL DATA

     The following table sets forth summary financial data with respect to Wells
for the periods  ended and as of the dates  indicated.  The  summary  historical
financial  data for the five years ended  December 31, 1997 are derived from the
audited financial  statements of the Company. The following table should be read
in  conjunction  with the  Company's  financial  statements  and related  notes,
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations," and the other financial  information included elsewhere herein. All
amounts are in thousands.
<TABLE>
<CAPTION>
                                                                           Fiscal Year Ended December 31,
                                                   ------------------------------------------------------------------------
                                                      1997            1996             1995             1994           1993
                                                   -----------      ----------      -----------      -----------     ------
Statement of Operations Data:
<S>                                                <C>             <C>            <C>             <C>            <C>
   Net sales ................................      $  267,349      $  228,161     $  232,555      $  197,991     $  155,401
   Cost of sales ............................         225,681         191,206        194,414         168,810        130,128
                                                      -------         -------        -------         -------        -------
   Gross profit .............................          41,668          36,955         38,141          29,181         25,273
   Selling, general and
     administrative expenses ................          17,446          15,877         16,211          14,536         13,536
   Compensation from
     settlement of employee
     stock options ..........................           4,070           --              --              --             --
                                                     --------      ----------      ---------       ---------      ---------

   Operating profit .........................          20,152          21,078         21,930          14,645         11,737
   Interest expense (a) .....................           8,390           5,176          7,087           8,443          8,487
   Income taxes .............................           5,073           7,059          6,262           3,016          1,697
                                                      -------        --------       --------        --------       --------

   Earnings before extra-ordinary
     loss and cumulative effect of
     accounting change (b)...................     $     6,689     $     8,843    $     8,581     $     3,186    $     1,553
                                                      ========        ========       ========        ========       ========
</TABLE>


                                       10

<PAGE>

<TABLE>
<CAPTION>
                                                                              As of December 31,
                                                      1997            1996             1995             1994           1993
                                                   -----------      ----------      -----------      -----------     ------
<S>                                               <C>            <C>            <C>              <C>            <C>
Balance Sheet Data:
   Cash and cash equivalents ................     $     5,352    $        277   $        342     $     1,827    $     1,115
   Working capital ..........................          29,989          18,175         19,355          19,813         17,675
   Inventories ..............................          20,209          19,838         19,972          24,665         18,705
   Property, plant and equipment, net........          27,269          26,723         26,489          28,241         29,996
   Total assets .............................         125,383         108,726        112,261         124,800        109,366
   Total indebtedness .......................         105,000          40,091         51,683          69,064         65,180
   Total stockholders' equity ...............         (16,068)         34,472         25,246          17,142         14,938
</TABLE>

Notes to Selected Financial Data:

(a)  Interest  expense  includes  amortization  of debt issuance  costs of $593,
     $495,  $570,  $474 and $334 for the years ended  December 31,  1997,  1996,
     1995,  1994 and 1993,  respectively,  and is net of interest income of $452
     for the year ended December 31, 1997.

(b)  Earnings  before  extraordinary  loss and  cumulative  effect of accounting
     changes excludes an extraordinary  loss of $1,292 (net of applicable income
     taxes of $826) on the refinancing of debt in 1997, an extraordinary loss of
     $1,092 (net of applicable  income taxes of $698) on the refinancing of debt
     in 1994, and a cumulative  effect of accounting  change for income taxes of
     $618 in 1993.

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

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

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

BASIS OF PRESENTATION

     The  following  discussion  of  financial  condition  and  the  results  of
operations for the years ended 1997,  1996 and 1995 is based on the  historical,
audited results achieved by the Company.  The following table sets forth for the
periods indicated,  net sales, gross profit,  operating profit and net earnings,
and for performance and other  measurements,  pounds of product  shipped,  gross
sales price per pound,  Adjusted  EBITDA (as defined below) and Adjusted  EBITDA
per pound.  The table also includes  average market prices of aluminum per pound
and  market  price of  aluminum  per pound at  period-end.  All  amounts  are in
thousands except for per pound data.

     Adjusted  EBITDA is defined as earnings  before  interest  expense,  income
taxes,  depreciation and amortization of goodwill,  and excludes LIFO charges or
income,  extraordinary  items and compensation from settlement of employee stock
options.  Adjusted  EBITDA  should not be  considered  in  isolation  of, nor in
substitute for, net


                                       11
<PAGE>

income,  cash flows from operations,  or other income or cash flow data prepared
in accordance with generally accepted accounting principles.
<TABLE>
<CAPTION>
                                                                        1997                   1996                   1995
                                                                  ---------------        ---------------        ----------
<S>                                                                    <C>                 <C>                 <C>
     Statement of Operations Data:
     Net Sales - Products .........................................    $  235,467          $  208,634          $  221,402
     Net Sales - Metal ............................................        31,882              19,527              11,153
                                                                           ------          ----------          ----------
         Net Sales ................................................       267,349             228,161             232,555

     Cost of Sales - Products .....................................       192,201             173,988             185,862
     Cost of Sales - Metal ........................................        31,409              19,550              11,082
     LIFO Charges (Income) ........................................         2,071             (2,332)             (2,530)
                                                                          -------          ----------           ---------
         Cost of Sales ............................................       225,681            191,206             194,414

     Gross Profit .................................................        41,668             36,955              38,141
     Operating Profit .............................................        20,152             21,078              21,930
     Net Earnings .................................................         5,397              8,843               8,581

     Other Measurement Data:


     Pounds of Product Shipped ....................................       154,930             138,380             137,779

     Gross Sales - Products .......................................    $  244,760          $  217,764          $  230,156
     Gross Sales Price per Pound ..................................         1.580               1.574               1.670

     Adjusted EBITDA ..............................................        29,970              22,285              23,406
     Adjusted EBITDA per Pound ....................................         0.193               0.161               0.170

     Average Market Price of Aluminum per Pound ...................         0.775               0.725               0.875
     Market Price of Aluminum per Pound at Period-End .............         0.797               0.736               0.797
</TABLE>

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

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

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


                                       12

<PAGE>

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

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

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

     The  Company's net sales  increased to $267.3  million in 1997 from $ 228.2
million in 1996,  an  increase of $39.1  million or 17.1%.  Net sales - products
increased to $235.5  million in 1997 from $208.6 million in 1996, an increase of
$26.9 million or 12.9%. Sales of value added products increased $8.1 million, or
6.4%,  to $134.8 in 1997 from  $126.7  million in 1996.  Sales of mill  finished
extrusions  increased  20.7%,  primarily  due to  increased  shipments  of  mill
finished  products  to truck  and  trailer  manufacturers,  several  distributor
accounts,  and  manufacturers  of equipment and electrical  products.  The gross
sales price per pound increased by 0.4%, reflecting an increase of $0.051 in the
average  market price per pound of aluminum and an increase of 12.0% in sales of
fabricated products, offset by the effect of a higher sales mix of mill finished
extrusions.

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

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


                                       13
<PAGE>

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

     Selling,  general and administrative expenses increased to $21.5 million in
1997 from $15.9  million in 1996,  an  increase of $5.6  million or 35.2%.  This
increase  is  primarily   attributable   to  an  increase  of  $4.1  million  in
compensation  related to the settlement of employee stock options as part of the
Recapitalization  (as  defined  herein)  and an  increase  of  $0.8  million  in
incentive  compensation.  Other selling,  marketing,  general and administrative
costs  increased  $0.7  million,  reflecting  the  increased  level of  business
activity and the development of sales and marketing programs.

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

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

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

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

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

Year Ended December 31, 1996 Compared to Year Ended December 31, 1995

     The  Company's  net sales  decreased to $228.2  million in 1996 from $232.6
million  in 1995,  a  decrease  of $4.4  million  or 1.9%.  Net sales - products
decreased to $208.6  million in 1996 from $221.4  million in 1995, a decrease of
$12.8 million or 5.8%.  However,  sales of valued added products  increased $6.0
million,  or 5.0%, to $126.7 million in 1996 from $120.7 million in 1995.  Sales
of mill  finished  extrusions  declined  16.8%,  reflecting  a decrease  in both
aluminum prices and shipments of mill finished products, particularly to trailer
manufacturers.  The $0.096 decrease in gross sales price per pound was less than
the $0.150 decline in the average  market price per pound of aluminum,  due to a
higher sales mix of higher value added products,  led by an increase of 18.6% in
sales of painted or anodized products.

     Pounds of product shipped  increased 0.6 million pounds,  or 0.4%, to 138.4
million in 1996 from 137.8 million pounds of product shipped in 1995.  Shipments
to commercial  construction  increased 2.8 million pounds,  reflecting  business
from  a  new  architectural  account.  In  residential  construction,  shipments
increased  5.1  million  pounds,  mainly  because of a  management  decision  to
dedicate   more  press   capacity  to  mobile  home   products.   Shipments   to
transportation  decreased  12.7 million  pounds,  primarily as a result of a 20%
decline  in  shipments  to  truck  and  trailer  manufacturing  as the  industry
consolidated  after  record  production  in the  1994-1995  period.  In consumer
durables,  shipments  increased 3.2 million  pounds,  primarily due to growth in
demand   for   office    furniture    and


                                       14
<PAGE>

pleasure boats. Shipments to  equipment/electrical  increased 1.2 million pounds
due to continuing  strong  performance of several niche  accounts,  particularly
those related to material handling  systems.  The increase of 1.0 million pounds
in shipments to distributors/other resulted mainly from continuing sales efforts
to increase custom extrusion business with select distributors.

     Cost of sales  decreased to $191.2  million in 1996 from $194.4  million in
1995, a decrease of $3.2 million or 1.6%. Cost of sales - products  decreased to
$174.0  million in 1996 from $185.9 million in 1995, a decrease of $11.9 million
or 6.4%. This decrease  resulted from a $14.7 million decrease in aluminum costs
and a $2.8 million increase in operating costs. Production labor costs per pound
increased  $0.011  mainly  due to a shift in  production  mix from  large  truck
trailer  extrusion shapes to smaller extrusion shapes requiring more press labor
and  higher  costs  of  labor  and  shipping  materials,  due to more  extensive
protective packing.  Other variable costs increased $0.014 mainly due to a large
increase in natural gas prices.

     Gross profit decreased to $37.0 million in 1996 from $38.1 million in 1995,
a decrease of $1.1 million or 2.9%.

     Selling,  general and administrative expenses decreased to $15.9 million in
1996 from  $16.2  million  in 1995,  a decrease  of $0.3  million  or 1.9%.  The
contributing  factors included  professional fees, which decreased $0.2 million;
and travel  expenses,  which decreased $0.3 million;  both decreases were due to
completion of supervisory  training principally  undertaken in 1995.  Offsetting
these  decreases  were  personnel  costs,  which  increased  $0.3 million due to
increased  management  incentive bonuses and employee stock option compensation.
Other general and administrative expenses decreased by $0.1 million.

     Operating  profit  decreased to $21.1 million in 1996 from $21.9 million in
1995, a decrease of $0.8 million or 3.7%.

     Interest  expense  decreased  to $5.2  million in 1996 from $7.1 million in
1995,  a decrease of $1.9  million or 26.8%.  The  decrease in interest  expense
resulted from a reduction in debt outstanding and a  performance-based  decrease
in interest rates under the Old Credit  Facility (as defined  herein).  In 1996,
the  Company  was able to reduce  debt from $51.7  million to $40.1  million,  a
decrease of 11.6 million.  Income tax expense  increased to $7.1 million in 1996
from $6.3 million in 1995, an increase of $0.8 million.  Effective tax rates for
the years ended December 31, 1996 and 1995 were 44% and 42%, respectively, which
differed from the federal statutory rate of 35% due to the goodwill amortization
and state income taxes, and in the case of 1996, the payment of income taxes due
from prior periods.

     As a result of the above factors, net earnings increased to $8.8 million in
1996 from $8.6 million in 1995, an increase of $0.2 million or 2.3%.

     Adjusted EBITDA, as previously  defined herein,  decreased to $22.3 million
in 1996 from $23.4  million in 1995,  a decrease  of $1.1  million or 4.7%.  The
decline in Adjusted  EBITDA  consisted  of $3.2  million  from a net increase in
operating  costs (as  previously  discussed),  offset by an  improvement of $1.9
million in sales  spread and of $0.2  million due to a slight  increase in sales
volume. Adjusted EBITDA per pound, in turn, decreased $0.009 to $0.161 in 1996.

Liquidity and Capital Resources

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

     As of December  31,  1997,  the  Company had $105  million of New Notes (as
defined herein)  outstanding and no borrowings under the New Credit Facility (as
defined herein). The significant indebtedness incurred by the


                                       15
<PAGE>

Company  as a  result  of  the  Recapitalization  will  have  several  important
consequences,  the foremost  being that interest  expense will be  substantially
higher than prior to the Recapitalization. The ability of the Company to satisfy
its obligations  pursuant to such  indebtedness,  including  pursuant to the New
Notes  and the  Indenture  (under  which  the New Notes  were  issued),  will be
dependent upon the Company's future performance, which, in turn, will be subject
to management,  financial and other business factors  affecting the business and
operations of the Company,  some of which are not in the Company's control.  The
Company's  liquidity may also be impacted by environmental  and other regulatory
matters.

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

  Cash Flows from Operating Activities

     Cash provided by operations in 1997, 1996 and 1995 was $5.3 million,  $14.1
million and $17.4 million,  respectively. In 1997, cash flow decreased primarily
as a result of reduced net earnings,  reflecting the non-recurring  compensation
charge and  increased  interest  costs.  In addition,  cash flow  decreased as a
result of  increases  in accounts  receivable  and  inventories  resulting  from
increased levels of business  activity and increased  aluminum prices.  In 1996,
cash flow increased  reflecting a modest  improvement in profit  performance and
continued emphasis on working capital management.

     Total working  capital  (excluding  current  portion of long-term  debt) at
December  31, 1997,  1996 and 1995 was $30.0  million,  $18.2  million and $19.4
million, respectively. In 1997, cash and cash equivalents increased $5.1 million
due in part to the  terms  and  conditions  of the  Notes  (as  defined  herein)
outstanding  (see Cash  Flows from  Financing  Activities).  Increases  in other
working capital accounts  reflected the impact of increased  business  activity,
the  effect of rising  aluminum  prices,  and the  change in timing of  interest
payments.  In 1996, lower aluminum prices and lower inventory levels resulted in
slightly lower working capital requirement than 1995.

  Cash Flows from Investing Activities

     Expenditures for property,  plant and equipment in 1997, 1996 and 1995 were
$3.0 million, $2.6 million and $1.1 million,  respectively.  During the last two
years,  the Company has  successfully  increased its casting capacity by 15% and
capacities on two extrusion presses by an average of 11% without the acquisition
of expensive  new  equipment.  The Company also made  investments  in CNC mills,
benders, saws and presses to increase its fabrication capabilities.  The Company
anticipates that  expenditures  for property,  plant and equipment will approach
$4.5  million in 1998 and will average $3.5 million per annum for the years 1999
through 2002.  The Company  plans to update and modernize two extrusion  presses
per year,  including the installation of advanced  isothermal  extrusion control
equipment,  where cost  justified.  The Company  expects to  increase  extrusion
capacity by 10% per press and reduce scrap generated in the process by 1.5%. The
Company  also plans to  upgrade  and  modernize  the  homogenizing  ovens at its
casting facility,  which is estimated to increase capacity by 5% and improve the
metallurgical  properties of billet cast,  resulting in further  efficiencies in
the extrusion process.  Approximately $1.0 million of the annual expenditure for
the years  1998-2002  is expected to be used for  maintenance  capital  with the
remainder invested in productivity improvements and capacity enhancements.

  Cash Flows from Financing Activities

     Cash provided by financing  activities was $2.8 million in 1997 compared to
cash used in financing  activities of $11.6 million in 1996 and $17.9 million in
1995.  Cash used in financing  activities  in 1996 and 1995  reduced  borrowings
under the Old Credit Facility (as defined herein).


                                       16
<PAGE>

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

     The offering of the Notes,  the repayment of the Old Credit  Facility,  the
retirement  of the  Subordinated  Notes,  and the entering  into of a New Credit
Facility  were  part  of  an  overall   recapitalization  of  the  Company  (the
"Recapitalization").  As  part  of  the  Recapitalization,  the  Company  used a
substantial  portion of the proceeds  received from the issuance and sale of the
Notes to pay a special  cash  dividend  to holders of its common  stock,  settle
existing employee stock options, and repurchase, or offer to repurchase,  shares
of common stock held by certain stockholders.

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

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

Futures Contracts and Forward Sales Contracts

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

     At December  31, 1997,  the Company was party to $19.5  million of aluminum
futures contracts through nationally  recognized brokerage firms and major metal
brokers.  These aluminum futures  contracts are for periods between January 1998
and December 1998,  covering 27.0 million pounds of aluminum at prices  expected
to be settled  financially  in cash as they reach  their  respective  settlement
dates.  The  Company  does not  engage in any  speculative  trading  of  futures
contracts.

LIFO Adjustment and Inflation

  The  largest  component  of the  Company's  cost of  sales  is  aluminum,  its
principal raw material. Aluminum costs can be volatile, and reported results may
vary due to LIFO  adjustments,  as previously  discussed.  With the exception of
LIFO  adjustments,  the  Company  does  not  believe  that  inflation  has had a
significant impact on its results of operations for the years ended December 31,
1997, 1996 and 1995.


                                       17
<PAGE>

Seasonality

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

Year 2000 Systems Compliance

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

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

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

Commitments and Contingencies

     At December 31, 1997, the Company has commitments  with four North American
suppliers to purchase 65.5 million pounds of primary  aluminum from January 1998
through  January 1999 at current market prices at the specified  delivery dates.
In addition,  the Company has a commitment with Venalum, even though the Venalum
Agreement  terminated  December  31,  1997,  to purchase  8.0 million  pounds of
aluminum  in January  1998 at  contract  market  prices,  a delivery  originally
scheduled  for  December  1997.  In January and  February  of 1998,  the Company
arranged further  commitments with five North American  suppliers to purchase an
additional 6.6 million pounds of primary  aluminum,  plus 16.8 million pounds of
aluminum billet from January 1998 through December 1998 at current market prices
at the delivery dates.  Management expects that such quantities of aluminum will
be  utilized  in the  normal  course  of  operations  during  the terms of these
agreements.

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


                                       18
<PAGE>

determined.   The  Company  has  not  anticipated  any  insurance   proceeds  or
third-party  payments in determining its estimated  liability for  environmental
remediation.

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

                                       19
<PAGE>

ITEM 8.      FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                          Index to Financial Statements

<TABLE>
<CAPTION>
                                                                                                           Page
<S>                                                                                                         <C>
Report of Independent Auditors .............................................................................21
Balance Sheets as of December 31, 1997 and 1996 ............................................................22
Statements of Operations for the years ended December 31, 1997, 1996 and 1995 ..............................23
Statements of Stockholders' Equity for the years ended December 31, 1997, 1996 and 1995 ....................24
Statements of Cash Flows for the years ended December 31, 1997, 1996 and 1995 ..............................25
Notes to Financial Statements ..............................................................................26
Schedule II -- Valuation and Qualifying Accounts ...........................................................39
</TABLE>


                                       20
<PAGE>

                         Report of Independent Auditors





The Board of Directors
Wells Aluminum Corporation

     We have  audited  the balance  sheets of Wells  Aluminum  Corporation  (the
"Company")  as of December  31, 1997 and 1996,  and the  related  statements  of
operations,  stockholders'  equity and cash flows for each of the three years in
the period  ended  December  31, 1997.  Our audits also  included the  financial
statement  schedule in the Index at Item 14(a).  These financial  statements and
schedule are the responsibility of the Company's management.  Our responsibility
is to express an opinion on these financial statements and schedule based on our
audits.

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

     In our opinion,  the financial statements referred to above present fairly,
in all material respects,  the financial position of Wells Aluminum  Corporation
as of December  31, 1997 and 1996,  and the results of  operations  and its cash
flows for each of the three years ended  December 31, 1997, in  conformity  with
generally  accepted  accounting  principles.  Also, in our opinion,  the related
financial statement schedule, when considered in relation to the basic financial
statements  taken  as a whole,  present  fairly  in all  material  respects  the
information set forth therein.


                                                   /s/    Ernst & Young LLP

March 20, 1998
Baltimore, Maryland



                                       21
<PAGE>


                                            WELLS ALUMINUM CORPORATION

                                                  BALANCE SHEETS

                                              (Dollars in Thousands)

<TABLE>
<CAPTION>
                                                                                      December 31,
                                                                                    1997         1996
                                                                                ----------    ---------
                                       Assets
<S>                                                                              <C>          <C>
Current assets:
    Cash and cash equivalents ................................................   $   5,352    $     277
    Accounts receivable, principally trade, less allowances of $825 and $1,170      30,599       22,279
    Inventories ..............................................................      20,209       19,838
    Other current assets .....................................................       1,444          938
                                                                                 ---------    ---------
        Total current assets .................................................      57,604       43,332
Property, plant and equipment, at cost less accumulated depreciation .........      27,269       26,723
Debt issuance costs, net of accumulated amortization of  $362 and $1,365 .....       4,387        2,104
Goodwill, net of accumulated amortization of $12,474 and $11,286 .............      34,550       35,738

Other assets .................................................................       1,573          829
                                                                                 ---------    ---------
        Total assets .........................................................   $ 125,383    $ 108,726
                                                                                 =========    =========

                        Liabilities and Stockholders' Equity
Current liabilities:
    Current portion of long-term debt ........................................   $      --    $      13
    Accounts payable, principally trade ......................................      20,253       19,577
    Accrued expenses .........................................................       7,362        5,567
                                                                                 ---------    ---------
        Total current liabilities ............................................      27,615       25,157
Long-term debt, less current portion .........................................     105,000       40,078
Deferred income taxes ........................................................       5,804        5,750
Deferred benefit plan obligations ............................................       3,032        3,269
                                                                                 ---------    ---------
        Total liabilities ....................................................     141,451       74,254
                                                                                 ---------    ---------

Stockholders' equity:
    Common stock, Class A, par value $0.01 per share, 1,100,000 and 975,000
        shares authorized, 909,005 and 778.062.5 shares issued ...............           9            8
    Common stock, Class B, par value $0.01 per share, 0 and 125,000 shares
        authorized and issued ................................................          --            1
    Additional paid-in capital ...............................................       1,215       24,390
    Accumulated (deficit) earnings ...........................................     (16,805)      10,565
    Additional minimum pension liability .....................................        (487)        (492)
                                                                                 ---------    ---------
        Total stockholders' equity ...........................................     (16,068)      34,472
                                                                                 ---------    ---------

        Total liabilities and stockholders' equity ...........................   $ 125,383    $ 108,726
                                                                                 =========    =========
</TABLE>


See accompanying notes.


                                      -22-
<PAGE>

                           WELLS ALUMINUM CORPORATION

                            STATEMENTS OF OPERATIONS

                             (Dollars in Thousands)

<TABLE>
<CAPTION>
                                                              Year Ended December 31,
                                                            1997        1996       1995
                                                         ---------    --------   --------
<S>                                                      <C>          <C>        <C>
Net sales ............................................   $ 267,349    $228,161   $232,555

Cost of sales ........................................     225,681     191,206    194,414
                                                         ---------    --------   --------

Gross profit .........................................      41,668      36,955     38,141

Selling, general and administrative expenses .........      17,446      15,877     16,211

Compensation from settlement of employee stock options       4,070        --         --
                                                         ---------    --------   --------

Operating profit .....................................      20,152      21,078     21,930

Interest expense, net of interest income .............       8,390       5,176      7,087
                                                         ---------    --------   --------

Earnings before income taxes and extraordinary item ..      11,762      15,902     14,843

Income taxes .........................................       5,073       7,059      6,262
                                                         ---------    --------   --------

Earnings before extraordinary item ...................       6,689       8,843      8,581

Extraordinary loss on refinancing of debt,
    net of  applicable income taxes of $826 ..........      (1,292)       --         --
                                                         ---------    --------   --------

Net earnings .........................................   $   5,397    $  8,843   $  8,581
                                                         =========    ========   ========
</TABLE>

See accompanying notes.


                                      -23-
<PAGE>

                           WELLS ALUMINUM CORPORATION

                       STATEMENTS OF STOCKHOLDERS' EQUITY

                             (Dollars in Thousands)



<TABLE>
<CAPTION>
                                                                             Accumu-         Additional
                                    Common      Common       Additional      lated           Minimum
                                    Stock,      Stock,       Paid-In         Earnings        Pension
                                    Class A     Class B      Capital         (Deficit)       Liability
                                    -------     -------      -------         ---------       ---------
<S>                                   <C>        <C>        <C>             <C>             <C>
Balance at December 31, 1994 ...       $ 8        $ 1        $ 24,347        $ (6,859)       $(355)

    Net earnings for 1995 ......        --         --            --             8,581         --
    Change in additional minimum
        pension liability ......        --         --            --              --           (490)
    Exercise of stock options ..        --         --              13            --           --
                                       ---        ---        --------        --------        -----
Balance at December 31, 1995 ...         8          1          24,360           1,722         (845)
    Net earnings for 1996 ......        --         --            --             8,843         --
    Change in additional minimum
        pension liability ......        --         --            --              --            353
    Exercise of stock options ..        --         --              30            --           --
                                       ---        ---        --------        --------        -----
Balance at December 31, 1996 ...         8          1          24,390          10,565         (492)
    Net earnings for 1997 ......        --         --            --             5,397         --
    Exchange of common stock ...         1         (1)           --              --           --
    Change in additional minimum
        pension liability ......        --         --            --              --              5
    Dividend declared ..........        --         --         (24,390)        (31,600)        --

    Repurchase of common stock .        (2)        --             (48)         (1,167)        --
    Settlement of stock options          2         --           1,263            --           --
                                       ---        ---        --------        --------        -----
Balance at December 31, 1997 ...       $ 9        $--        $  1,215        $(16,805)       $(487)
                                       ===        ===        ========        ========        =====
</TABLE>

See accompanying notes.


                                      -24-
<PAGE>

                           WELLS ALUMINUM CORPORATION

                            STATEMENTS OF CASH FLOWS

                             (Dollars in Thousands)

<TABLE>
<CAPTION>
                                                                                                 YEAR ENDED DECEMBER 31,
                                                                                       -----------------------------------------
                                                                                          1997            1996            1995
                                                                                       ---------        --------        --------
<S>                                                                                    <C>              <C>             <C>
Operating activities:
Net earnings ...................................................................       $   5,397        $  8,843        $  8,581

Adjustments  to  reconcile  net  earnings  to net  cash  provided  by  operating
    activities:
        Depreciation and amortization ..........................................           4,270           4,034           4,576
        Settlement of employee stock options ...................................           1,263             --              --
        Deferred income taxes ..................................................              30            (704)           (191)
        Extraordinary loss on refinancing of debt ..............................           1,292             --              --
        Changes in operating assets and liabilities:
            Accounts receivable, net ...........................................          (8,320)          2,362           1,748
            Inventories ........................................................            (371)            134           4,693
            Accounts payable and accrued expenses ..............................           2,471            (930)         (3,650)
            Other assets and liabilities .......................................            (728)            348           1,663
                                                                                       ---------        --------        --------
Net cash provided by operating activities ......................................           5,304          14,087          17,420
                                                                                       ---------        --------        --------

Investing activities:

Purchase of property, plant and equipment ......................................          (3,035)         (2,589)         (1,054)
                                                                                       ---------        --------        --------

Net cash used in investing activities ..........................................          (3,035)         (2,589)         (1,054)
                                                                                       ---------        --------        --------

Financing activities:

Principal payments on long-term debt ...........................................         (69,791)        (93,793)        (89,231)
Proceeds from long-term debt ...................................................         134,700          82,200          71,850
Payment of debt issuance costs .................................................          (4,749)            --             (483)
Proceeds from the exercise of stock options ....................................            --                30              13
Payment of special cash dividend ...............................................         (55,990)            --              --


Prepayment penalty on early retirement of debt .................................            (149)            --              --
Purchase of common stock .......................................................          (1,215)            --              --
                                                                                       ---------        --------        --------
Net cash provided by (used in) financing activities ............................           2,806         (11,563)        (17,851)
                                                                                       ---------        --------        --------
Net increase (decrease) in cash and cash equivalents ...........................           5,075             (65)         (1,485)
Cash and cash equivalents at beginning of year .................................             277             342           1,827
                                                                                       ---------        --------        --------

Cash and cash equivalents at end of year .......................................       $   5,352        $    277        $    342
                                                                                       =========        ========        ========
</TABLE>

See accompanying notes.


                                      -25-
<PAGE>

                           WELLS ALUMINUM CORPORATION

                          NOTES TO FINANCIAL STATEMENTS



1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Wells Aluminum  Corporation  (the "Company") is a domestic  manufacturer of
aluminum  extruded  and  fabricated  products  for  several  diverse  industries
including    building/construction,    transportation,    durable    goods   and
equipment/electrical.

RECLASSIFICATION

     Certain amounts previously  reported have been reclassified to conform with
the 1997 presentation.

USE OF ESTIMATES

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

CASH AND CASH EQUIVALENTS

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

INVENTORIES

     The  aluminum   component  of  inventories,   representing   68%  of  total
inventories  at December  31,  1997 and 1996,  is stated at the lower of cost or
market,  using the last-in,  first-out  method (LIFO).  The labor,  overhead and
supplies  components of  inventories  are carried at the lower of cost or market
using the  first-in,  first-out  method  (FIFO).  The  outside  purchased  parts
component  of  inventories  are carried at the lower of cost or market using the
weighted average cost method.

PROPERTY, PLANT AND EQUIPMENT

     Property,  plant and equipment is stated at cost.  Maintenance  and repairs
are charged to operations when incurred, while expenditures having the effect of
extending the useful life of an asset are capitalized.  Depreciation is computed
using the  straight-line  method over the estimated  useful lives of the assets.
Depreciation  expense for the years ended  December 31, 1997,  1996 and 1995 was
$2,489,000, $2,351,000 and $2,818,000, respectively.

DEBT ISSUANCE COSTS

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


                                      -26-
<PAGE>

                           WELLS ALUMINUM CORPORATION

                    NOTES TO FINANCIAL STATEMENTS (Continued)


1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

GOODWILL

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

CREDIT RISK

     The Company is potentially  subject to  concentrations  of credit risk with
accounts  receivable and futures  contracts.  Although the Company has a diverse
customer  base,  34%  and  27% of the  accounts  receivable  balance  was due in
aggregate  from five  customers as of December 31, 1997 and 1996,  respectively.
The Company  performs  ongoing  credit  evaluations  of  customers  and does not
require   collateral  for  accounts   receivable.   The  Company  evaluates  the
creditworthiness  of the  counterparties  to the futures contracts and considers
nonperformance risk to be remote.

PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS

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

     The Company has historically provided  postretirement medical insurance and
life insurance benefits (primarily for salaried employees). In 1995, the Company
adopted on a prospective basis Statement of Financial  Accounting Standards 106,
Employers'  Accounting  for  Postretirement  Benefits  Other Than  Pensions,  to
account  for the cost of  postretirement  benefits  other  than  pensions.  This
statement   changed  the  prevalent   practice  of  cash  basis  accounting  for
postretirement  benefits by requiring  the accrual of such  benefits  during the
employees' years of service.

FORWARD SALES CONTRACTS AND FUTURES CONTRACTS

     In the normal  course of business,  the Company  enters into forward  sales
contracts  with certain  customers for the sale of fixed  quantities of extruded
aluminum at scheduled  intervals  whereby the cost of the aluminum  component of
the contract is fixed for the duration of the contract, based on market price at
the inception of the contract.  In order to hedge its exposure to aluminum price
volatility under these forward sales contracts, the Company enters into aluminum
futures contracts to purchase aluminum,  based on scheduled deliveries under the
forward sales contracts.  Gains and losses on futures  contracts  designated and
effective as hedges of aluminum  price  exposure are recorded as  adjustments to
the cost of inventory.

RELATED PARTY TRANSACTIONS

     During the years  ended  December  31,  1997,  1996 and 1995,  the  Company
purchased aluminum from CVG Industria  Venezolana de Aluminio C.A.  ("Venalum"),
an owner  of  180.362.5  shares  of Class A common  stock,  with  total  amounts
purchased of $69,606,000,  $69,288,000 and  $68,277,000,  respectively.  Amounts
payable to Venalum at December 31, 1997 and 1996 were $6,344,000 and $8,567,000,
respectively.


                                      -27-
<PAGE>

                           WELLS ALUMINUM CORPORATION

                    NOTES TO FINANCIAL STATEMENTS (Continued)


1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


STOCK-BASED COMPENSATION

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

BUSINESS SEGMENTS

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

2.   INVENTORIES

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

<TABLE>
<CAPTION>
                                                               1997            1996
                                                            --------        ---------
<S>                                                         <C>             <C>
Cost for aluminum and FIFO cost for other components:
    Raw materials ...................................       $ 11,840        $ 11,073

    Finished goods and work-in-process ..............         10,658           8,929

    Supplies ........................................            471             525
                                                            --------        --------
                                                              22,969          20,527
    Less LIFO reserve ...............................         (2,760)           (689)
                                                            --------        --------

                                                            $ 20,209        $ 19,838
                                                            ========        ========
</TABLE>

3.   PROPERTY, PLANT AND EQUIPMENT

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

                                           1997            1996
                                        --------        ---------
    Land ........................       $    816        $    816
    Buildings and improvements ..          9,075           8,909
    Machinery and equipment .....         45,847          44,485
    Construction in progress ....          1,848             352
                                        --------        --------
                                          57,586          54,562
    Less accumulated depreciation        (30,317)        (27,839)
                                        --------        --------
                                        $ 27,269        $ 26,723
                                        ========        ========


                                      -28-
<PAGE>

                           WELLS ALUMINUM CORPORATION

                    NOTES TO FINANCIAL STATEMENTS (Continued)


4.   RECAPITALIZATION

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

     In May 1997, the Company issued and sold  $105,000,000  principal amount of
10.125%  Series A Senior Notes  ("Series A Notes") due 2005. In connection  with
the  consummation  of the  issuance  and sale of the Notes,  the Company  repaid
existing  indebtedness  and entered into a new bank credit  facility (see Note 6
herein)  providing a secured working capital line of $15,000,000,  which matures
in 2002.

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

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

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

     At December 31, 1997,  there were 909,005.0  shares of Class A Common Stock
outstanding.

5.   ACCRUED EXPENSES

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

                                              1997         1996
                                             ------       ------
Interest .............................       $  886       $1,011
Salaries, wages and other compensation        3,697        2,474
Other ................................        2,779        2,082
                                             ------       ------
                                             $7,362       $5,567
                                             ======       ======


                                      -29-

<PAGE>

                           WELLS ALUMINUM CORPORATION

                    NOTES TO FINANCIAL STATEMENTS (Continued)


6.   LONG-TERM DEBT

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


                                                      1997           1996
                                                    --------       --------
Credit agreement:

    Revolving loan facility .................       $   --         $  1,400
    Term A loan .............................           --            7,477
    Term B loan .............................           --            6,201
Subordinated notes:
    14.125% senior subordinated notes .......           --           15,000
Senior notes:
    10.125% Series B senior notes (see Note 4)       105,000           --
Other .......................................           --               13
                                                     105,000         40,091
    Less current portion ....................           --              (13)
                                                    --------       --------
                                                    $105,000       $ 40,078
                                                    ========       ========

     Aggregate  maturities  of  long-term  debt  for  each  of  the  five  years
succeeding December 31, 1997 are $0.

CREDIT AGREEMENT

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

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

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

     The  Term A Loan  required  quarterly  principal  payments  of  $1,375,000,
through December 31, 2000 and was subject to interest,  at the Company's option,
at either 1.5% over the Agent's prime lending rate or 2.75% over


                                       30
<PAGE>

                           WELLS ALUMINUM CORPORATION

                    NOTES TO FINANCIAL STATEMENTS (Continued)


6.   LONG-TERM DEBT (CONTINUED)

LIBOR.  On or after  January 1, 1996,  either rate was subject to a reduction of
0.25% or 0.50% if the Company met certain financial  criteria stated in the 1994
Credit  Agreement.  The Company  met these  financial  criteria  and as such the
interest  rates were reduced by 0.25%.  In May 1997,  the remaining  balance due
under  the Term A Loan was  paid in full as part of the  Recapitalization.  As a
consequence of retiring the Term A Loan, the Company  recorded an  extraordinary
loss of $555,000  consisting of $910,000 of unamortized  costs, net of an income
tax benefit of $355,000.

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

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

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

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

SUBORDINATED NOTES

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


                                       31
<PAGE>

                           WELLS ALUMINUM CORPORATION

                    NOTES TO FINANCIAL STATEMENTS (Continued)

6.   LONG-TERM DEBT (CONTINUED)

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

7.   INTEREST EXPENSE, NET OF INTEREST INCOME

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

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

Interest expense .......................    $ 8,249        $4,681       $6,517
Amortization of debt issuance costs ....        593           495          570
                                            -------        ------       ------
                                              8,842         5,176        7,087
Interest income ........................       (452)         --           --
                                            -------        ------       ------
Interest expense, net of interest income    $ 8,390        $5,176       $7,087
                                            =======        ======       ======


     Cash paid for interest  amounted to  $8,375,000,  $5,015,000 and $6,184,000
for the years ended December 31, 1997, 1996 and 1995, respectively.

8.   FINANCIAL INSTRUMENTS

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

9.   Income Taxes

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


                                                1997          1996
                                               ------       -------
Deferred tax liabilities:
    Property, plant and equipment ......       $6,372       $6,701
    Inventory ..........................          237          212
                                               ------       ------
Total deferred tax liabilities .........        6,609        6,913
                                               ------       ------
Deferred tax assets:
    Pension and benefit plan liabilities          568          952
    Accrued liabilities ................          319          135
    Allowance for doubtful accounts ....          322          456
                                               ------       ------
Total deferred tax assets ..............        1,209        1,543
                                               ------       ------
Net deferred tax liabilities ...........       $5,400       $5,370
                                               ======       ======

     Deferred  income taxes are included in the Balance  Sheets in other current
assets and deferred income taxes.


                                       32
<PAGE>

                           WELLS ALUMINUM CORPORATION

                    NOTES TO FINANCIAL STATEMENTS (Continued)


9.   INCOME TAXES (CONTINUED)

     For the years  ended  December  31, 1997 and 1996,  there was no  valuation
allowance for any of the deferred tax assets.

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

<TABLE>
<CAPTION>
                                                      1997         1996         1995
                                                     ------       ------       ------
<S>                                                  <C>          <C>          <C>
Income tax expense calculated at the statutory
    federal income tax rate ..................       $4,117       $5,566       $5,195
Amortization of goodwill .....................          416          416          416
State taxes, net of federal benefits .........          518          683          642
Prior years' income taxes ....................         --            313         --
Other ........................................           22           81            9
                                                     ------       ------       ------
Income tax expense ...........................       $5,073       $7,059       $6,262
                                                     ======       ======       ======
</TABLE>


                          1997         1996           1995
                         ------       -------        -------
Current taxes ....       $5,043       $ 7,763        $ 6,453
Deferred taxes ...           30          (704)          (191)
                         ------       -------        -------
Income tax expense       $5,073       $ 7,059        $ 6,262
                         ======       =======        =======

     Cash paid for  federal  and state  income  taxes  amounted  to  $4,490,000,
$6,883,000 and $4,960,000 for the years ended December 31, 1997,  1996 and 1995,
respectively.

10.  LEASES

     The Company leases various facilities and equipment under short-term rental
and operating lease agreements.  Rent expense under these agreements amounted to
$1,752,000,  $1,496,000  and  $1,434,000  for the years ended December 31, 1997,
1996 and  1995,  respectively.  Future  minimum  payments  under  noncancellable
operating  leases as of December 31, 1997 are:  $1,392,000 in 1998,  $896,000 in
1999,  $607,000  in 2000,  $341,000  in  2001,  $128,000  in 2002  and  $526,000
thereafter.

11.  PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS

     The  Company  sponsors  several  defined  benefit  pension  plans  covering
substantially  all  salaried  and hourly  employees.  The  benefits for salaried
employees are based on years of service and compensation  while the benefits for
hourly employees are based on years of service.  The Company's funding policy is
to  contribute  annually  an  amount  at  least  equal  to  the  minimum  annual
contributions  required by ERISA.  The plans'  assets are invested  primarily in
money market funds, common stocks and stock mutual funds.


                                       33
<PAGE>

                           WELLS ALUMINUM CORPORATION

                  NOTES TO THE FINANCIAL STATEMENTS (Continued)

11.  PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS (CONTINUED)

     A summary of the actuarially  computed  benefit  obligations and assets for
the  defined  benefit  pension  plans as of  December  31  follows  (dollars  in
thousands):


<TABLE>
<CAPTION>
                                                        1997           1997            1996           1996
                                                     -----------    -----------     -----------    -----------
                                                     Accumulated      Assets        Accumulated      Assets
                                                       Benefit        Exceed          Benefit        Exceed
                                                     Obligation     Accumulated     Obligation     Accumulated
                                                       Exceeds        Benefit         Exceeds        Benefit
                                                       Assets       Obligation        Assets       Obligation
                                                     ----------     -----------     ----------     -----------
<S>                                                   <C>            <C>             <C>            <C>
Actuarial present value of benefit obligations:

    Vested benefit obligation .................       $ 3,464        $  8,373        $ 5,652        $ 3,884
                                                      =======        ========        =======        =======
    Accumulated benefit obligation ............       $ 4,354        $  9,255        $ 6,620        $ 4,292
                                                      =======        ========        =======        =======
Projected benefit obligation ..................       $ 4,354        $ 11,307        $ 6,620        $ 6,038
Plan assets at fair value .....................         3,672           9,470          4,895          4,815
                                                      -------        --------        -------        -------
Plan assets less than
    projected benefit obligations .............          (682)         (1,837)        (1,725)        (1,223)
Unrecognized prior service costs ..............           648             421            829             33
Unrecognized net (gain) loss ..................           799             906            807           (208)
Additional minimum pension
    liability .................................        (1,447)           --           (1,636)          --
                                                      -------        --------        -------        -------

Total accrued and
    deferred pension obligations ..............       $  (682)       $    510        $(1,725)       $(1,398)
                                                      =======        ========        =======        =======
</TABLE>


A summary of net pension costs for the years ended December 31 follows  (dollars
in thousands):

<TABLE>
<CAPTION>
                                                                    1997          1996           1995
                                                                  -------        -------        ------
<S>                                                               <C>            <C>            <C>
Service cost - benefits earned during the period ..........       $   803        $   825        $ 690
Interest cost on projected benefit obligation .............         1,005            884          824
Return on plan assets .....................................        (1,071)          (758)        (622)
Net amortization and deferral .............................           373            195          105
                                                                  -------        -------        -----
Net pension cost ..........................................       $ 1,110        $ 1,146        $ 997
                                                                  =======        =======        =====
</TABLE>

A summary of the significant actuarial assumptions follows:




                                       1997        1996        1995
                                       -----       -----       -----
Discount rates ..............          7.25%       7.75%       7.25%
Future compensation increases          4.50%       4.50%       4.00%

The actuary assumed an expected  long-term rate of return on assets of 8.00% for
1997, 1996 and 1995.

     In addition to the Company's  defined  benefit  pension plans,  the Company
offers postretirement medical insurance and life insurance benefits to employees
(primarily   salaried   employees)   who  retire   under   certain   eligibility
requirements.  Coverage  is for the  lifetime  of the  retiree  and  spouse  (if
elected). Contribution requirements for


                                       34
<PAGE>

                           WELLS ALUMINUM CORPORATION

                    NOTES TO FINANCIAL STATEMENTS (Continued)


11.  PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS (CONTINUED)

current retirees are set at a fixed  percentage of expected claims costs,  while
contributions  for future  retirees will vary dependent upon years of service at
retirement.  The Company funds its postretirement benefit obligation on a pay as
you go basis.

     A  reconciliation  of the plans'  combined  funding status with the amounts
recognized  in  the  balance  sheet  as  of  December  31  follows  (dollars  in
thousands):


                                                       1997           1996
                                                     --------       --------
Accumulated postretirement benefit obligation:
    Retirees .................................       $(1,150)       $(1,044)
    Fully eligible active plan participants ..          (524)          (475)
    Other active plan participants ...........        (2,147)        (1,605)
                                                     -------        -------
                                                      (3,821)        (3,124)

Plan assets at fair value ....................          --             --
Accumulated postretirement benefit obligations
    in excess of plan assets .................        (3,821)        (3,124)
Unrecognized transition obligation ...........         2,444          2,588
Unrecognized net gain ........................          (148)          (413)
                                                     -------        -------
Net pension cost .............................       $(1,525)       $  (949)
                                                     =======        =======

     The portion of the accumulated postretirement benefit obligation related to
life  insurance  is  $1,004,000  and  $799,000  for  December 31, 1997 and 1996,
respectively.

     The components of net periodic  postretirement benefit cost follow (dollars
in thousands):

<TABLE>
<CAPTION>
                                                                       1997        1996
                                                                       -----       ----
<S>                                                                    <C>         <C>
Service cost ...................................................       $183        $186
Interest cost ..................................................        243         220
Amortization of unrecognized transition obligation over 20 years        144         144
Amortization of unrecognized gain ..............................         (2)        --
                                                                       ----        ----
Net periodic postretirement benefit cost .......................       $568        $550
                                                                       ====        ====
</TABLE>

     The weighted-average annual assumed rate of increase in the per capita cost
of covered  benefits (i.e.  health care cost trend rate) for the plans is 8% and
is assumed to decrease gradually to 5% and remain at that level thereafter.  The
health care cost trend rate  assumption has a significant  effect on the amounts
reported.  For  example,  increasing  the  health  care cost  trend  rate by one
percentage  point in each year would  increase  the  accumulated  postretirement
benefit  obligation  for the plans as of December  31, 1997 by $547,000  and the
aggregate  of  the  service  and  interest  cost   components  of  net  periodic
postretirement benefit for 1997 by $72,000.

     The  weighted-average  discount rate used by the actuary in determining the
accumulated postretirement benefit obligations was 7.25 percent and 7.75 percent
at December 31, 1997 and 1996, respectively.


                                       35
<PAGE>

                           WELLS ALUMINUM CORPORATION

                    NOTES TO FINANCIAL STATEMENTS (Continued)


12.  STOCK OPTION PLANS

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


                                           1997           1996           1995
                                          ------         ------         ------
Options outstanding at January 1 .        57,000         53,000         60,000
Options exercised ................          --           (3,000)          (750)
Options settled ..................       (57,000)
Options granted ..................          --            7,000           --
Options canceled .................          --             --           (6,250)
                                         -------        -------        -------

Options outstanding at December 31          --           57,000         53,000
                                         =======        =======        =======
Options exercisable at December 31          --           42,750         26,500
                                         =======        =======        =======


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

     In June 1997, the Board of Directors of the Company approved a stock option
plan which  authorized up to 65,000 shares of Class A Common Stock for the plan.
The plan  provides for the granting of options to officers,  other key employees
and  directors  at an exercise  price not to exceed the fair market value on the
date of the grant as determined  by the Board of  Directors.  Under terms of the
plan,  the maximum  term for the  options  granted is ten years with the options
vesting ratably over a period of four years. The options granted are exercisable
at a price of $8.00 per share. The weighted-average  remaining  contractual life
of the options outstanding as of December 31, 1997 approximates 9.5 years.


                                                  1997        1996      1995
                                                 ------      -------   ------
       Options outstanding at January 1 .          --          --       --
       Options exercised ................          --          --       --
       Options granted ..................        61,350        --       --
       Options canceled .................        (9,650)       --       --
                                                 ------       ----     ----
       Options outstanding at December 31        51,700        --       --
                                                 ======       ====     ====
       Options exercisable at December 31          --          --       --
                                                 ======       ====     ====

13.  FUTURES CONTRACTS

     The  Company,  in the  normal  course  of  business,  enters  into  futures
contracts  to  manage  the  risk  of  fluctuations  in the  price  of  aluminum.
Fluctuations  in the price of aluminum  can have a  significant  impact upon the
operations  of the Company.  These  instruments  involve  elements of credit and
market risk that are not reflected on the Company's balance sheet. Entering into
these contracts  involves not only the risk of dealing with  counterparties  and
their  ability  to meet the terms of the  contracts,  but also of  movements  in
market value of the futures contracts.


                                       36
<PAGE>

                           WELLS ALUMINUM CORPORATION

                  NOTES TO THE FINANCIAL STATEMENTS (Continued)


13.  FUTURES CONTRACTS (CONTINUED)

The Company is required to place  amounts on deposit with  brokers  based on the
market value of certain contracts.  These margin deposits bear interest based on
the rate of certain  U.S.  Treasury  instruments  and are to be  refunded as the
market value changes or contracts are closed.

     As of December  31, 1997 and 1996,  the Company has  contracts  outstanding
with a notional  principal amount of $19,469,000 and $11,125,000,  respectively,
all of which  the  Company  has  used to  hedge  forward  sales  contracts.  The
unrealized loss related to these contracts approximates $501,000 at December 31,
1997.

14.  COMMITMENTS AND CONTINGENCIES

     At December 31, 1997, the Company has commitments  with four North American
suppliers to purchase 65.5 million pounds of primary  aluminum from January 1998
through  January  1999 at  current  market  prices  at the  delivery  dates.  In
addition,  the  Company has a  commitment  under the  Venalum  Agreement,  which
expired December 31, 1997, to purchase 8.0 million pounds of aluminum in January
1998 from Venalum, a delivery originally scheduled for December 1997. Management
expects that such  quantities  of aluminum will be utilized in the normal course
of operations during the terms of these agreements.

     The Company has received  notice of claims  asserting  potential  liability
under  various  federal  and  state  environmental  laws.   Management  believes
substantially  all such claims were discharged in a Chapter 11 bankruptcy filing
by the former owner of the Company and relate to matters  existing prior to June
1987 which are covered by an  indemnity  agreement  with the former owner of the
Company. The indemnity agreement requires the former owner to pay all qualifying
claims, as defined,  in excess of $500,000 if the aggregate amount of all claims
exceeds $1,500,000.

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

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

15.  SUBSEQUENT EVENTS

     In January and February of 1998, the Company arranged commitments with five
North American suppliers to purchase an additional 6.6 million pounds of primary
aluminum,  plus 16.8 million pounds of aluminum billet from January 1998 through
December 1998 at current market prices at the delivery dates. Management expects
that such  quantities  of  aluminum  will be  utilized  in the normal  course of
operations during the terms of these agreements.


                                       37
<PAGE>

15.  SUBSEQUENT EVENTS (CONTINUED)

     In late February 1998, the Company's  collective  bargaining agreement with
the local union at one plant location expired, and shortly thereafter, the local
union  initiated a work stoppage.  In late March 1998, the Company and the local
union reached  agreement on a new collective  bargaining  agreement and the work
stoppage  ceased.  During the work stoppage,  the Company  operated the affected
plant using salaried personnel from within the Company and temporary  employees.
Management  believes  that the work  stoppage  did not have a  material  adverse
effect on the financial performance of the Company.

                                       38
<PAGE>

                SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS

                           WELLS ALUMINUM CORPORATION

                                December 31, 1997

                             (Dollars in Thousands)


<TABLE>
<CAPTION>
               COL. A                   COL. B              COL. C            COL. D       COL. E
                                                          Additions
                                        Balance at  Charged to   Charged to                Balance at
                                        Beginning   Costs and    Other       Deductions    End
              Description               of Period   Expenses     Accounts    -- Describe   of Period
--------------------------------         ---------  --------     --------    -----------   ---------
<S>                                     <C>          <C>          <C>        <C>          <C>
Year Ended December 31, 1997:
Deducted from asset accounts:
  Allowance for doubtful accounts       $1,170       $150         --         $(495)(1)    $  825
                                        ------       ----                    -----        ------
    Total                               $1,170       $150         --         $(495)       $  825
                                        ======       ====                    =====        ======

Year Ended December 31, 1996:

Deducted from asset accounts:
  Allowance for doubtful accounts       $  925       $548         --         $(303)(1)    $1,170
                                        ------       ----                    -----        ------
    Total                               $  925       $548         --         $(303)       $1,170
                                        ======       ====                    =====        ======

Year Ended December 31, 1995:

Deducted from asset accounts:
  Allowance for doubtful accounts       $1,008       $464         --         $(547)(1)    $  925
                                        ------       ----                    -----        ------
    Total                               $1,008       $464         --         $(547)       $  925
                                        ======       ====                    =====        ======
</TABLE>

(1)  Uncollectible accounts written off, net of recoveries and adjustments.


                                       39
<PAGE>

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

     None.

                                    PART III

ITEM 10.     DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

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

<TABLE>
<CAPTION>
                     Name                    Age                                  Position
-----------------------------------------     --      -----------------------------------------------------------
<S>                                           <C>     <C>
Russell W. Kupiec .......................     50      President, Chief Executive Officer and Director
W. Russell Asher ........................     55      Senior Vice President, Chief Financial Officer and Director
Lynn F. Brown ...........................     53      Senior Vice President, Sales and Marketing and Director
Leo A McCafferty .......................      60      Vice President, Operations and Director
William J. Milam ........................     57      Vice President, Sales and Product Management
David J. Raymonda ......................      40      Controller, Secretary and Treasurer
Elizabeth Varley Camp ..................      40      Director
Elena de Costas ...........................   45      Director
Todd Goodwin ............................     66      Director
Edward R. Heiser ........................     62      Director
Lewis W. van Amerongen ..............         57      Director
Estrella Vidal .............................  38      Director
</TABLE>


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

     Pursuant to an agreement among the Company and certain of its stockholders,
Venalum has the right to nominate two directors to the Board of  Directors.  Ms.
Elena de Costas and Ms.  Estrella  Vidal have been nominated by Venalum and have
been duly elected and qualified.

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

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

     Lynn F. Brown  joined the Company in January  1996 and has been Senior Vice
President,  Sales and Marketing  since that time.  From December 1994 to January
1996, he served as Executive Vice President,  Sales and Marketing of Terra Green
Technologies, a start-up business in the ceramics industry. From July 1986 to


                                       40
<PAGE>

December  1994,  Mr.  Brown  was  Business  Manager  of  International   Paper's
Fountainhead  Products Group. Mr. Brown has been a director of the Company since
June 1997.

     Leo A.  McCafferty  joined the  Company  in October  1995 and has been Vice
President, Operations since July 1996. From October 1995 to July 1996, he served
as Vice President,  Manufacturing. From May 1993 to October 1995, Mr. McCafferty
was  President of Solutions  Et Al, a  consulting  company  engaged in strategic
planning and operations control. From 1986 to May 1993, he was President of PEMS
Service and Repair, a company engaged in ground water treatment and control. Mr.
McCafferty has also held vice president and general manager positions at Black &
Decker  Corporation,  where he was employed for twenty years. Mr. McCafferty has
been a director of the Company since December 1997.

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

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

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

     Elena de Costas has been Vice  President of Finance and  Administration  of
Venalum  since 1995 and has served as a director  of the  Company  since  August
1997.  From 1994 to 1995,  Ms.  de  Costas  served as  Manager  of  Finance  and
Administration of Venalum.

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

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

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

     Estrella  Vidal is the  Assistant  Corporate  Executive to the President of
Venalum and has served as a director of the Company since December 1997.  During
the past five years,  Ms. Vidal has held various  administrative  positions with
Venalum.


                                       41
<PAGE>

ITEM 11.     EXECUTIVE COMPENSATION

SUMMARY COMPENSATION

     The following  table sets forth the  compensation  earned,  whether paid or
deferred,  to Wells's  Chief  Executive  Officer  and its other five most highly
compensated executive officers (collectively, the "Named Officers") for services
rendered in all  capacities to the Company  during the years ended  December 31,
1997, 1996 and 1995.

                                            Summary Compensation Table
<TABLE>
<CAPTION>
                                                                                  Long-Term
                                                                                Compensation
                                                                                   Awards
                                                                                ------------
                                                     Annual Compensation         Securities
                                                  -------------------------      Underlying
Name and Principal Position            Year       Salary           Bonus          Options
---------------------------            ----       ------           -----         ----------
<S>                                    <C>        <C>            <C>              <C>
Russell W. Kupiec                      1997       $234,650       $1,434,955       15,000
  President and                        1996       $187,500       $  175,000        1,300
    Chief Executive Officer            1995       $146,583       $  112,000         --

W. Russell Asher                       1997       $140,000       $  991,042       10,000
  Senior Vice President and            1996       $130,000       $  110,000        1,000
    Chief Financial Officer            1995       $120,000       $   80,000         --

Lynn F. Brown                          1997       $136,100       $  167,210        5,000
 Senior Vice President,                1996       $130,000       $   50,000          500
    Sales and Marketing                1995           --         $     --           --

Leo A. McCafferty                      1997       $120,900       $  180,000        5,000
  Vice President,                      1996       $ 87,500       $   65,000         --
    Operations                         1995       $ 16,667       $   12,800         --

William J. Milam                       1997       $112,067       $  487,571        1,500
  Vice President,                      1996       $106,562       $   25,000         --
    Sales and Product Management       1995       $102,625       $   29,000         --

David J. Raymonda                      1997       $ 85,180       $  511,515        1,500
  Controller, Treasurer and            1996       $ 80,180       $   23,000         --
    Secretary                          1995       $ 74,980       $   20,000         --
</TABLE>


                                       42
<PAGE>

OPTION GRANTS IN LAST FISCAL YEAR

     The following table sets forth information on grants of options made to the
Named Officers during fiscal 1997.

                          Option Grants in Fiscal 1997
<TABLE>
<CAPTION>
                                      Individual Grants
                                    ----------------------
                       Number of    % of Total
                       Securities    Options     Exercise
                       Underlying   Granted to    or Base                         Grant
                        Options    Employees in    Price      Expiration           Date
    Name                Granted     Fiscal Year  Per Share      Date(1)          Value(2)
------------------      -------     -----------  ---------      -------          --------
<S>                     <C>            <C>       <C>         <C>                 <C>
Russell W. Kupiec       15,000         24.4%     $   8.00    June 30, 2007       $120,000
W. Russell Asher        10,000         16.3%     $   8.00    June 30, 2007       $ 80,000
Lynn F. Brown            5,000          8.1%     $   8.00    June 30, 2007       $ 40,000
Leo A. McCafferty        5,000          8.1%     $   8.00    June 30, 2007       $ 40,000
William J. Milam         1,500          2.4%     $   8.00    June 30, 2007       $ 12,000
David J. Raymonda        1,500          2.4%     $   8.00    June 30, 2007       $ 12,000
</TABLE>

(1)  The terms of the stock  options  granted in fiscal  1997  provide  that the
     options become exercisable in four substantially equal installments on July
     1, 1998, 1999, 2000 and 2001.

(2)  The grant  date  value was  determined  using the  enterprise  value of the
     Company,  based upon third party  offers to acquire  the  Company  less the
     amount of  indebtedness  outstanding  at May 28,  1997  (including  accrued
     interest, agency fees and prepayment penalty) and the special cash dividend
     paid in connection with the Recapitalization.

     The following  table provides  information on the valuation of options held
by the Named  Officers.  None of the  options  held by the Named  Officers  were
eligible for exercise during fiscal 1997.
<TABLE>
<CAPTION>
                                  Number of Securities         Value of Unexercised
                                 Underlying Unexercised        In-the-Money Options
                               Options at Fiscal Year End      At Fiscal Year End (1)
                               --------------------------    -------------------------
                                Exercisable/Unexercisable    Exercisable/Unexercisable
                               --------------------------    -------------------------
<S>                                    <C>                        <C>
Russell W. Kupiec...........           0/15,000                   $0/$120,000
W. Russell Asher............           0/10,000                    $0/$80,000
Lynn F. Brown ..............            0/5,000                    $0/$40,000
Leo A. McCafferty...........            0/5,000                    $0/$40,000
William J. Milam............            0/1,500                    $0/$12,000
David J. Raymonda ..........            0/1,500                    $0/$12,000
</TABLE>

(1)  The value of the  in-the-money  options is based upon an estimate of market
     value of $16.00 per share at December 31, 1997.


                                       43
<PAGE>

PENSION BENEFITS

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

                                                Pension Plan Table
<TABLE>
<CAPTION>
                                          Years of Service

Remuneration            10            15            20            25            30            35
------------------    -------       -------       -------       -------       -------       -------
<S>                   <C>           <C>           <C>           <C>           <C>           <C>
$ 100,000 ........    $15,360       $23,040       $30,720       $38,400       $46,080       $53,760
$ 125,000 ........    $19,200       $28,800       $38,400       $48,000       $57,600       $67,200
$ 150,000 ........    $23,040       $34,560       $46,080       $57,600       $69,120       $80,640
$ 175,000 ........    $24,576       $36,864       $49,152       $61,440       $73,728       $86,016
$ 200,000 ........    $24,576       $36,864       $49,152       $61,440       $73,278       $86,016
</TABLE>

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

     The  respective  years of  service  credited  for  pension  purposes  as of
December 31, 1997, and the estimated  years of service at age 65 for each of the
Named Officers are as follows:


                                       Years of Service     Years of Service
                                     at December 31, 1997   at Normal Retirement
                                     --------------------   --------------------
Russell W. Kupiec .....................       6.76                 21.31
W. Russell Asher ......................       4.00                 13.60
Lynn F. Brown .........................       2.00                 14.23
Leo A. McCafferty .....................       2.21                  6.56
William J. Milam ......................      26.53                 33.84
David J. Raymonda .....................      18.34                 43.00

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

EMPLOYMENT AGREEMENTS

     Each of the Named  Officers has an employment  agreement  with the Company.
Among other  things,  each  arrangement  provides for a term of  employment in a
specific executive position, a specified annual base salary and participation in
any additional  incentive  compensation  or bonus  programs of the Company.  The
employment  agreements with Messrs. Kupiec and Asher continue until December 31,
1999 and annually thereafter unless otherwise  terminated.  If either Mr. Kupiec
or Mr. Asher is terminated  other than for cause or  disability,  the Company is
obligated  to  continue  paying the base  salary  amount  through the end of the
contract  term,   subject  to  an  offset  for  earnings  from  other  full-time
employment,  and to maintain  benefits for such executive through the end of the
contract  term. If certain  Change in Ownership (as defined in such  agreements)
events occur during the


                                       44
<PAGE>

term of these agreements,  the term of employment is automatically  extended for
three years from the date the  executive is notified of the Change in Ownership.
In the  event of a Change  in  Ownership,  the  executive  is given the right to
terminate his  agreement if he is  dissatisfied  with his salary or  performance
review to be given  approximately  18 months after the Change in Ownership.  If,
after a Change in Ownership, the executive terminates his employment due to such
dissatisfaction  or is  discharged  other  than  for  cause or  disability,  the
Company's  obligation to continue  paying his base salary through the end of the
contract  term is not  subject  to any offset and the  Company is  obligated  to
maintain benefits for such executive through the end of the contract term.

     The employment  agreements with each of Mr. Milam and Mr. Raymonda continue
until December 31, 1998, which are subject to automatic two year extensions,  if
certain  Change in Ownership (as defined in such  agreements)  events occur.  If
either of such executives is terminated other than for cause or disability,  the
Company is obligated to continue  paying the base salary amount  through the end
of the contract  term,  subject to an offset for earnings  from other  full-time
employment,  and to maintain  benefits for such  executive  for six months after
such  termination.  The employment  agreements for Messrs.  Brown and McCafferty
ended on December 31, 1997, and during their contract term,  were  substantially
similar to the employment agreements of Mr. Milam and Mr. Raymonda.

STOCK OPTION PLAN

     In June 1997,  the  Company  adopted  and the  stockholders  of the Company
subsequently  approved the 1997 Stock  Incentive  Plan (the "Plan")  pursuant to
which officers, directors and other key employees of the Company will be granted
stock  options  to  purchase  shares  of  Class  A  Common  Stock.  The  Plan is
administered by either the Stock Option Committee (the "Committee") of the Board
of Directors or the Board of Directors (the "Board"). The Committee or the Board
will have the discretion to determine the exercise price, the duration and other
terms and  conditions of such options.  The Committee or the Board will have the
authority  to  interpret  and  construe  the  Plan,  and any  interpretation  or
construction  of the  Plan by the  Committee  or the  Board  will be  final  and
conclusive.  During the year ended December  31,1997,  61,350 stock options were
granted and 9,650  stock  options  were  cancelled,  both  pursuant to the Plan.
Twenty five percent of such outstanding options will vest and become exercisable
on each of the first through fourth anniversaries of the date of the grant.

ITEM 12.     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     Wells is  authorized to issue  1,100,000.0  shares of Class A Common Stock,
par value  $0.01 per share  (the  "Common  Stock").  As of  December  31,  1997,
909,005.0 shares of Common Stock were issued and outstanding.

     The following table sets forth certain information as of December 31, 1997,
with respect to the shares of the Common Stock of the Company beneficially owned
by each person or group that is known by the Company to be a beneficial owner of
more than 5% of the outstanding  Common Stock and by all directors and executive
officers of the Company.


                                       45
<PAGE>
<TABLE>
<CAPTION>
                                                           Beneficial Ownership
                                                             Number of Shares     Percentage of Total
                                                           --------------------   -------------------
<S>                                                              <C>                   <C>
Wells Holdings Limited Partnership
   600 Madison Avenue, New York, New York 10022 ...              560,000.0             61.61%
CVG Industria Venezolana de Aluminio, C.A .........
    Zona Industrial Matanzas, Cuidad Guayana,
    Apt 289312, Estado Bolivar, Venezuela .........              180,362.5             19.84%
Russell W. Kupiec .................................               34,810.0              3.83%
W. Russell Asher ..................................               41,125.0              4.52%
Lynn F. Brown .....................................                2,937.5              0.31%
William J. Milam ..................................               12,600.0              1.39%
David J. Raymonda .................................               29,375.0              3.23%
Todd Goodwin ......................................              560,000.0             61.61%
Edward R. Heiser ..................................               16,000.0              1.76%
Lewis W. van Amerongen ............................              560,000.0             61.61%
All Executive Officers and Directors
    as a Group (12 Persons) .......................              696,847.5             76.66%
</TABLE>

     Wells  Holdings  Limited   Partnership  ("Wells  Holdings")  is  a  limited
partnership of which GGvA is the sole general  partner.  As such, GGvA exercises
sole  voting  and  investment  power with  respect to the shares  owned by Wells
Holdings.  Messrs.  Goodwin and van  Amerongen,  directors of the  Company,  are
partners in GGvA,  with the shared power to direct the actions of GGvA,  and may
be deemed to own  beneficially  the shares owned by Wells  Holdings by virtue of
their status and rights as such partners.

     Wells  Holdings is the  successor  limited  partnership  of The Fulcrum III
Limited   Partnership   and  The  Second   Fulcrum   III   Limited   Partnership
(collectively,  "Fulcrum III").  Fulcrum III was a limited  partnership of which
GGvA was the sole general partner. GGvA has informed the Company that all of the
shares owned by Fulcrum III have been transferred to Wells Holdings.

AGREEMENTS WITH STOCKHOLDERS

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

     In 1988, the Company  entered into a Stock Purchase  Agreement with Venalum
(the "Venalum Stock Purchase  Agreement").  The Venalum Stock Purchase Agreement
provides that, upon certain  issuances of equity  securities,  Venalum will have
rights to maintain its  percentage of equity  interest in the Company's  capital
stock by  purchasing  a portion of such  equity  securities.  Subject to certain
conditions, Venalum has certain "piggyback" rights to have its shares of Class A
Common Stock  registered under the Securities Act. The Company has agreed to pay
the  costs and  expenses  associated  with two such  registrations,  except  for
discounts and commissions.

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


                                       46
<PAGE>

Venalum shall be elected to the Board of Directors,  and Venalum  agreed to vote
its shares of Class A Common Stock in favor of the  Company's  slate of nominees
for election to the Board of Directors.

ITEM 13.     CERTAIN RELATIONSHIPS AND CERTAIN TRANSACTIONS

     The  Company  was party to an  agreement  with  Venalum  pursuant  to which
Venalum supplied primary  aluminum to the Company.  This contract  accounted for
approximately  60-65% of the  aluminum  purchased  by the Company  from  outside
suppliers.  Pursuant  to the Venalum  Agreement,  the  Company  purchased  $68.3
million,  $69.3 million and $69.6 million of aluminum from Venalum in 1995, 1996
and 1997, respectively.  Prices were based on the MWTP from the prior month. The
Company believed that the terms of the Venalum  Agreement were no less favorable
to the Company than would have been obtained in an arms' length transaction. The
Venalum  Agreement  commenced  in 1988 and was  renewed on  numerous  occasions.
During 1997,  negotiations  to extend the Venalum  Agreement or enter into a new
supply agreement were not successful.  The Venalum Agreement expired on December
31, 1997,  although the last  scheduled  delivery of primary  aluminum under the
Venalum Agreement was received in January 1998.

     In 1987, the Company entered into an agreement with GGvA, pursuant to which
GGvA provides  financial  advisory and other  services to the Company.  For such
services,  GGvA was paid an annual  retainer of $250,000 in 1995, 1996 and 1997,
plus reimbursement for its out-of-pocket  expenses. In addition, GGvA received a
fee of $500,000 for financial advisory and other services in connection with the
Recapitalization.

     GGvA has  informed  the Company that all of the shares owned by Fulcrum III
were transferred to Wells Holdings, a new limited partnership,  of which GGvA is
the sole general  partner.  In connection  with that  transfer,  GGvA offered to
purchase from the existing  limited  partners of Fulcrum III their  interests in
the capital stock of the Company owned by Fulcrum III.  Certain limited partners
accepted  such  offer,  and as a  result,  the  interest  of  GGvA  in  the  new
partnership  owning the capital stock of the Company  increased to approximately
83% of the  interests  in the  capital  stock  of the  Company  owned by the new
partnership.

                                     PART IV

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

(a)  Financial Statements

     1.   Financial Statements

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

          -    Report of Independent Auditors
          -    Balance Sheets as of December 31, 1997 and 1996
          -    Statements of Operations  for the years ended  December 31, 1997,
               1996 and 1995
          -    Statements of  Stockholders'  Equity for the years ended December
               31, 1997, 1996 and 1995
          -    Statements  of Cash Flows for the years ended  December 31, 1997,
               1996 and 1995
          -    Notes to the Financial Statements

     2.   Financial Statement Schedules

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

          -    Valuation and Qualifying Accounts and Reserves


                                       47
<PAGE>

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

(b)  Exhibits

     3.1  Articles  of  Amendment  and   Restatement   of  the   Certificate  of
          Incorporation of Wells Aluminum Corporation (the "Company").

     3.2  By-Laws of the Company. *

     4.1  Indenture,  dated as of May 28,  1997,  between  the Company and State
          Street Bank and Trust Company  (formerly known as Fleet National Bank)
          (the "Trustee"). *

     4.2  Form of 10.125% Series A and Series B Senior Notes due 2005,  dated as
          of May 28, 1997 (incorporated by reference to Exhibit 4.1). *

     4.3  Registration  Rights  Agreement,  dated as of May 28, 1997,  among the
          Company and Merrill Lynch & Co. (the "Initial Purchaser"). *

     10.1 Amended and Restated Credit Agreement, dated as of May 28, 1997, among
          the  Company,  the  lending  institutions  party  thereto  and  Credit
          Agricole Indosuez, as Agent. *

     10.2 Amended and Restated General Security  Agreement,  dated as of May 28,
          1997, between the Company and Credit Agricole Indosuez. *

     10.3 Employment  Agreement with Russell W. Kupiec, dated as of December 18,
          1996.

     10.4 Employment  Agreement with W. Russell Asher,  dated as of December 18,
          1996.

     10.5 Employment  Agreement  with David  Raymonda  dated as of December  18,
          1996.

     10.6 Employment  Agreement with William J. Milam,  dated as of December 18,
          1996.

     10.7 1997 Stock Incentive Plan

     12.1 Statement re Computation of Ratio of Earnings to Fixed Charges.


     27.1 Financial Data Schedule.

          -----------------
          *  Previously filed.

(c)  Reports on 8-K

         The  Company did not file any reports on Form 8-K during the year ended
December 31, 1997.


                                       48
<PAGE>

                                   SIGNATURES


     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned  thereunto  duly  authorized,  in the  City of  Baltimore,  State of
Maryland, on March 30, 1998.

                                       Wells Aluminum Corporation


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

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

<TABLE>
<CAPTION>
       Signature                                        Title                                    Date
----------------------------------        ----------------------------------------               --------------
<S>                                       <C>                                                    <C>
/s/ Russell W. Kupiec                     Principal Executive Officer and Director               March 30, 1998
----------------------------------
Russell W. Kupiec

/s/ W. Russell Asher                      Chief Financial Officer and Director                   March 30, 1998
----------------------------------
W. Russell Asher

/s/ David J. Raymonda                     Principal Accounting Officer                           March 30, 1998
----------------------------------
David J. Raymonda

/s/ Lynn F. Brown                         Director                                               March 30, 1998
----------------------------------
Lynn F. Brown

/s/ Leo A. McCafferty                     Director                                               March 30, 1998
----------------------------------
Leo A. McCafferty

/s/ Elizabeth Varley Camp                 Director                                               March 30, 1998
----------------------------------
Elizabeth Varley Camp

/s/ Elena de Costas                       Director                                               March 30, 1998
----------------------------------
Elena de Costas

                                          Director                                               March   , 1998
----------------------------------
Todd Goodwin

/s/ Edward R. Heiser                      Director                                               March 30, 1998
----------------------------------
Edward R. Heiser

/s/ Lewis W. van Amerongen                Director                                               March 30, 1998
----------------------------------
Lewis W. van Amerongen

                                          Director                                               March   , 1998
----------------------------------
Estrella Vidal
</TABLE>