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, 1995, 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         1-5562                                    

                       KOLLMORGEN CORPORATION                  
      (Exact name of registrant as specified in its charter)
          New York                                    04-2151861     
(State or other jurisdiction of                   (I.R.S. Employer 
incorporation or organization)                    Identification No.)

Reservoir Place, 1601 Trapelo Road, Waltham, MA            02154-7333 
   (Address of principal executive office)                 (Zip Code) 

Registrant's telephone number, including area code    (617) 890-5655     

Securities registered pursuant to Section 12(b) of the Act: 
                                         Name of each exchange on 
        Title of each class                     which registered 
    Common Stock - $2.50 par value       New York Stock Exchange, Inc.
    Preferred Stock Purchase Rights      New York Stock Exchange, Inc.
    8 3/4% Convertible Subordinated
       Debentures Due 2009               New York Stock Exchange, Inc.

Securities registered pursuant to Section 12(g) of the Act: 
                               None           
                       (Title of each class) 

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

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

    State the aggregate market value of the voting stock held by non-
affiliates of the registrant.      $103,690,463 as of March 25, 1996.  

    Indicate the number of outstanding shares of the registrant's Common
Stock.       9,723,466 shares as of March 25, 1996.  

                DOCUMENTS INCORPORATED BY REFERENCE

    Portions of 1996 Definitive Proxy Statement to be filed for the 1996
Annual Meeting of Shareholders are incorporated by reference into Part III. 
<PAGE>
<PAGE>2


                              PART I

Item 1. Business.  

    (a) General.  Kollmorgen Corporation, incorporated in the State of New
York in 1916, has operations in two industry segments:  the motion
technologies group and electro-optical instruments.  The term the "Company"
as used herein refers to Kollmorgen Corporation and its subsidiaries.  

    (b) Financial Information about Industry Segments.  A table setting for
the amounts of revenue, operating profit or loss and identifiable assets
attributable to each of the Company's industry segments in each of its last
three fiscal years is contained in Note 19 captioned "Industry Segment
Information."  

  (c) Narrative Description of Business

  Motion Technologies Group. 

  The Company believes that it is one of the major worldwide manufacturers
of specialty direct current ("d.c.") permanent magnet motors with associated
electronic servo amplifiers and servo feedback components.  These products
are manufactured in the United States by the Company's Inland Motor,
Industrial Drives and PMI Divisions.  In addition, the Company manufacturers
motion technology products through its French subsidiary, Kollmorgen Artus.  
The Inland Motor Division designs and manufactures specialty d.c. torque
motors, servo motors, tachometer generators, electromechanical actuators and
associated high technology drive electronics used worldwide in aerospace,
defense, process control, medical, and machine tool applications.  The
Industrial Drives Division manufactures a line of specialty drive motors and
related electronic amplifiers which are used in a variety of industrial
applications including industrial automation, process control, machine tools,
underwater equipment, and robotics.  In addition, this Division sells a line
of stepper motors and brushless motors used for office and factory
automation, instrumentation, and medical applications.  The PMI Division
designs, manufactures and distributes a line of low inertia, high speed of
response, d.c. motors and associated electronics plus feedback devices used
primarily in industrial automation and medical applications.  Kollmorgen
Artus manufactures and sells generators, special motors, electromechanical
actuators and drive electronics, synchros, and resolvers, which are sold
worldwide into the avionics and aerospace market.  

  Commencing in 1994, the Company's VMG group began designing for
manufacture in Bombay, India, high volume, fractional horsepower motors
primarily for the computer peripheral and electronics markets.  Commencing in
1995, the Company began distributing its industrial motors products into the
People's Republic of China through a majority-owned joint venture company,
Tianjin Kollmorgen Industrial Drives Corporation, located in Tianjin, PRC.  

<PAGE>
<PAGE>3


  In the specialty motor and drive business, competitive advantage is
gained by the ability of the Company to design new or adapt existing motors
and drive systems to meet relatively stringent packaging and performance
requirements of customers, most of whom are original equipment manufacturers
purchasing the motors and drives for inclusion in their end product.  While
meeting these stringent technical specifications, the motors and drives must
also be price competitive.  The number and identity of the competitors in
this segment varies depending upon the particular industry and product
application.  In recent years, a number of large European and Japanese
manufacturers, either directly or through joint ventures with American
companies, have been able to compete successfully in the United States
machine tool and industrial automation marketplaces, including the market for
industrial motors of the type that the Company's Industrial Drives
manufactures.  In other markets, there are relatively few competitors for
each marketplace or application, and generally they are specialized domestic
or foreign motor manufacturers.  

  In the United States, the industrial/commercial products manufactured in
this segment are marketed and sold by the Company's Industrial and Commercial
Products Sales Group, and the defense and aerospace products are marketed by
the Aerospace and Defense Products Sales Group.  Depending upon the
particular motor product or control system in question, the products of the
Company's motion technologies group are marketed and sold directly through
qualified technical personnel employed by the Company, or through
manufacturer's representatives or distributors, or by a combination of the
foregoing.  

  The backlog of the motion technologies group at the end of 1995 was
$56.2 million essentially all of which is expected to be shipped in 1996.  

  Electro-Optical Instruments.  

  The Company's electro-optical business is conducted principally by one
domestic division and two subsidiaries:  the Electro-Optical Division,
Kollmorgen Instruments Corporation, and Proto-Power Corporation.  The
products of this industry segment serve two broad customer groups:  military
and industrial/commercial.  The Company serves the military market primarily
through the Electro-Optical Division located in Northampton, Massachusetts. 
This Division has been the primary designer and major supplier of submarine
periscopes and related spare parts to the United States Navy since 1916.  In
September, 1994, the Company acquired substantially all of the assets of the
conventional optical periscope business of Sperry Marine, Inc. at a purchase
price of approximately $5 million.  The Electro-Optical Division also markets
and sells submarine periscopes to navies throughout the world.  

  This Division also has been an important supplier of other electro-
optical instruments for various weapon systems.   These instruments often
possess highly advanced servo-driven optical systems and may use lasers,
infrared detectors, or low-light level television imaging systems for night
vision.  During 1994, this operation received awards of approximately $14
million from the Naval Sea Systems Command for optical sights for the DDG-51
Arleigh-Burke Class guided missile destroyers.  In addition, this Division
received additional orders for spares and production units valued at
approximately $10 million in 1995.  

<PAGE>
<PAGE>4


  In February, 1995, the Company received a $35 million contract from the
Naval Sea Systems Command for the design and production of a photonics mast
system which is intended to replace existing optical periscopes.  In the
second quarter, 1995, the Electro-Optical Division received two additional
awards from the United States Navy.  The first, a contract initially valued
at $1.8 million, for three Type 8 Mod 3 periscopes, has an option valued in
excess of $28 million for 42 additional periscopes.  The second contract,
valued at $6.9 million, for the design and fabrication of a modular mast
system for a new class of attack submarines, also has an option for delivery
of production units valued in excess of $10 million.  

  The Company serves the industrial/commercial marketplace for electro-
optical instruments through a wholly-owned subsidiary, Kollmorgen Instruments
Corporation, which operates through its Macbeth Division.  The Macbeth
Division, located in New Windsor, New York, designs, manufactures and sells
worldwide specialized instruments and materials used for the measurement of
color and light.  This Division manufactures and sells a line of
spectrophotometers which measure color and are used in the textile, paint,
paper, plastics and many other industries where the measurement of color is
important.  It is also a manufacturer of densitometers, which are instruments
that are used to control photographic and printing processes by measuring the
opacity or density of materials, such as films, inks, and dyes.  In addition,
this Division manufactures specialized lighting devices for the inspection
and comparison of transparencies and prints in the photographic and printing
industries.  The Macbeth Division also manufactures standard lighting sources
used in evaluating color and produces a line of color standards sold under
the U.S. registered trademark "Munsell".  The on-line version of the
spectrophotometers manufactured by this Division permits the measurement of
spectral characteristics on a production line in a broad range of industrial
processes without interrupting production flow.  This Division has recently
entered into several multi-year development and production contracts with
large domestic and foreign paint manufacturers to deliver a proprietary
multi-angle spectrophotometer for use in matching metal paints for automobile
refinishing.  Kollmorgen Instruments GmbH, a German subsidiary of Kollmorgen
Instruments Corporation, designs and manufactures a product line of on-line
spectrophotometers.  

  Macbeth's position has been built upon high quality products which
provide uniform results and meet specialized needs and standards, upon
proprietary software, and upon superior after-sales service.  The Company's
competition in this field consists of a number of domestic and foreign
privately held companies and divisions or subsidiaries of publicly held
corporations.  Depending upon the product and customers in question, the
Company's industrial products are sold through dealers and independent sales 
representatives, distributors or systems houses and directly through the
divisions' own sales forces.  In Europe, these products are distributed
through Kollmorgen Instruments GmbH, Kollmorgen (U.K.) Limited, the Company's
wholly-owned English subsidiary, and through independent representatives and
dealers.  

<PAGE>
<PAGE>5


  In October, 1995, the Company sold the Photo Research Division of
Kollmorgen Instruments Corporation, a manufacturer of photometers and
spectroradiometers, for $3.2 million to a subsidiary of Excel Technology,
Inc.  

  Proto-Power Corporation, a wholly-owned subsidiary of the Company, is a
consulting engineering company that primarily provides services for the
modification and upgrade of nuclear and fossil power plants of domestic
electric utility companies and independent power producers.  In recent years,
this subsidiary has licensed its proprietary computer-aided engineering
software to a number of its customers for analyzing the performance of power
plant systems and equipment.  

  Kollmorgen Artus also manufactures and sells calibration equipment for
air traffic control navigation aids.  In March, 1996, Kollmorgen Artus sold
its product line of Sorel fault detection equipment.  

  Within this segment, military products represented 43% of sales in 1995,
44% of sales in 1994, and 47% of sales in 1993.  The Company's military
business is characterized by long-term contracts which require the delivery
of products over more than one year and progress payments during the
manufacture of the product.  Competition is generally limited to divisions of
large multinational companies which specialize in military contracting.  To
date, the Company has been able to compete effectively against these larger
companies because of the Company's experience and expertise in the
specialized areas which it serves.  

  The backlog of the electro-optical instruments segment at the end of
1995 was $53.1 million of which approximately 70% is expected to be shipped
in 1996.  

  Customer Base. 

  Except to the extent that sales to the U.S. government under numerous
prime and sub-contracts may be considered as sales to a single customer, the
Company's business is not characterized by dependence upon one customer or a
few customers, the loss of any of which would have a materially adverse
effect on its total business.  Typical of all engineered or custom-made
component businesses, the Company's motion technologies group is
characterized by a customer base founded upon a number of large key accounts,
the importance of any one of which can vary from year to year.  During 1995,
no customer accounted for 10% or more of the Company's consolidated revenues. 

  Government Sales.  

  In 1995, sales to the U.S. Government or for U.S. Government end-use
represented approximately 19% of revenues, of which 15% were generated from
the electro-optical instruments segment and 4% was from the motion
technologies group.  

<PAGE>
<PAGE>6


  Patents.  

  The Company has either applied for or been granted a number of domestic
and foreign patents pertaining to the motion technologies group and electro-
optical instruments segments.  The Company believes that these patents are
and will be important to the Company's continued leadership position in these
business segments and, when necessary, has and will continue to enforce its
legal rights against alleged infringements of its patent estate.  

  Raw Materials. 

  The raw materials essential to the Company's business are generally
available in the open market, and neither segment of the Company's business
experienced any significant shortages in such materials during the past three
years.  The Company believes that it has adequate sources of raw materials
available for use and does not anticipate any significant shortages.  

  Research and Development.  

  During 1995, the Company spent $13.2 million or approximately 5.8% of
its consolidated sales on research activities related to the development of
new products.  This compares to $10.8 million or 5.7% in 1994, and $9.3
million or 5.0% in 1993.  Substantially all of this amount was sponsored by
the Company.  

  Environmental Matters.  

  The Company's operations are subject to a variety of federal
environmental laws and regulations.  The most significant of these laws are
the Clean Air Act, the Clean Water Act and the Resource Conservation and
Recovery Act, all of which are administered by the United States
Environmental Protection Agency.  These statutes and the regulations impose
certain controls on atmospheric emissions, discharges into sewers and
domestic waters, and the handling and disposal of hazardous wastes.  In
addition, certain state and local jurisdictions have adopted environmental
laws and regulations that are more stringent than federal regulations. 
Compliance with these federal and state laws and regulations has resulted in
expenditures by the Company to improve or replace pollution control
equipment.  The Company's estimated capital expenditures for environmental
control facilities are not expected to be material.  

  Under the federal Comprehensive Environmental Response, Compensation and
Liability Act and analogous state statutes, certain liabilities are imposed
for the disposal of "hazardous substances" without regard to fault or the
legality of such disposals.  The Company has been named, or has been informed
that it may be named, as a potentially responsible party at several waste
disposal sites under these statutes.  Based upon the information available to
date, the Company does not believe that its share of any clean-up costs will
have a material impact on the Company's financial condition, cash flows or
results of operations.  

<PAGE>
<PAGE>7


  Employees.  

  The Company is currently a party to two collective bargaining
agreements.  The Company's Electro-Optical Division is a party to a three-
year agreement expiring in August, 1996, with the International Association
of Machinists and Aerospace Workers that currently covers 45 employees.  In
March, 1994, the Macbeth Division of Kollmorgen Instruments Corporation
entered into a three-year contract with the International Brotherhood of
Electrical Workers, which contract currently covers 28 employees at that
Division.  

  As of December 31, 1995, the Company employed approximately 1,765
employees.  The Company believes that it enjoys satisfactory relations with
its employees, including those covered by collective bargaining agreements.  

  In February, 1995, the Company received a petition from the
International Union, United Automobile, Aerospace & Agricultural Implement
Workers of America ("UAW") requesting the representation of a group of
approximately 200 production and maintenance employees at the Company's
Inland Motor facility located in Radford, Virginia.  At the election held in
March, 1995, a majority of employees eligible to cast ballots voted against
such union representation.  

  Financial Information About Foreign and Domestic Operations and Export
Sales.  

  Financial information on the Company's foreign and domestic operations
and export sales is contained in the response to Item 14(a) of this Report.  

Item 2.   Properties.  

  The Company's corporate office is located in Waltham, Massachusetts. 
The table which follows sets forth a current summary of the locations of the
Company's principal operating plants and facilities, and other pertinent
facts concerning them.  The Company's facilities are substantially utilized,
well maintained and suitable for its products and services.  

<TABLE>
<CAPTION>
                                                Size of        Leased
Industry Segment             Location          Facility       or owned
<S>                       <C>                 <C>             <C>
Motion Technologies Group Blacksburg, VA        5,000 sq.ft.  Leased
                          Commack, NY         100,000 sq.ft.  Leased
                          Radford, VA         261,000 sq.ft.  Owned
                          Avrille, France      94,000 sq.ft.  Owned
                          Besancon, France     11,000 sq.ft.  Owned

Electro-Optical Instruments                   Brattleboro, VT  24,000 sq.ft. Leased
                          Groton, CT           11,500 sq.ft.  Owned
                          New Windsor, NY      83,000 sq.ft.  Owned
                          Northampton, MA      98,000 sq.ft.  Owned

Corporate                 Waltham, MA           6,250 sq.ft.  Leased
</TABLE>

<PAGE>
<PAGE>8


The Company maintains approximately 192,000 sq.ft. of excess space resulting
from prior business segment dispositions and consolidations of facilities. 
Currently approximately 65,000 sq.ft of this excess space is being leased or
sublet and 127,000 sq.ft. remains unutilized.  


Item 3. Legal Proceedings.

    The Company has various legal proceedings arising from the ordinary
conduct of its business; however, they are not expected to have a material
adverse effect on the consolidated financial position, cash flows, or results
of operations of the Company.  

Item 4. Submission of Matters to a Vote of Security Holders.  

    Not applicable.  

Executive Officers of the Company.  

    The following is a list of the Company's executive officers, their ages
and their positions as of March 15, 1996:  


                          Present    Business Experience During 
      Name       Age      Office          Past Five Years        

Gideon Argov      39     President President and Chief Executive 
                            and    Officer since November 1991; 
                           Chief   Director since May 1991.  From 
                         Executive March 1988 to May 1991, 
                          Officer  President and Chief Executive 
                                   Officer and Director of High 
                                   Voltage Engineering Company.  
                                   Prior to that date, for five 
                                   years a manager and senior 
                                   consultant with Bain & Company.  

Robert J. Cobuzzi 54      Senior   Senior Vice President (since 
                           Vice    February 1993), Treasurer and 
                        President, Chief Financial Officer since 
                        Treasurer  July 1991.  From April 1989 to 
                           and     July 1991, Vice President and 
                          Chief    Treasurer of High Voltage 
                         Financial Engineering Company.  Prior to 
                          Officer  April 1989, Vice President and 
                                   Chief Financial Officer of 
                                   Ausimont N.V.   

James A. Eder     50       Vice    Vice President since January 
                        President, 1990; General Counsel since 
                        Secretary  December 1991, and Secretary 
                           and     since 1983.  Previously he had
                         General   been Assistant Corporate Counsel
                         Counsel   from 1977 to 1982.  

<PAGE>
<PAGE>9


Mark E. Petty     40       Vice    Vice President since January 1, 
                         President 1996.  President of the
                                   Company's U.S. Motion 
                                   Technologies Group since 1994.  
                                   Prior to that, he held several 
                                   management positions in the 
                                   Company since March 1992.  
                                   Previously, President of General
                                   Eastern, a Division of High 
                                   Voltage Engineering Company.  

  All officers are elected annually for one-year terms at the
organizational meeting of the Board of Directors held immediately following
the annual meeting of shareholders.  

                            PART II

Item 5.   Market for the Company's Common Equity and Related Shareholder 
      Matters.  

  The Company's Common Stock is traded on the New York Stock Exchange. 
There were approximately 2,100 registered holders of the Company's Common
Stock on March 15, 1996.  The following table sets forth the high and low
sales price for shares of the Company's Common Stock within the last two
fiscal years and the dividends paid during each quarterly period.  

<TABLE>
                            SELECTED QUARTERLY STOCK DATA
                       (in thousands, except per share amounts)
<CAPTION>
                1 Q 95 2 Q 95       3 Q 95 4 Q 95       1 Q 94 2 Q 94    3 Q 94    4 Q 94
<S>             <C>    <C>   <C>    <C>    <C>   <C>    <C>    <C>
Market price per
  common share:                                                
    High:       6 7/8  8 7/8 11 5/8 11 1/8 9      9 3/4  8 1/8  7 1/2
    Low:        5 3/4  6 1/4  8 1/8  9 1/8 7 1/4  7 3/8  6 7/8  5 1/4
Shares of common                                                         
  stock traded:   752    821  1,770    961   839  1,215    440    716
Dividends per                                                  
  common share   $.02   $.02   $.02   $.02  $.02   $.02   $.02   $.02
Average outstanding                                                      
  common shares and                                                      
  common share                                                 
  equivalents   9,650  9,658  9,670  9,692 9,637  9,640  9,644  9,647

</TABLE>


Item 6.   Selected Financial Data.  

  The following table sets forth selected consolidated financial data
for the Company for each of the five fiscal years 1991 through 1995.  All
dollar amounts are in thousands except per share data.  

<PAGE>
<PAGE>10


<TABLE>
                          SELECTED FINANCIAL DATA
<CAPTION>
                      1995        1994        1993       1992      1991  
<S>               <C>         <C>         <C>        <C>       <C>       
Net sales         $ 228,655   $ 191,771   $ 185,538  $ 194,859 $ 200,457 
Net income (loss)     7,157       4,051       4,752     (8,725)  (35,938)

Total assets        147,474     138,201     134,008    149,568   154,443 
Total debt           49,808      53,991      53,524     56,170    58,339 
Redeemable preferred
 stock (See Note 8 to
 Financial Statements)           25,506      22,532     22,407    22,282    22,156 

Common share data:                                             
  Number of average                                            
   outstanding shares                                          
   and equivalents 9,667,434   9,641,698   9,632,232  9,627,228 9,628,122
 Net income (loss) * $  .26      $  .18      $  .25     $(1.14)   $(3.97)
 Cash dividends      $  .08      $  .08      $  .08     $  .08    $  .26 

<FN>
*  After payment of the 10% premium on the redemption of the Series D Convertible 
   Preferred Stock.  See Note 8 to the financial statements.  

</TABLE>

Item 7.   Management's Discussion and Analysis of Financial Condition and 
      Results of Operations.  

  This filing contains forward-looking statements which involve risks and
uncertainties.  The Company s actual results may differ significantly from
the results discussed in the forward-looking statements.  Factors that might
cause such a difference include, but are not limited to, product demand and
market acceptance risks, the effect of economic conditions, the impact of
competitive products and pricing, product development, commercialization and
technological difficulties, capacity and supply constraints or difficulties,
availability of capital resources, general business and economic conditions,
the effect of the Company s accounting policies, and other risks detailed
below and in the Company s Securities and Exchange Commission filings.  

  In October, 1995 the Company sold its Photo Research business for $3.2
million in cash after expenses relating to the sale, which resulted in a gain
of approximately $0.9 million.  On January 19, 1996 the Company entered into
a term loan with the Company s lead bank which amended its existing loan
agreement to include a $25 million five year amortizing term loan for the
purpose of the redemption in February, 1996 of the Company s Series D
Convertible Preferred Stock (the "Preferred Stock").  The Preferred Stock had
a dividend rate of 9.5% versus the 7.45% interest rate of the term loan, and
consequently should have a beneficial impact on the Company s earnings per
share and cash flow.  Additionally, the deductibility of the interest 
<PAGE>
<PAGE>11


payments will have a favorable impact if  the Company s tax benefit
carryforwards are fully utilized.  In March, 1996 the Company sold a
significant portion of its French instrumentation business for 12 million
French francs (approximately $2.4 million).  This will allow the Company to
consolidate all of its motion technology  operations at one site, which is
expected to lower the fixed costs of the French group.  It is not expected
that the sale of this business will have a material impact on the Company's
results in the first quarter of 1996.  

                            Results of Operations

  For the year ended December 31, 1995, the Company had sales of $228.7
million and net income of $7.2 million, equal to $0.26 per common share. 
These results compare with 1994 sales of $191.8 million and net income of
$4.1 million, equal to $0.18 per common share, and 1993 sales of $185.5
million and net income of $4.8 million, equal to $0.25 per common share. 
Deducted from earnings in the calculation of earnings per share in 1995 was
the 10% premium of $2.3 million, or $0.24 per share, required pursuant to the
1990 Preferred Stock purchase agreement, and paid by the Company at  the
February 1996 redemption of all of the Preferred Stock.  

  The Company's sales increase of 19% in 1995 over 1994 is attributable to
increased revenue in both of the Company's business segments.  Overall the
Company s aerospace and defense related revenues increased 21% and non-
defense related revenues increased 18%.  Domestic sales increased 25% in 1995
over 1994 and sales to customers outside of the United States increased 9%
over 1994.  The Company s sales increase of 3% in 1994 over 1993 is also
attributable to increased revenues in both of the Company s business
segments.  

  Sales and marketing expenses were $29.4 million or 13% of sales for 1995
as compared to $27.8 million or 14% of sales for 1994 and $24.7 million or
13% of sales for 1993.  The increase in spending in 1995 was primarily the
result of increased expenses incurred by the Company s Macbeth division
relating to the costs of launching several new products, and the expansion of
the Company s sales and marketing operations in Europe and the Far East.  The
increase in sales and marketing expenses in 1994 over 1993 reflects the
acquisition in 1994 of Hightech Components, Ltd. in the U.K. and the full
year operation of sales offices opened in late 1993.  Additionally, the 
Company s Electro-Optical division incurred $1 million of additional expenses
in connection with several bid proposals in 1994, which resulted in an award
in 1995 of a $35 million contract for the design and construction of the next
generation of periscopes for the U.S. Navy.  

  Research and development expenses were $13.2 million or 6% of sales in
1995, $10.8 million or 6% of sales in 1994, and $9.3 million or 5% of sales
in 1993.  The increased spending was primarily attributable to the support of
long term contracts awarded to the Company s French aerospace and defense
operation, and the development projects for commercial motion technology
products for introduction in 1995, 1996, and 1997.  The increase in research 
<PAGE>
<PAGE>12


and development spending in 1994 over 1993 was primarily attributable to
$1 million in spending to expedite the development of products by the
Company s French instrument group, which were delivered in 1995.  

  Interest expense was $4.7 million, $4.8 million, and $5.1 million, in
1995, 1994, and 1993, respectively.  Interest expense remained relatively
flat from 1994 to 1995 as the debt the Company incurred in connection with
the 1994 acquisition of  certain assets of Hightech Components Ltd. and
Sperry Marine Inc., and the increased bank debt of the Company s French
subsidiary, was offset by the reduction in long term debt as a result of the
Company's annual mandatory sinking fund payments on its two convertible
subordinated debentures.  The decline in interest expense in 1994 over 1993
was also a result of the lower level of long term debt due to these mandatory
sinking fund payments.  

  The Company recognized tax benefits of approximately $0.8 million for
each of the years 1994 and 1993 resulting from resolution of certain prior
year tax assessments.  The Company s tax rate reflects the utilization of net
operating loss and other tax credit carryforwards.  

                           Motion Technologies Group

  Sales in the motion technologies group increased to $130.8 million in
1995, up 27% from $103.4 million in 1994.  Sales in 1994 were down 4%
compared to 1993 sales of $107.2 million.  In 1995 this segment increased its
domestic revenues by 36% and foreign revenues by 10% over 1994.  Sales to the
defense market increased 41% over 1994, and sales to the non-defense markets
increased 22%.  The most significant increase in sales was in the Company s
U.S. commercial business where revenues increased 30% over 1994, largely as a
result of increased OEM sales.  The Company's French subsidiary, Kollmorgen
Artus, which sells principally to the aerospace and defense markets, had a
20% increase in sales in 1995 over 1994, which included revenues recognized
under significant development and production contracts for two aerospace
programs.  The sales decline in 1994 versus 1993 reflects an 11% decline in
the aerospace and defense group as a result of the of the weak condition in
the defense/aerospace market.  

  Operating income (excluding corporate expenses) for this segment was
$9.8 million and $8.5 million in 1995 and 1994, respectively, and the
operating income was $9.7 million in 1993. The increase in operating income
in 1995 over 1994 was a result of the increased revenues discussed above,
however, operating profit as a percent of sales declined in 1995 to 7.5% from
8.2%.  Gross margins for the segment declined to 31% in 1995 from 35% in
1994. This reduction was principally attributable to an increased portion of
revenues from OEM business, which has historically been at lower gross
margins than the Company s other business.  Manufacturing cost reductions and
unit price increases should improve the gross margins on ongoing OEM
contracts which are expected to provide significant revenues in 1996.  It is
expected that the segment should be able to improve gross margins in 1996 as
compared to 1995.  The preceding forward-looking statements are subject to
significant risks and uncertainties, which may cause the Company s actual
<PAGE>
<PAGE>13


experience to differ from its expectations.  These risks and uncertainties
include, among other things, the possibility that the mix of products sold
will be less favorable than either expectations or that experienced in 1995,
unexpected increases in cost of goods sold, increased competition, pricing
pressures, and lower than expected sales.  

  The motion technologies group s research and development spending
remained at 5% of sales in both 1995 and 1994, but the total dollar spending
increased 39% to support the development of products introduced in 1995 and
expected to be introduced in 1996 and 1997, and two aerospace programs at the
Company s French subsidiary.  Sales and marketing expenses increased 9% in
1995 to support the higher level of sales.  Sales and marketing expenses were
12% of sales in 1995 and 14% in 1994.  

  The segment s operating income for 1994 declined from 1993 as a result
of the decline in revenues in the aerospace and defense business, increased
spending on research and development, and the costs associated with the
expansion of the segment s sales and marketing force, both domestically and
internationally.  

  New orders for this segment were up 14% in 1995 over 1994, with the
Industrial and Commercial Products and Aerospace and Defense Products groups
both having an increase of 14% over 1994.  Backlog for this segment was $56.2
and $60.3 million at December 31, 1995 and 1994, respectively.  The Company
believes the decrease is primarily due to shorter leadtime requirements of
the segment s customers, particularly in the non-defense markets.  In 1994,
new orders were up 7% over 1993, and backlog increased 23%.  The increases
reflected the increased sales and marketing efforts and the acquisition of
Hightech Components Ltd.  

  Capital expenditures in 1995, 1994, and 1993 for this segment were $2.7
million, $3.0 million and $3.0 million, respectively, principally for
replacement of existing equipment and investments in new equipment to improve
manufacturing efficiency.

                           Electro-Optical Instruments

  Sales in the electro-optical instruments segment increased to $97.8
million, up 11% from $88.4 million in 1994.  Sales in 1994 increased by 13%
over 1993 sales of $78.4 million.  The increase in 1995 over 1994 was due in
large part to increased sales of new color instrumentation products at the
Company s Macbeth division.  The Electro-Optical division also realized an
increase in revenues over 1994 under percentage of completion accounting on
long-term military contracts.  The sales increased in this segment despite
the absence of fourth quarter sales for the Company s Photo Research division
which was sold in early October, 1995.  Excluding the sales of Photo Research
for both 1995 and 1994, revenues increased 14%.  In 1994 the sales increase
over 1993 was primarily attributable to increased revenues by the Company s
Electro-Optical division.  

<PAGE>
<PAGE>14


  Operating income (excluding corporate expenses) for this segment was
$6.4 million in 1995, an increase of 93% over 1994 operating income of $3.3
million which was unchanged from 1993 operating income of $3.3 million. 
Included in the 1995 results for the segment is the gain on the sale of Photo
Research.  Excluding this gain, operating income would have been $5.5
million, an increase of 65% over 1994.  The increase in 1995 over 1994 is
primarily a result of increased sales volume at the Company's Electro-Optical
division.  Operating income in the commercial light and instrumentation
business also improved due to the increased sales volume for newly introduced
products.  The Company s consulting engineering business, Proto-Power, also
showed significant growth in both revenues and operating income.  The results
of the Company s French instrumentation business were negatively affected by
charges of approximately $1.2 million associated with the planned downsizing
of that operation which took place in the fourth quarter of 1995 and early
1996.  

  Gross margin for this segment improved slightly in 1995 over 1994,
increasing to 37% from 36%.  Margin improvements at the segment s Electro-
Optical division were somewhat offset by a small decline at the segment s
Macbeth division, reflecting the lower gross margins on OEM products
introduced in late 1994.  

  Research and development spending increased 8% in 1995 versus 1994, and
remained at 7% of sales.  Sales and marketing expenses increased 3% in 1995
over 1994, but declined as a percentage of sales to 14% from 15% in 1994.  

  Operating income in 1994 of $3.3 million was unchanged from 1993.  The
contribution on increased sales by the Company s Electro-Optical division was
offset by lower sales and increased spending by the Company s French
instrumentation business.  

  Backlog for this segment was $53.1 million, $58.3 million, and $61.6
million at December 31, 1995, 1994, and 1993, respectively.  The decrease in
1995 was caused in large part by the shipments at the Company s French
instrumentation business booked in 1994 and not replaced. Additionally, in
both 1995 and 1994 the recognition of revenues on long term contracts under
percentage of completion accounting by the Electro-Optical division reduced
the segment's backlog.  

  Capital expenditures in 1995, 1994, and 1993 for this segment were $1.1
million, $1.7 million, and $2.5 million, respectively, primarily for
replacement of existing equipment and investment in new equipment to improve
the efficiency of product manufacturing.  

                        Liquidity and Capital Resources

  The Company's consolidated cash position increased by $10.6 million
during 1995.  Cash provided from operations was $19.0 million, while $0.4
million was used for investing activities and $7.6 million was used for
financing activities. 

<PAGE>
<PAGE>15


  Included in the cash provided from operations is the elimination of the
requirement by the Company s lead bank, to maintain restricted cash balances
in support of its standby letter of credit facility, which made available $6
million of cash to the Company.  Additionally, the Company had a $2 million
letter of credit at another bank which guaranteed an obligation for a former
business sold by the Company in 1987.  The Company was required to pay the $2
million in 1995 to satisfy its obligation, which was previously reserved and,
therefore, had no impact on the Company's results of operations.  The Company
has no further obligation with respect to this transaction.  

  At December 31, 1995, the Company was contingently liable for $8.9
million for outstanding standby letters of credit issued principally to
secure advance payments received from foreign customers on long-term military
contracts.  

  Accounts receivable growth used $2.2 million of cash, reflecting
increased revenue of 20% in the fourth quarter of 1995 compared to the same
period in 1994.  Inventories used $3.9 million of cash reflecting the higher
revenue levels as compared to 1994.  Recoverable amounts on long-term
contracts increased by $4.7 million reflecting the increased revenue
recognized on long term military contracts under the percentage completion
method for which billing milestones have not yet been reached.  Accounts
payable and accrued liabilities generated $8.3 million in cash excluding the
use of cash to fund the $2 million payment required by the standby letter of
credit discussed above.  This increase in liabilities was to support the
increased volume of the businesses as compared to a year ago.  

  The Company's investing activities in 1995 included expenditures of $3.9
million for property, plant and equipment primarily for replacement of
existing equipment and investment in new equipment to improve manufacturing
efficiency.  In early 1995 the Company sold a vacant building, receiving $2.4
million in cash after expenses, which was used to repay a mortgage of $2.0
million.  The Company sold the assets of its Photo Research business in
October 1995 receiving $3.2 million in cash after deducting expenses
connected with the transaction.  The Company invested $1.0 million in a joint
venture in India to manufacture high volume low cost fractional horsepower
motors.  Additionally, the Company made an equity investment of $0.6 million
in Servotronix Ltd., an Israeli company which is involved in the joint
development of high performance digital drives and controls with the
Company s motion technologies group.  In 1996 the Company will make an
additional investment of at least $1.4 million in Servotronix.  

  The Company's financing activities used $7.6 million of cash during the
year.  Dividends, both common and preferred, accounted for $3.0 million.  The
Company also made mandatory sinking fund payments on its two convertible
subordinated debentures totalling $3.1 million.  The Company is required,
under the terms of the convertible subordinated debenture agreements, to make
certain mandatory sinking fund payments each year through the year 2009.  The
Company paid $0.9 million against notes the Company issued in connection with
the 1994 acquisition of the submarine periscope assets of Sperry Marine Inc.
and the assets of Hightech Components Ltd.  At the Company's French facility,
$1.2 million was borrowed against existing credit lines.  

<PAGE>
<PAGE>16


  On February 19, 1996 the Company redeemed all of the outstanding shares
of its Preferred Stock at 110% of liquidation value plus accrued and unpaid
dividends.  The redemption payment of $25.8 million was financed by $25
million in debt and $0.8 million in working capital.  As a requirement of the
$25 million term loan provided under the Company s Amended and Restated
Credit Agreement among the Company, its primary bank, and certain other
financial institutions, the Company entered into a rate protection agreement
with its primary bank.  The rate protection agreement is a $25 million five
year amortizing interest rate swap which effectively converts a floating rate
debt to a 7.45% fixed rate of interest.  The Company has no exposure to
fluctuations in interest rates during the term of the loan, unless the
Company were to prepay the loan and interest rates declined.  Repayments
under the term loan commence in 1996 with payments due of $2.3 million.  The
credit agreement has a combined limit of $45 million divided between the term
loan and a revolving credit facility of up to $20 million with a $12.5
million sublimit on letters of credit.  

  Capital spending for 1996 is expected to be at significantly higher
levels in 1996 principally due to the investment by the Company in new
information systems to better allow the Company to manage and grow its
business.  The Company expects to obtain lease or debt financing for much of
its capital requirements for 1996.  The Company s need, cost of, and access
to funds are dependent on future operating results, as well as conditions
external to the Company.  The Company continues to focus on working capital
reductions and effective cash management in order to maximize the amount of
available cash.  The Company believes that with the cash generated from
operations and with its current borrowing capacity it will be able to finance
its 1996 capital expenditures, sinking fund payments, and working capital
requirements.  

  The preceding forward-looking statements are subject to significant
risks and uncertainties, which may cause the Company s actual experience to
differ from its expectations.  These risks and uncertainties include, among
other things, the possibility that the Company s capital needs will be
greater than expected, due to, for example, lower than expected revenues,
operating losses, increased working capital needs, unanticipated capital
expenditure requirements and acquisitions, and the possibility that external
borrowings, financing arrangements, or other capital sources will not be
available as anticipated or will not be available on terms that are favorable
to the Company.  

  General corporate expenses included interest expense, investment income,
and general and administrative expenses.  

Item 8.   Financial Statements and Supplementary Data.  

  The information required by this Item 8 is included in Item 14(a) of
this Report.  

<PAGE>
<PAGE>17


Item 9.   Changes in and Disagreements with Accountants on Accounting
      and Financial Disclosure.  

  None.  

                           PART III

Item 10.  Directors and Executive Officers of the Company.

  The information required by this Item 10 of Form 10-K relating to
directors who are nominees, and to directors continuing in office after the
Company's Annual Meeting of Shareholders to be held on May 8, 1996, is
contained in the definitive proxy statement to be filed with the Securities
and Exchange Commission (the "Commission") on or before April 5, 1996, under
the headings "Nominees", and "Continuing Directors", and such information is
incorporated herein by reference in response to this item.  

  The information required by this Item 10 of Form 10-K with respect to
executive officers is set forth in Part I of this Form 10-K under the heading
"Executive Officers of the Company".  

Item 11.  Executive Compensation.  

  The information required by this Item 11 of Form 10-K is contained in
the Company's definitive proxy statement to be filed with the Commission on
or before April 5, 1996, under the heading "Executive Compensation" and such
information is incorporated herein by reference in response to this item.  

Item 12.  Security Ownership of Certain Beneficial Owners and Management.  

  The information required by this Item 12 of Form 10-K is contained in
the definitive proxy statement to be filed with the Commission on or before
April 5, 1996, under the headings "Security Ownership of Certain Beneficial
Owners" and "Security Ownership of Management" and such information is
incorporated herein by reference in response to this item.  

Item 13.  Certain Relationships and Related Transactions.

  The information required by this Item 13 of Form 10-K is contained in
the Company's definitive proxy statement to be filed with the Commission on
or before April 5, 1996, under the heading "Certain Relationships and Related
Transactions" and such information is incorporated herein by reference in
response to this item.  

<PAGE>
<PAGE>18


                           PART IV 

Item 14.  Exhibits, Financial Statements, Schedules, and Reports on Form 8-K. 

  (a) The following documents are filed as part of this report:  

      (1)     Financial Statements.  See Index to Financial Statements
              on page 20.  

      (2)     Exhibits.  See Exhibit Index on page 47.  

  (b) Reports on Form 8-K.  On February 26, 1996, the Company filed a
      current report on Form 8-K announcing the redemption of its entire
      issue of Series D Convertible Preferred Stock.  
<PAGE>
<PAGE>19


                           SIGNATURES


  Pursuant to the requirements of Section 13 of the Securities Exchange
Act of 1934, Kollmorgen Corporation has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.  

                               KOLLMORGEN CORPORATION 


                                  /s/  Robert J. Cobuzzi        
                               Robert J. Cobuzzi
                               Its: Senior Vice President, Treasurer
                                   and Chief Financial Officer
                               March __, 19965

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


  /s/  Gideon Argov                
Gideon Argov                           March __, 1996
President and 
Chief Executive Officer/Director 


  /s/  Robert J. Cobuzzi           
Robert J. Cobuzzi                      March __, 1996 
Senior Vice President, Treasurer and 
Chief Financial Officer


  /s/                              
Keith D. Jones                             March __, 1996
Chief Accounting Officer


  /s/  James A. Eder               
James A. Eder                          March __, 1996
Vice President and Secretary and
Attorney-in-Fact For:  

 Allan M. Doyle, Jr., Director    Robert N. Parker, Director
                                  
 Jerald G. Fishman, Director      Eric M. Ruttenberg, Director
                                  
 James H. Kasschau, Director      George P. Stephan, Director
 
 J. Douglas Maxwell, Jr., Director

                                  
                                  
<PAGE>
<PAGE>20


                              INDEX TO FINANCIAL STATEMENTS


  The following consolidated financial statements of the Company and its
subsidiaries are included in response to Item 8.  

                                                        Page(s) in
                                                         Form 10-K
                                                        -----------

  Report of Independent Accountants                       21

  Consolidated Balance Sheets as of 
      December 31, 1995 and 1994                         22-23

  Consolidated Statements of Operations 
      for the years ended December 31, 
      1995, 1994 and 1993                                24 

  Consolidated Statements of Shareholders' 
      Equity for the years ended 
      December 31, 1995, 1994 and 1993                   25-26

  Consolidated Statements of Cash Flows 
      for the years ended December 31, 1995, 
      1994 and 1993                                      27-28

  Notes to Consolidated Financial Statements              29-46





<PAGE>
<PAGE>21


              REPORT OF INDEPENDENT ACCOUNTANTS


To the Board of Directors and Shareholders
Kollmorgen Corporation:  

  We have audited the accompanying consolidated balance sheets of
Kollmorgen Corporation as of December 31, 1995 and 1994, and the related
consolidated statements of operations, shareholders' equity and cash flows
for each of the three years in the period ended December 31, 1995.  These
consolidated financial statements are the responsibility of the Company's
management.  Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.  

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

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



                                         /s/ Coopers & Lybrand L.L.P.


Boston, Massachusetts
January 31, 1996, except as to the information
presented in Note 8 relating to the Series D
Convertible Preferred Stock redemption for
which the date is February 19, 1996.


<PAGE>
<PAGE>22


<TABLE>

KOLLMORGEN CORPORATION AND SUBSIDIARIES 
Consolidated Balance Sheets  
December 31, 1995 and 1994  
(Dollars in thousands)  

<CAPTION>
ASSETS                                    1995          1994  
------                                  --------      --------
<S>                                   <C>           <C>       
Current assets:
   Cash and cash equivalents (Note 1) $  17,789     $   7,165 
   Restricted cash (Note 2)                  -          8,000 
   Accounts receivable (net of reserve 
     of $697 in 1995 and $1,064 in 1994) 40,831        38,348 
   Recoverable amounts on long-term contracts          12,116     7,380 
   Inventories (Note 3)                  26,210        23,231 
   Prepaid expenses                       1,557         1,303 
                                       ---------     ---------
                                                              
Total current assets                     98,503        85,427 
                                       ---------     ---------
                                                              
Property, plant and equipment, net (Note 4)            28,803    30,789 

Net assets held for sale (Note 13)           -          3,000 

Goodwill (net of accumulated amortization
  of $1,037 in 1995 and $420 in 1994)     5,631         6,180 

Other assets                             14,537        12,805 
                                       ---------     ---------
                                      $ 147,474     $ 138,201 
                                       =========     =========

<FN>
The accompanying notes are an integral part of these consolidated financial
statements.  
<PAGE>
<PAGE>23


LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
                                       1995          1994  
                                    ---------     ---------
Current liabilities:                                       
   Notes payable (Note 6)          $   9,019     $  10,104 
   Current portion of long-term debt (Note 7)        3,901     3,220 
   Redeemable preferred stock (Note 8) 2,756            -  
   Accrued compensation and payroll taxes            8,328     5,000 
   Accounts payable                   24,969        18,722 
   Accrued liabilities                22,065        23,356 
                                    ---------     ---------
Total current liabilities             71,038        60,402 
                                    ---------     ---------

Long-term debt (Note 7)               36,888        40,667 

Other liabilities                      5,501         4,720 

Commitments and contingencies (Note 15)   -             -  

Redeemable preferred stock (Note 8)
      Series D, par value $1.00 and
      liquidation value $1,000 per share     
      --authorized, issued and outstanding   
        shares, 23,187.5              22,750        22,532 

Shareholders' equity (Notes 9 and 10):       
   Common stock, par value $2.50 per share                 
      -- authorized 25,000,000 shares                      
      -- outstanding 10,762,024 shares in                  
           1995 and 10,756,513 in 199426,904        26,891 
   Additional paid-in capital         14,343        20,353 
   Accumulated deficit               (18,958)      (26,115)
   Cumulative translation adjustments (1,454)       (1,371)
   Less common stock in treasury, at cost                  
      -- 1,068,558 shares in 1995 and 
         1,106,608 shares in 1994     (9,538)       (9,878)
                                    ---------     ---------

Total shareholders' equity            11,297         9,880 
                                    ---------     ---------

                                   $ 147,474     $ 138,201 
                                    =========     =========

<FN>
The accompanying notes are an integral part of these consolidated financial
statements.  

</TABLE>
<PAGE>
<PAGE>24

<TABLE>
KOLLMORGEN CORPORATION AND SUBSIDIARIES 
Consolidated Statements of Operations
For the Years Ended December 31, 1995, 1994, and 1993
(Dollars in thousands, except per share amounts) 

<CAPTION>
                                      1995        1994       1993  
                                    --------    --------   --------
<S>                                <C>         <C>        <C>      
                                                                   
Net sales                          $228,655    $191,771   $185,538 
Cost of sales                       152,614     124,627    121,286 
                                    --------    --------   --------
Gross profit                         76,041      67,144     64,252 
                                    --------    --------   --------
Selling and marketing expense        29,412      27,753     24,708 
General and administrative expense   22,435      21,491     21,973 
Research and development expense     13,178      10,843      9,338 
                                    --------    --------   --------
Income before interest and taxes     11,016       7,057       8,233
                                    --------    --------   --------
Other (income) expense:                                 
    Interest expense, net             4,007       3,679      4,149 
    Other, net                        (148)         142        180 
                                    --------    --------   --------
Income before income taxes            7,157       3,236       3,904

Income tax benefit (Note 11)              0        (815)      (848)
                                    --------    --------   --------
Net income                         $  7,157    $  4,051   $  4,752 
                                    ========    ========   ========

Net income available to 
     common shareholders           $  2,509    $  1,727   $  2,428 
                                    ========    ========   ========

Earnings per common share            $  .26      $  .18     $  .25 
                                     ======      ======     ====== 
Weighted average common shares
     outstanding                      9,667       9,642      9,634 
                                     =======     =======    =======

<FN>

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

</TABLE>
<PAGE>
<PAGE>25
<TABLE>
KOLLMORGEN CORPORATION AND SUBSIDIARIES
Consolidated Statements of Shareholders' Equity
December 31, 1995, 1994 and 1993 (dollars in thousands)
<CAPTION>
                             Common Stock    Add'l  Accum-    Cumulative   Treasury Stock       Total
                            --------------  Paid-in  ulated   Translation  --------------     -------------
                           Shares    Amount  Capital Deficit   Adjustment  Shares    Amount    Shares    Amount
                           ---------- ------- ------- --------  ---------- --------- -------- --------   ------
<S>                        <C>        <C>     <C>     <C>       <C>       <C>        <C>      <C>        <C>
Balance, Dec. 31, 1992     10,744,542 $26,861 $26,521 $(34,918) $  (443)  1,114,408  $(9,947) 9,630,134  $ 8,074
Net income                                               4,752                                             4,752
Common stock issuances          5,488      14      24                                              5,488      38
Dividends paid on common
  and preferred stock                          (2,973)                                                    (2,973)
Accretion of preferred
  stock discount                                 (125)                                                      (125)
Translation adjustments                                          (2,181)                                  (2,181)
                           ---------- -------  -------- -------- --------  ----------  -------- --------- -------
Balance, Dec. 31, 1993     10,750,030  26,875   23,447  (30,166) (2,624)   1,114,408   (9,947)  9,635,622  7,585
Net income                                                4,051                                             4,051
Common stock issuances          6,483      16       30                                               6,483     46 
Dividends paid on common
  and preferred stock                           (2,975)                                                    (2,975)
Common stock issued
  from treasury                                    (24)                        7,800        69       7,800     45 
Accretion of preferred
  stock discount                                  (125)                                                      (125)
Translation adjustments                                           1,253                                     1,253
                           ---------- -------  -------- --------  -------- --------- --------  ---------  --------
Balance, Dec. 31, 1994     10,756,513  26,891   20,353  (26,115)   (1,371) 1,106,608  (9,878)  9,649,905     9,880 
Net income                                                7,157                                              7,157 
Dividends paid on common
  and preferred stock                           (2,978)                                                     (2,978)
Common stock issuances        5,511        13      35                                                5,511      48 
Common stock issued from
  treasury                                        (97)                         38,050      340      38,050     243 
Accretion of preferred
  stock discount                                 (652)                                                        (652)
Translation adjustments                                               (83)                                     (83)
Preferred stock redemption
  premium                                      (2,318)                                                      (2,318)
                          ----------  -------  -------- --------  --------  ---------   -------  ---------  --------
<PAGE>
<PAGE>26


<CAPTION>
                             Common Stock    Add'l  Accum-    Cumulative   Treasury Stock        Total
                            --------------  Paid-in  ulated   Translation  --------------    -------------
                          Shares    Amount  Capital Deficit   Adjustment    Shares  Amount   Shares   Amount
                         ---------- ------- ------- --------  ----------   -------  -------  --------- --------
<S>                      <C>        <C>     <C>     <C>       <C>         <C>       <C>      <C>       <C>
Balance, Dec. 31, 1995   10,762,024 $26,904 $14,343 $(18,958) $(1,454)    1,068,558 $(9,538) 9,693,466 $11,297 
                         ========== ======= ======= ========= ========    ========= =======  ========= =======


<FN>
The accompanying notes are an integral part of these consolidated financial statements.  

</TABLE>
<PAGE>
<PAGE>27


<TABLE>
KOLLMORGEN CORPORATION AND SUBSIDIARIES 
Consolidated Statements of Cash Flows 
For the Years Ended December 31, 1995, 1994, and 1993
(Dollars in thousands)

<CAPTION>
                                               1995       1994        1993  
                                             --------   --------    --------
<S>                                         <C>        <C>         <C>      
Cash flows from operating activities:                           
Income from operations                      $  7,157   $  4,051    $  4,752 
Adjustments to reconcile income (loss) to net cash              
     provided by operating activities:                          
  Depreciation                                 5,751      5,897       5,989 
  Amortization                                 1,848        781         755 
(Gain) on sale of assets                        (293)        -           -  
Other non-cash expenses                           48         46          38 

Changes in operating assets and liabilities (net of
     effects from acquisitions):
  Restricted cash                              8,000     (1,280)       (962)
  Accounts and notes receivable               (2,194)    (3,154)      2,105 
  Recoverable amounts on long-term contracts  (4,736)    (1,546)      6,209 
  Inventories                                 (3,892)       512       1,264 
  Prepaid expenses                              (248)      (501)     (1,145)
  Accounts payable and accrued liabilities     6,264     (1,329)     (8,452)
  Deferred income taxes and other expenses       747        249          25 
  Other                                          304        465         290 
                                             --------   --------    --------
Net cash provided by operations               18,756      4,191      10,868 
                                             --------   --------    --------
Cash flows from investing activities:
  Capital expenditures                        (3,852)    (4,837)     (5,470)
  Purchase of property held for sale                                 (4,263)
  Proceeds from sale of assets (net of related expenses)  5,619          -    -  
  Equity investments                          (1,718)        -           -  
  Long term notes receivable (net of repayments)(425)        -           -  
  Acquisition of Hightech Components and                                    
     certain assets of Sperry Marine              -      (3,749)         -  
                                             --------   --------    --------
Net cash provided by (used in) investing activities        (376)     (8,586)(9,733)
                                             --------   --------    --------


<FN>

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


<PAGE>
<PAGE>28


<CAPTION>
                                               1995       1994        1993  
                                             --------   --------    --------
<S>                                         <C>        <C>         <C>      
Cash flows from financing activities:                           
  Net borrowings (repayments) under credit lines(803)     1,351      (1,322)
  Principal repayment on other notes            (896)        -           -  
  Common stock issued from treasury              243         45          -  
  Principal payments under capital lease obligations        (42)        (33)  -  
  Retirement of long-term debt                (3,075)    (4,499)     (2,656)
  Dividends paid on common and preferred stock(2,978)    (2,975)     (2,973)
                                             --------   --------    --------
Net cash provided by (used in) investing activities      (7,551)     (6,111)(6,951)
Effect of exchange rate changes on cash         (205)       (11)         35 
                                             --------   --------    --------
Net increase (decrease) in cash and equivalents          10,624     (10,517)(5,781)
Cash and cash equivalents at beginning of year 7,165     17,682      23,463 
                                             --------   --------    --------
Cash and cash equivalents at end of year    $ 17,789   $  7,165    $ 17,682 
                                             ========   ========    ========

Supplemental cash flow information
  Cash paid during the period for:
    Interest                                   4,704      4,809       5,130 
    Income taxes (net of refunds)               (321)       101        (646)

  Non-cash financing activities:
    Mortgage assumed                              -          -        1,987 


   Acquisition of Hightech Components and 
      assets of Sperry Marine:
        Fair value of assets acquired             -       6,539          -  
        Cash paid                                 -       3,749          -  
                                                        --------
      Notes assumed                                       2,790 
                                                        ========



<FN>

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

</TABLE>

<PAGE>
<PAGE>29


KOLLMORGEN CORPORATION AND SUBSIDIARIES 
Notes to Consolidated Financial Statements 
December 31, 1995, 1994, and 1993
(Dollars in thousands, except per share amounts)
_________________________________________________________________ 

Note 1.   Summary of significant accounting policies

  A summary of the significant accounting policies followed by Kollmorgen
Corporation is presented below.  Certain reclassifications have been made to
the prior years' financial statements to conform to 1995 classifications. 
For purposes of the Notes to Consolidated Financial Statements, the term the
"Company" refers to Kollmorgen Corporation and its subsidiaries.  

  Principles of Consolidation   The consolidated financial statements
include the accounts of the Company and all of its majority-owned
subsidiaries.  

  Use of Estimates  The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
certain estimates and assumptions that affect the reported amount of assets
and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reported period.  Actual results could differ from those
estimates.  

  Cash and Cash Equivalents   Cash equivalents are stated at cost that
approximates fair value.  The Company considers all highly liquid investments
purchased with an original maturity of three months or less to be cash
equivalents.  

  Recoverables   Recoverable amounts on long-term contracts represent
revenues recognized on a percentage-of-completion basis less progress
billings.  

  Inventories   Inventories are stated at the lower of cost or market,
principally using the first-in, first-out method.  Progress payments received
on contracts other than major long-term contracts are deducted from
inventories.  

  Property, Plant and Equipment and Accumulated Depreciation   Property,
plant and equipment are carried at cost and include expenditures for major
improvements which substantially increase their useful life.  Repairs and
maintenance are expensed as incurred.  When assets are retired or otherwise
disposed of, the assets and related allowances for depreciation and
amortization are eliminated from the accounts and any resulting gain or loss
is recognized.  

  For financial reporting purposes, depreciation is provided generally on
a straight-line basis over the estimated useful lives of the buildings (10 to
50 years) and the machinery and equipment (3 to 12 years).  Leasehold
<PAGE>
<PAGE>30


Notes to Consolidated Financial Statements - continued

improvements are depreciated over the remaining period of the existing
leases.  For income tax purposes, depreciation is computed by using various
accelerated methods and, in some cases, different useful lives than those
used for financial reporting.  

  Goodwill and Intangibles   Goodwill consists of amounts by which the
cost of acquisitions exceeded the values assigned to net tangible assets. 
Intangible assets consist principally of patents.  All of the intangible
assets are being amortized on a straight-line basis over periods ranging from
10 to 40 years.  

  At each balance sheet date, management evaluates whether there has been
a permanent impairment in the value of goodwill or intangible assets by
assessing the carrying value of the asset against the anticipated future cash
flows from related operating activities.  Factors which management considers
in performing this assessment include current operating results, trends and
prospects, and, in addition, demand, competition, and other economic factors. 

  Foreign Currency Translation   The functional currency for the majority
of the Company s foreign operations is the applicable local currency.  The
translation from the applicable foreign currencies to U.S. dollars is
performed for balance sheet accounts using the exchange rates in effect at
the balance sheet date and for revenue and expense accounts using a weighted
average exchange rate during the period.  The gains or losses resulting from
such translation are included in stockholders  equity.  Gains or losses
resulting from foreign currency transactions are included in other income.  

  Sales   Sales, other than revenues from major long-term contracts, are
recorded as products are shipped.  Major programs that are performed under
long-term contracts are accounted for using the percentage-of-completion
method.  Revenues recognized under this method were $37.7 million, $34.4
million, and $24.5 million in 1995, 1994, and 1993, respectively.  In most
cases the contracts also provide for progress billings over the life of the
program.  

  Earnings Per Common Share   Earnings per common share is based on net
income less the dividends, interest accretion and the premium paid (see Note
8) on redeemable preferred stock divided by the weighted average number of
common shares outstanding.  Fully diluted net income assumes full conversion
of all convertible securities into common stock which include the convertible
subordinated debentures and redeemable preferred stock.  The fully diluted
calculation does not result in significant dilution of net income per common
share and, accordingly, is not presented.  

  Income Taxes   Effective January 1, 1993 the Company adopted Statement
of Accounting Standards No. 109, "Accounting for Income Taxes" ("FAS 109"). 
The adoption of FAS 109 had no material effect on results of operations or
financial position.  

<PAGE>
<PAGE>31


Notes to Consolidated Financial Statements - continued

  Postretirement Benefits Other Than Pensions   Effective January 1, 1993,
the Company adopted Statement of Accounting Standards No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions" ("FAS 106"). 
Under FAS 106, the Company is required to accrue the expected benefit
obligation for postretirement benefits during the employees' active service
periods.  

  The Company has elected the delayed recognition method in which the cost
for employees hired prior to January 1, 1992, is being amortized over 20
years.  The Company paid approximately $0.8 million in 1995 for post-
retirement benefits to current retirees.  

  Fair Value of Financial Instruments  The method and assumptions used to
estimate the fair value of each class of financial instrument for which it is
practicable to estimate a value are as follows:  

  Long-Term Debt:  The fair value of the Company s long-term debt is
estimated based on its quoted market prices.  

  Standby Letters of Credit:  The fair values of letters of credit are
based on the estimated cost to terminate them or otherwise settle the
obligations with the counterparties at the reporting date.  

  New Accounting Pronouncement  In October 1995, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No. 123,
 Accounting for Stock-Based Compensation  (SFAS 123), which is effective for
transactions entered into in fiscal years that begin after December 15, 1995. 
SFAS 123 established a fair value based method of accounting for stock-based
compensation plans.  The Company will adopt the disclosure method in 1996. 
The Company has not determined its effect on a proforma basis to 1995 net
income and earnings per share of applying fair value accounting rules to
grants of stock-based awards in 1995.  

Note 2.  Restricted cash

  The Company has no restricted cash balances at December 31, 1995.  In
1995 the Company s lead bank eliminated the requirement for the Company to
maintain restricted cash balances in support of an irrevocable standby and
documentary letter of credit facility.  Additionally, in 1995 the Company
paid $2 million under a guarantee secured by a letter of credit at another
bank and which was supported by a $2 million restricted cash balance.  

  The restricted cash balance of $8 million in 1994 served as collateral
for both an irrevocable standby and documentary letter of credit facility at
the Company's lead bank and to secure a specific letter of credit at another
bank.  

<PAGE>
<PAGE>32


Notes to Consolidated Financial Statements - continued

Note 3.   Inventories

  Inventories at December 31 consist of the following:

                                        1995        1994  
                                     ---------   ---------
        Raw materials               $  15,110   $  12,323 
        Work in process                 7,653       6,888 
        Finished goods                  3,447       4,020 
                                     ---------   ---------
                                    $  26,210   $  23,231 
                                     =========   =========

Note 4. Property, Plant and Equipment

    Property, plant and equipment at December 31 consists of the following:

                                        1995        1994  
                                     ---------   ---------
        Land                         $  2,086   $   1,877 
        Leasehold improvements            792         889 
        Buildings                      35,652      35,162 
        Machinery and equipment        74,385      74,146 
        Capital leases                    581       450   
                                     ---------   ---------
                                      113,496     112,524 
        Less accumulated depreciation
            and amortization           84,693      81,735 
                                     ---------   ---------
                                     $ 28,803   $  30,789 
                                     =========   =========

Note 5. Financial Instruments

    The Company has not used derivatives to hedge its exposure to market
risks from changes in foreign exchange rates and interest rates.  In 1996,
however, as part of its borrowing facility with its lead bank (see Note 6)
the Company entered into a $25 million five year amortizing interest rate
swap which effectively converts a floating rate debt to a fixed rate of
interest of 7.45%.  The Company has no exposure to fluctuations in interest
rates during the term of the loan, unless the Company were to prepay the loan
and interest rates declined.  

    The Company s principal foreign operations are in countries in which the
currency historically has been fairly stable.  Management believes that any
fluctuations in currency rates within these countries will not have a
material adverse effect on the Company s financial condition, cash flows, or
results of operations.  

<PAGE>
<PAGE>33


Notes to Consolidated Financial Statements - continued

Note 6. Lines of credit and notes payable

    Notes payable consist of the following at December 31:  

                                   1995         1994
                                 --------         --------
                Foreign          $ 7,103      $ 6,152 
                Domestic           1,916            3,952 
                                 --------         --------
                                 $ 9,019          $10,104 
                                 ========         ========

    On January 19, 1996, the Company amended its borrowing facility with its
lead bank to provide for (i) a five year $20 million revolving credit
facility (with a $12.5 million sublimit on letters of credit), and (ii) a $25
million amortizing five year term loan. The term loan was for the sole
purpose of redeeming the Series D Convertible Preferred Stock as discussed in
Note 8.  The term loan bears interest at 7.45% and is repaid in mandatory
installments of $2.25 million, $3 million, $5.25 million, $6 million, $6.75
million, and $1.75 million in the years 1996, 1997, 1998, 1999, 2000, and
2001 respectively.  The borrowing facility is secured by substantially all of
the tangible and intangible assets of the Company (excluding real property). 
The facility contains certain financial covenants that the Company must
comply with including limits on capital spending, minimum cash flow
requirements, minimum tangible net worth, current ratio, and other ratios
relating to the amount of total debt that the Company may have as compared to
the Company s net worth and earnings.  The requirements to be met change
during the term of the loan.  

    At December 31, 1995, the Company s agreement with its lead bank
provided for a one-year $17.5 million domestic revolving credit and standby
letter of credit facility, and a 21 million French franc revolving credit
facility (approximately $4 million) for the Company s French operation.  At
December 31, 1995, the Company had $8.9 million of standby and documentary
letters of credit outstanding at this bank, approximately $3.6 million (17.6
million francs) under the French facility, and no amounts were outstanding
under the domestic revolving credit facility.  The agreement also required
the Company to maintain, among other things, certain financial ratios, and
contained other affirmative and negative covenants.  The Company was in
compliance with all covenants at December 31, 1995.  

    The Company's French subsidiary, Kollmorgen Artus, maintains working
capital lines of credit with three French banks other than the Company s lead
bank discussed above.  At December 31, 1995 the Company had approximately
$3.1 million  outstanding and $0.7 million of availability under these lines
of credit.  

<PAGE>
<PAGE>34


Notes to Consolidated Financial Statements - continued

Note 7. Long-term debt 

    Long-term debt consists of the following:  

                                       1995             1994  
                                     --------         --------
8 3/4% Convertible subordinated                               
  debentures due 2009               $ 36,340         $ 37,438 
10 1/2% Convertible subordinated                              
  debentures due 1997                  4,000            6,000 
Term loans, 10.5% due through 1997        28               41 
Capital lease obligations                421              408 
                                     --------         --------
                                      40,789           43,887 
Less current maturities                3,901            3,220 
                                     --------         --------
                                    $ 36,888         $ 40,667 
                                     ========         ========

  The 8 3/4% Convertible Subordinated Debentures are convertible at any
time prior to maturity, unless previously redeemed, into 1,057,933 shares of
common stock of the Company at a conversion price of $34.35 per share,
subject to adjustment in certain events.  The Company is required to make
annual sinking fund payments sufficient to retire $1.75 million principal
amount of debentures which commenced on May 1, 1994, and each year thereafter
including May 1, 2009.  As part of the mandatory sinking fund payments, the
Company purchased, on the open market, $951 thousand aggregate principal
amount of bonds at a market price below par value which resulted in an
immaterial gain.  At December 31, 1995 the market price of these debentures
approximated carrying value.  

  The 10-1/2% Convertible Subordinated Debentures, issued in a private
placement, are convertible into 160,000 shares of the Company's common stock
at a price of $25 per share at any time prior to maturity, unless previously
redeemed.  The debentures are subject to mandatory sinking fund payments
which commenced on August 1, 1993, and each year thereafter including
August 1, 1997, in the amount of $2 million of principal reduction.  

  The Company incurred $4.7 million, $4.8 million, and $5.1 million of
interest expense on debt in 1995, 1994, and 1993, respectively.
  
  Long-term debt at December 31, 1995, matures as follows:  

              Date             Maturities
              ----             ----------
              1996             $  3,901
              1997                3,913 
              1998                1,843 
              1999                1,792 
              2000                1,750
              Thereafter     27,590 
                           --------
                           $ 40,789 
                           ========
<PAGE>
<PAGE>35


Notes to Consolidated Financial Statements - continued

Note 8.  Preferred Stock

    The Company's Restated Certificate of Incorporation provides that the
Corporation is authorized to issue 500,000 shares of preferred stock, $1.00
par value, in series.  At December 31, 1995, there were 23,187.5 shares of
preferred stock issued and outstanding.  

    In March, 1990, the Company sold 23,187.5 shares of a new issue of
Series D convertible preferred stock (the "Preferred Stock") for $1,000 per
share, or an aggregate of approximately $23.2 million, to a group of
investors led by Tinicum Enterprises, Inc.  The Preferred Stock had a
cumulative dividend rate of 9.5 percent per year and was convertible into an
aggregate of 1,717,591 shares of Kollmorgen common stock, subject to
antidilution provisions.  

    On February 19, 1996, the Company redeemed all of the Preferred Stock. 
The redemption price included a 10% premium of $2.3 million plus unpaid
dividends through the date of redemption.  At December 31, 1995, there were
no unpaid dividends, and the Preferred Stock is shown at its liquidation
value plus the 10% premium or $25.5 million.  The Company borrowed $25
million to finance the redemption (see Note 6), and such note requires
repayments in 1996 of $2.3 million, this amount together with the amount of
the redemption to be funded from working capital, or a total of $2.8 million,
is classified as a current liability on the accompanying balance sheet.  

Note 9.  Common Stock, Additional Paid-in Capital and Treasury Stock

    Pursuant to the By-Laws of the Corporation, directors who are not
employees of the Corporation receive an annual retainer of $12,000.  Under
the terms of the 1992 Stock Ownership Plan for Non-Employee Directors, each
non-employee director receives at least 50% of his annual retainer in shares
of common stock.  The number of shares of common stock is based on the fair
market value of such shares at the end of each quarterly period.  

    The Company maintains a Shareholder Rights Plan which provides one
Preferred Stock Purchase Right (Right) for each outstanding share of Common
Stock of the Company.  Each Right entitles the registered holder, subject to
the terms of a Rights Agreement, to purchase one one-thousandth of a share
(Unit) of Series B Preferred Stock, par value $1.00 per share (Preferred
Stock), at a purchase price of $50 per Unit.  The units of preferred stock
are non-redeemable, voting, and are entitled to certain preferential dividend
rights.  The exercise price and the number of units issuable are subject to
adjustment to prevent dilution.  

    The Rights are not exercisable until the earlier to occur of (i) 10 days
following a public announcement (the date of such announcement being the
"Stock Acquisition Date") that a person or group has acquired beneficial
ownership of 20% or more of the then outstanding shares of capital stock of
the Company entitled to vote ("Acquiring Party") or (ii) a date determined by
<PAGE>
<PAGE>36


Notes to Consolidated Financial Statements - continued

the Board of Directors following the commencement of a tender or exchange
offer which would result in a party beneficially owning 30% or more of the
shares of voting stock of the Company.  

    The Board of Directors of the Company may redeem the Rights at any time
on or prior to the tenth day following the Stock Acquisition Date at a price
of $0.01 per Right. Unless earlier redeemed, the Rights will expire on
December 20, 1998.  

    Common stock reserved for issuance at December 31, 1995 and 1994, were
as follows:  conversion of debentures and redeemable preferred stock --
2,935,524 and 3,066,470, respectively; and stock options and other awards --
1,122,441 and 1,173,991, respectively.  

    As a result of the Company's losses in previous years, there was not a
sufficient amount of retained earnings from which to pay dividends and,
accordingly, dividends paid on common and preferred stock were charged to
"Additional Paid-in Capital."  

Note 10.   Stock option and purchase plans

    The Company maintains two employee stock option plans under which grants
have been made to officers and key employees.  Options are generally first
exercisable after one year but before ten years from date of grant.  

    A summary of changes during 1995, 1994, and 1993 in shares of common
stock authorized for grant to officers and key employees under the stock
option plans are as follows:  

                                         Number of Shares
                               1995       1994       1993  
                           ---------- ---------- ----------
Shares under option at January 1        879,700    872,820   892,337 
Options granted              209,000    132,000    185,000 
Options exercised            (38,050)    (6,800)        -  
Options canceled             (89,700)  (118,320)  (204,517)
                           ---------- ---------- ----------
Shares under option at December 31      960,950    879,700   872,820 
                           ========== ========== ==========
Options exercisable at December 31      443,850    369,600   300,220 

Price per share of options granted     $ 7.38 to  $ 5.63 to $ 6.00 to
                             $ 9.75     $ 8.88     $ 7.75  

  Option prices at December 31, 1995, ranged from $4.50 to $16.88 per
share.  Prices of options exercised in 1995 ranged from $5.00 to $7.625 per
share.  

<PAGE>
<PAGE>37


Notes to Consolidated Financial Statements - continued

  Options available for grant at December 31, 1995, 1994 and 1993 were
12,491, 145,291, and 213,291, respectively.  

  In addition, under the terms of the 1992 Stock Ownership Plan for Non-
Employee Directors, the Company maintains a stock option program for its non-
employee directors who automatically receive an option to purchase 2,000
shares of common stock every other year.  Options available for grant under
this program at December 31, 1995, 1994 and 1993 were 105,518, 111,029, and
130,512, respectively.  

Note 11.  Taxes on income

  The components of income (loss) before income taxes were as follows:  

                                 1995        1994      1993  
                               --------   --------   --------
    Domestic                  $  7,543   $  5,001   $  5,819 
    Foreign                       (386)    (1,765)    (1,915)
                               --------   --------   --------
    Total                     $  7,157   $  3,236   $  3,904 
                               ========   ========   ========


  FAS 109 requires recognition of deferred tax liabilities and assets for
the expected future tax consequences of events that have been included in the
financial statements or tax returns.  Under this method, deferred tax
liabilities and assets are determined based on the difference between the
financial statement and tax bases of assets and liabilities using enacted tax
rates in effect for the year in which the differences are expected to
reverse.  

  The provision (benefit) for income taxes consists of the following (in
thousands):  

                                 1995       1994       1993  
                               --------   --------   --------
Current provision (benefit):           
    U.S. federal              $     61   $   (906)  $   (703)
    Foreign                       (235)        35         -  
    State                           -          56         -  
                               --------   --------   --------
                                  (174)      (815)      (703)
                               --------   --------   --------
Deferred provision (benefit):          
    U.S. federal                    -          -          -  
    Foreign                        174         -        (145)
    State                           -          -          -  
                               --------   --------   --------
                                   174         -        (145)
                               --------   --------   --------
Total                         $      0   $   (815)  $   (848)
                               ========   ========   ========
<PAGE>
<PAGE>38


Notes to Consolidated Financial Statements - continued

  The U.S. effective income tax rate from operations is different from the
U.S. federal statutory rate for the following reasons:  

                                   1995      1994      1993 
                                --------  --------  --------
Income tax provision (benefit) if                 
   computed at U.S. federal rates        $  2,433  $  1,100  $  1,378 
Benefit of net operating loss
   carryforwards                 (2,650)   (1,769)   (1,534)
Foreign unutilized net operating 
   losses and tax credits            -        646        -  
Foreign tax rate variances           70        (2)       -  
State income taxes net of                                   
   federal benefit                   -         37        -  
Other                               147      (827)     (692)
                                --------  --------  --------
                               $      0  $   (815) $   (848)
                                ========  ========  ========

  The deferred tax assets and liabilities are comprised of the following:  

                                  12/31/95     12/31/94 
                                 ----------   ----------
    Bad debt reserve             $     233    $     260 
    Employee benefit reserves          711        2,405 
    Reserve for net realizable value
         of real estate              1,200        2,500 
    Other                            3,807          799 

    Net operating losses and credits18,842       17,580 

    Property, plant and equipment   (2,527)      (2,526)
                                  ---------    ---------
                                    22,266       21,018 
                                  ---------    ---------
    Valuation allowance            (22,266)     (21,018)
                                  ---------    ---------
Net deferred tax asset           $      -     $      -  
                                  =========    =========


    For Federal income tax purposes, the Company has domestic regular tax
net operating loss carryforwards of approximately $19.9 million, which may be
used to offset future taxable income.  The Company also has foreign net
operating losses of approximately $6.8 million.  These net operating losses
expire beginning in 2002.  Additionally, the Company has available $7.6
million of general business tax and other credit carryforwards which will
expire beginning in 2002.  

<PAGE>
<PAGE>39


Notes to Consolidated Financial Statements - continued

Note 12.    Asset Acquisitions and Equity Investments

    In May 1995 the Company entered into an agreement to acquire for $0.6
million, a 10% equity interest in Servotronix Ltd., an Israeli firm which
designs and markets digital control systems for the motion control market.  

    Under the agreement with Servotronix, the companies will jointly develop
products for the worldwide motion control marketplace to be sold exclusively
under the name of Kollmorgen through the Company s distribution channels. 
Servotronix will continue to design and market products of their own design
to their customers under the Kollmorgen name.  

    In 1995 the Company advanced to Servotronix $0.3 million for working
capital in anticipation of exercising its right to increase its equity share. 
In 1996 the Company will increase its equity interest in Servotronix with
payments totalling $1.4 million.  The Company has the right to increase its
minority interest in 1997 for an additional $2.7 million.  

    In 1995 the Company invested $1.0 million for a 51% interest in a joint
venture in Bombay, India to manufacture high volume brushless fractional
horsepower motors.  Additionally the Company has advanced $1.1 million to the
joint venture to fund its working capital requirements.  The joint venture
was not finalized as of December 31, 1995 and was not included in the
financial results of the Company.  Management believes that the exclusion of
the joint venture does not have a material impact on the financial statements
presented.  

    On April 8, 1994, certain assets and liabilities of Hightech Components,
Ltd. were purchased for $1.5 million of which $0.7 million was paid in cash
and $0.8 million was financed with a promissory note.  Hightech is a
distributor of motion technology products and is located in Hampshire,
England.  

    On September 1, 1994, the Electro-Optical Division in Northampton,
Massachusetts, purchased certain assets of the conventional optical periscope
business of Sperry Marine, Inc.  The purchase price was $5 million of which
$3 million was paid in cash and $2 million was financed with promissory
notes.  This acquisition resulted in $4.2 million of goodwill.  

Note 13.    Sale of Assets

    In February, 1995, the Company sold a vacant building which it had
recorded as an asset held for sale at the end of 1994, and valued at $3
million.  Included in the results of operations for the year ended December
31, 1995, and classified as other expense, is a loss of approximately $0.5
million on the sale.  

<PAGE>
<PAGE>40


Notes to Consolidated Financial Statements - continued

    In October, 1995, the Company sold its Photo Research division for
approximately $3.2 million in cash after deducting related expenses.  The
Company recorded a gain, which is included in other income, of approximately
$0.9 million on the sale.  

Note 14.     Leases 

    The Company leases certain of its facilities and equipment under various
operating and capital lease arrangements.  Such arrangements generally
include fair market value renewal and/or purchase options.  

    Rent expense for operating leases amounted to $2.5 million in 1995, $2.1
million in 1994, and $3.0 million in 1993 (excluding $.3 million and $.9
million in 1994 and 1993, respectively, which was provided for in prior
restructuring provisions).  Future minimum rental payments required under
non-cancelable operating and capital leases having a lease term in excess of
one year, together with the present value of the net minimum lease payments
at December 31, 1995, are as follows:  

                                     Operating           Capital
                                       Leases         Leases
                                   ----------    ----------
        1996                        $  2,045      $    162 
        1997                           1,507           162 
        1998                           1,227           126 
        1999                           1,138            65 
        2000                           1,134             0 
        Thereafter                     6,223             0 
                                     --------      --------
        Total minimum lease payments$ 13,274           515 
                                     ========
        Less amounts representing interest             (94)
                                                   --------
        Present value of net minimum
               lease payments                     $    421 
                                                   ========


Note 15.  Contingencies

    The Company has various lawsuits, claims, commitments and contingent
liabilities arising from the ordinary conduct of its business; however, they
are not expected to have a material adverse effect on its consolidated
financial position.  

    In doing business with the U.S. Government, the Company is subject to
routine audits and, in certain circumstances, to inquiry, review, or
investigation by the U.S. Government Agencies relating to the Company's
compliance with Government Procurement policies and practices.  The Company's
<PAGE>
<PAGE>41


Motes to Consolidated Financial Statements - continued

policy has been and continues to be to conduct its activities in compliance
with all applicable rules and regulations.  

    The Company is engaged primarily in the manufacture and sale of highly
diversified lines of commercial, industrial, and military products into both
domestic and international markets.  The Company generally does not require
collateral from its customers on the basis of ongoing reviews and evaluations
of their credit and financial condition.  

Note 16.    Pension and other employee benefit plans 

    The Company maintains three non-contributory qualified defined benefit
pension plans covering substantially all domestic employees.  Plans covering
most employees provide pension benefits based generally on the employee's
years of service and final five-year or career average compensation.  Due to
full funding, the Plans currently have no required contribution by the
Company.  

    The net periodic pension cost for the years 1995, 1994 and 1993,
including amounts related to discontinued operations, included the following
components:  

                               1995       1994       1993  
                             --------   --------   --------
Service cost                $  1,617   $  1,986   $  2,146 
Interest cost                  3,123      3,104      3,058 
Actual (return) loss on plan assets     (13,472)       158    (6,376)
Net amortization and deferral  8,396     (5,508)       (65)
                             --------   --------   --------
Net periodic pension cost (credit)     $   (336)  $   (260) $ (1,237)
                             ========   ========   ========


  The assumptions used in determining the end of year benefit obligations
included a discount rate of 6.50% and 8.25% in 1995 and 1994, respectively,
an expected investment return of 10% and compensation increases of 5%.  The
reduction in the discount rate resulted in a significant increase in the
actuarial present value of benefit obligations as of December 31, 1995. 
During 1993, the Company had pension curtailments resulting from the larger
than expected reductions in the number of employees who would otherwise be
eligible to participate in a defined benefit pension plan.  Accordingly, the
net amortization and deferral component of the credit includes a curtailment
gain of $1.3 million for 1993.  The Plan assets consist principally of cash,
common stocks, and bonds.  

<PAGE>
<PAGE>42


Notes to Consolidated Financial Statements - continued

  The Plans' funded status together with the amounts recognized in the
Company's Balance Sheet at December 31 are as follows:  

                                     1995            1994  
                                   --------        --------
Actuarial present value of                 
   benefit obligations:                                    
     Vested                       $ 40,853        $ 27,896 
                                   ========        ========
     Accumulated                    41,766          28,432 
                                   ========        ========
     Projected                      56,600          37,830 
Plan assets at fair value           58,357          46,992 
                                   --------        --------
Plan assets in excess of 
   projected benefit obligation      1,757           9,162 
Unrecognized net (gain) loss         4,931          (2,368)
Unrecognized net asset at January 1 (5,277)         (5,849)
Unrecognized prior service cost      1,798           1,928 
                                   --------        --------
Prepaid pension cost              $  3,209        $  2,873 
                                   ========        ========


  The Salaried Employees' Retirement Plan provides that in the event of a
termination of that Plan following a change in control of the Company, any
assets of the Plan remaining after provision is made for all benefits
thereunder will be employed to supplement such benefits.  

  The Company also maintains a Supplemental Retirement Income Plan
("SERP") for former key employees.  The Company has accrued an actuarially
determined liability of $3.5 million at December 31, 1995 and $2.8 million at
December 31, 1994, in anticipation of the payment of such benefits in the
future to seven former employees who were designated as eligible by the
Personnel and Compensation Committee for participation in the SERP program. 
The Company incurred a pension expense of $0.3 million in 1995 and in 1994
for the SERP.  

  The Company has a voluntary 401(k) savings and investment plan designed
to enhance the existing retirement program covering certain eligible domestic
employees.  In 1995, the Company matched 50% of each participant's
contributions, up to a maximum contribution of 2% of base salary.  Company
contributions to this plan were $534 thousand, $225 thousand, and $325
thousand in 1995, 1994, and 1993, respectively.  

Note 17.  Postretirement medical insurance benefits

  The Company maintains a postretirement medical benefits plan covering
substantially all domestic employees hired prior to January 1, 1992.  The
plan is contributory.  Retiree contributions are adjusted annually, and are
based on the difference between total cost and the employer contribution. 
The Company's contribution towards retiree medical benefits for employees
<PAGE>
<PAGE>43


Notes to Consolidated Financial Statements - continued

retiring after January 1, 1992, are capped at 1991 levels.  FAS 106 was
implemented on a delayed recognition basis, resulting in amortization of the
transition obligation amount over 20 years.  The Company currently funds the
plan as claims are paid.  

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

                                   1995       1994     1993  
                                 --------   -------- --------
        Service cost             $   122    $   133  $   136 
        Interest cost                460        435      446 
        Amortization of 
           obligation at transition  278        278      301 
                                  -------    -------  -------
        Net periodic postretirement 
           benefit cost          $   860    $   846  $   883 
                                  =======    =======  =======

    The Company's postretirement benefit plans are unfunded.  

    For measurement purposes, an 8% annual rate of increase in the per
capita cost of covered medical benefits was assumed for 1995; the rate was
assumed to decrease gradually to 5.5% for 1999 and remain at that level
thereafter.  Increasing the assumed health care cost trend rates by 1% in
each year would increase the accumulated postretirement benefit obligation as
of January 1, 1995, by $209 thousand and the aggregate of the service cost
and interest cost components of net periodic postretirement benefit cost by
$18 thousand.  

    The plan amounts recognized in the Company's Balance Sheet at
December 31, 1995 and 1994, are as follows:  

                                          1995         1994  
                                        --------     --------
Accumulated postretirement benefit obligation:  
      Retirees                         $  4,174     $  4,053 
      Fully eligible plan participants      315          257 
      Other active plan participants      2,330        1,573 
                                        --------     --------
          Total                           6,819        5,883 
Plan assets at fair value                    -            -  
                                        --------     --------
Accumulated postretirement benefit obligation 
   in excess of plan assets              (6,819)      (5,883)
Unrecognized net (gain) loss                835           58 
Unrecognized prior service cost              -            -  
Unrecognized transition obligation        4,726        5,004 
                                        --------     --------
Accrued postretirement benefit cost    $ (1,257)     $  (821)
                                        ========     ========
<PAGE>
<PAGE>44


Notes to Consolidated Financial Statements - continued

    The weighted average discount rates used in determining the accumulated
postretirement benefit obligation are 6.5% and 8.25% as of December 31, 1995,
and 1994, respectively.  

Note 18.   Foreign Operations and Geographic Segments, and Export Sales

    The impact of the Company's foreign operations upon the consolidated
financial statements are summarized as follows (in thousands):  


                                                     European 
1995            Consolidated Eliminations Domestic  Operations
----            ------------ ------------ --------- ----------
Net sales          $228,655     $ (8,505) $180,891   $ 56,269 
                   =========    ========= =========  =========
Net income from 
  operations       $  7,157     $    (19) $  7,501     $ (325)
                   =========    ========= =========  =========
Identifiable assets$126,764     $ (1,214) $ 86,740   $ 41,238 
Corporate assets     20,710           -     20,710         -  
                   ---------    --------- ---------  ---------
Total assets       $147,474     $ (1,214) $107,450     41,238 
                   =========    ========= =========
Liabilities                                            33,044 
                                                     ---------
Equity in foreign
  subsidiaries                                       $  8,194 
                                                     =========

                                                     European 
1994            Consolidated Eliminations Domestic  Operations
----            ------------ ------------ --------- ----------
Net sales          $191,771     $ (5,439) $151,288   $ 45,922 
                   =========    ========= =========  =========
Net income (loss) from
  continuing operations         $  4,051  $    255   $  5,199  $ (1,403)
                   =========    ========= =========  =========
Identifiable assets$112,315     $   (834) $ 77,112   $ 36,037 
Corporate assets     25,886           -     25,886         -  
                   ---------    --------- ---------  ---------
Total assets       $138,201     $   (834) $102,998     36,037 
                   =========    ========= =========           
Liabilities                                            27,364 
                                                     ---------
Equity in foreign
   subsidiaries                                      $  8,673 
                                                     =========

<PAGE>
<PAGE>45


Notes to Consolidated Financial Statements - continued

                                                     European 
1993            Consolidated Eliminations Domestic  Operations
----            ------------ ------------ --------- ----------
Net sales          $185,538     $ (4,113) $150,260   $ 39,391 
                   =========    ========= =========  =========
Net income (loss) from
  continuing operations         $  4,752  $    325   $  6,938  $ (2,511)
                   =========    ========= =========  =========
Identifiable assets$ 95,943     $    (72) $ 66,814   $ 29,201 
Corporate assets     38,065           -     38,065         -  
                   ---------    --------- ---------  ---------
Total assets       $134,008     $    (72) $104,879     29,201 
                   =========    ========= =========           
Liabilities                                            21,635 
                                                     ---------
Equity in foreign
  subsidiaries                                       $  7,566 
                                                     =========


  The Company's principal foreign manufacturing facilities are in France
and Germany.  The sales eliminations are transfers at prevailing wholesale
selling prices.  The Company has no significant foreign operations other than
in Europe.  

  In addition to foreign operations, export sales amounted to $31.9 million
in 1995, $32.5 million in 1994, and $27.6 million in 1993.  

  Sales to the U.S. Government or for U.S. Government end-use amounted to
$43.5 million in 1995, $39.3 million in 1994, and $39.4 million in 1993.  

Note 19.  Industry Segment Information

  The Company has operations in two industry segments:  the motion
technologies group and electro-optical instruments.  The following table
includes certain financial information relating to each of the Company s
segments in the last three fiscal years.  

                           1995          1994         1993  
                         --------     ---------    ---------
Motion Technologies Group
 Sales                 $ 130,811     $ 103,379    $ 107,177 
   Operating Income        9,798         8,521        9,673 
 Assets                   76,509        64,238       55,383 
 Capital additions         2,728         3,000        2,989 
 Depreciation              3,316         3,105        3,138 
 Backlog                  56,248        60,267       48,946 

<PAGE>
<PAGE>46


Notes to Consolidated Financial Statements - continued

Electro-Optical
Instruments
 Sales                 $  97,844     $  88,392    $  78,361 
   Operating income        6,406         3,315        3,289 
 Assets                   50,255        48,078       40,560 
 Capital additions         1,111         1,738        2,451 
 Depreciation              2,214         2,567        2,644 
 Backlog                  53,119        58,303       61,551 

Corporate 
 Operating expenses    $  (9,047)    $  (8,600)   $  (9,058)
 Assets                   20,710        25,886       38,065 
 Capital additions            13            99           30 
 Depreciation                221           225          207 

Consolidated
 Sales                 $ 228,655     $ 191,771    $ 185,538 
 Net income before taxes   7,157         3,236        3,904 
 Assets                  147,474       138,201      134,008 
 Capital additions         3,852         4,837        5,470 
 Depreciation              5,751         5,897        5,989 
 Backlog                 109,367       118,570      110,497 


  The operating income in the above table represents operating segment
income before general corporate expenses, interest, and income taxes. 
Identifiable assets by segment are those assets used exclusively in the
operation of that industry segment.  

  Effective January 1, 1995, the Company began reporting the operating
results of its French instruments business in the Electro-Optical Instruments
segment.  Previously, the business had been part of the Motion Technologies
Group.  Accordingly, the 1994 and 1993 segment information has been restated
to reflect this change.  

  Corporate expenses include interest expense, interest income, and
general and administrative expenses, and are not allocated to respective
segments.  Corporate assets consist principally of cash and investments, net
assets held for disposition, equity investments, and intangible pension
assets.  

<PAGE>
<PAGE>47


                          EXHIBIT INDEX


                                                         Page in this
Exhibit No.           Description of Exhibit              Form 10-K  


   3(a)   Restated Certificate of Incorporation,             N/A
      as amended, incorporated by reference to 
      Exhibit 3(a) of the Form SE filed on
      April 2, 1990.  

   3(b)   By-Laws, as amended.                               N/A

   4(a)   Debenture Purchase Agreement dated as of           N/A
      July 30, 1982, with respect to 10-1/2% 
      Convertible Subordinated Debentures Due 
      1996 incorporated by reference to 
      Exhibit 4 to the Quarterly Report on 
      Form 10-Q of the Company for the quarter 
      ended June 30, 1982.  

   4(b)   Indenture dated as of May 1, 1984, with            N/A
      respect to 8-3/4% Convertible Subordinated 
      Debentures Due 2009 incorporated by 
      reference to Exhibit 4 to Registration 
      Statement on Form S-3 (2-90655).  

   4(c)   Rights Agreement dated as of December 20,          N/A
      1988, as amended and restated as of 
      March 27, 1990, between the Company and 
      the First National Bank of Boston, as 
      Rights Agent, incorporated by reference 
      to Exhibit 4(d) of the Form SE filed 
      on April 2, 1990.  

   4(d)   Stock purchase agreement dated March 27, 1990,     N/A
      with Annex II, Registration Rights, with 
      respect to the issue of Series D Convertible 
      Preferred Stock, par value $1.00, of the 
      Company, incorporated by reference to 
      Exhibit 4(e) of the Form SE filed on 
      April 2, 1990.  

  10(a)   Third Restated and Amended Letter of Credit        N/A
      Facility Agreement dated January 19, 1996, 
      among Kollmorgen Corporation, The First 
      National Bank of Boston, Certain Other 
      Financial Institutions Listed on Schedule 1, 
      and The First National Bank of Boston, 
      as Agent, incorporated by reference to 
      Exhibit 10 of the Form SE filed on or about 
      February 11, 1996.  

<PAGE>
<PAGE>48


                                                         Page in this
Exhibit No.           Description of Exhibit              Form 10-K  


  10(b)   Kollmorgen Stock Option Plan, as amended,          N/A
      incorporated by reference to Exhibit A of 
      the Company's Proxy Statement dated 
      March 24, 1987, for the Annual Meeting of 
      Shareholders held on April 22, 1987.  

  10(c)   Kollmorgen 1991 Long Term Incentive Plan,          N/A
      incorporated by reference to Exhibit A of 
      the Company's Proxy Statement dated 
      April 29, 1991, for the Annual Meeting of 
      Shareholders held on May 23, 1991.  

  10(d)   Form of 1988 Non-Qualified Stock Option            N/A
      Agreement for James A. Eder.  Said agreement 
      is incorporated by reference to Exhibit 10(g) 
      to the Annual Report on Form 10-K of the 
      Company for the year ended December 31, 1988. 

  10(e)   Form of 1990 Non-Qualified Stock Option            N/A
      Agreement for James A. Eder.  Said agreement 
      is incorporated by reference to Exhibit 10(h) 
      to the Annual Report on Form 10-K of the 
      Company for the year ended December 31, 1991.  

  10(f)   Form of 1991, 1992, and 1993 Non-Qualified         N/A
      Stock Option Agreement under the Long-Term 
      Incentive Plan and/or Kollmorgen Stock Option 
      Plan for Gideon Argov, Robert J. Cobuzzi, 
      James A. Eder and Mark E. Petty.  Each 
      agreement is identical except for the 
      number of shares and the date of grant.  Said 
      agreement is incorporated by reference to 
      Exhibit 10(j) to the Annual Report on 
      Form 10-K of the Company for the year ended 
      December 31, 1991.  

  10(g)   Form of 1995 Incentive Stock Option                51
      Agreement under the Long-Term Incentive Plan 
      for Gideon Argov, Robert J. Cobuzzi, and 
      Mark E. Petty.  Each agreement is identical 
      except for the number of shares.  

<PAGE>
<PAGE>49


                                                         Page in this
Exhibit No.           Description of Exhibit              Form 10-K  


  10(h)   Kollmorgen 1992 Stock Ownership Plan for           N/A
      Non-Employee Directors incorporated by 
      reference to Exhibit A of the Company's 
      Proxy Statement dated April 6, 1992, for 
      the Annual Meeting of Shareholders held 
      on May 13, 1992.  

  10(i)   Form of 1992 Non-Qualified Stock Option            N/A
      Agreement between each non-employee 
      director and the Company pursuant to the 
      Kollmorgen 1992 Stock Ownership Plan for 
      Non-Employee Directors incorporated by 
      reference to Exhibit 10(i) to the 
      Annual Report on Form 10-K of the Company 
      for the year ended December 31, 1992.  

  10(j)   Kollmorgen 1996 Corporate Incentive Plan           60
      for Corporate Officers and other key 
      corporate employees.  

  10(k)   Employment Agreement dated May 10, 1991,           N/A
      as amended, for James A. Eder.  Said 
      Agreement is incorporated by reference 
      to Exhibit 10(c) to the Annual Report on 
      Form 10-K of the Company for the year 
      ended December 31, 1991.  

  10(l)   Letter employment agreement dated May 21,          N/A
      1991, for Gideon Argov.  Said Agreement is 
      incorporated by reference to Exhibit 10(c) 
      to the Annual Report on Form 10-K of the 
      Company for the year ended December 31, 1991.  

  10(m)   Letter employment agreement dated July 1,          N/A
      1991, for Robert J. Cobuzzi.  Said Agreement 
      is incorporated by reference to Exhibit 10(c) 
      to the Annual Report on Form 10-K of the 
      Company for the year ended December 31, 1991.  

  10(n)   Form of severance agreement for each of the        N/A
      following persons:  Allan M. Doyle, Jr. and 
      George P. Stephan.  Said agreement is 
      incorporated by reference to Exhibit 10(i) 
      to the Annual Report on Form 10-K of the 
      Company for the year ended December 31, 1989.  

<PAGE>
<PAGE>50


                                                         Page in this
Exhibit No.           Description of Exhibit              Form 10-K  


  10(o)   Form of Indemnification Agreement for each         N/A
      of the Company's executive officers, directors 
      and director emeritus.  Each agreement is 
      identical to this exhibit except for the name 
      and title of each individual.  Said agreement 
      is incorporated by reference to Exhibit 10(f) 
      to the Annual Report on Form 10-K of the 
      Company for the year ended December 31, 1987.  

  10(p)   Description of Post-Retirement Arrangement for     N/A
      Non-Employee Directors.  Said agreement is 
      incorporated by reference to Exhibit 10(i) to 
      the Annual Report on Form 10-K of the Company 
      for the year ended December 31, 1988.  

  10(q)   Participation Agreement between Allan M.           N/A
      Doyle, Jr. and the Corporation with respect 
      to Mr. Doyle's service as a director of 
      Millitech Corporation incorporated by 
      reference to Exhibit 10(q) to the Annual 
      Report on Form 10-K of the Company for the 
      year ended December 31, 1992.  

  10(r)   Supplemental Retirement Income Plan for            N/A
      key executives incorporated by reference 
      to Exhibit 10(n) to the Annual Report on 
      Form 10-K of the Company for the year 
      ended December 31, 1990.  

   11 Calculations of Earnings Per Share                 61

   21 Subsidiaries of the Company                        62

   23 Consent of Independent Accountants -               63
      Coopers & Lybrand L.L.P.

   24 Powers of Attorney                                 64

   27 Financial Data Schedule                            71