CROMPTON & KNOWLES CORPORATION
                  EMPLOYEE STOCK OWNERSHIP PLAN
                  NOTES TO FINANCIAL STATEMENTS
                    DECEMBER 31, 1995 and 1994    


1.   Basis of Presentation
The accompanying financial statements have been prepared on an
accrual basis.  Securities transactions are recorded on the trade
date, and dividend income is recorded on the ex-dividend date.

2.   Plan Description
The Employee Stock Purchase and Savings Plan was adopted by the
Board of Directors of Crompton & Knowles Corporation (the
"Corporation") on January 27, 1976.  Effective July 1, 1989 the
Board of Directors amended the Plan to convert it into an
Employee Stock Ownership Plan (the "Plan").  The Plan permits an
eligible employee to elect to participate by authorizing a
withholding of an amount equal to 1%, 2%, 3%, 4%, 5% or 6% of
compensation as the basic contribution to the Plan. 
Contributions by the Corporation to the Plan were made at an
amount equal to 66 2/3% of each participating employee's basic
employee contribution to the Plan.

Funds contributed under the Plan are held in a trust fund (the
"Trust") and were invested in five investment funds, the Crompton
& Knowles Stock Fund ("C&K Stock Fund"), the Fixed Income Fund,
the Equity Fund, the Advisers Fund, and the Mortgage Fund.

The C&K Stock Fund is a fund invested entirely in common stock of
Crompton & Knowles Corporation, and contributions by the
Corporation to the Plan are invested in this fund.  The market
value of the common stock is based on quotations from the New
York Stock Exchange.

The Fixed Income Fund is a fund invested under an agreement with
Hartford Life Insurance Company (the "Hartford") pursuant to
which the Hartford guarantees the repayment of principal and the
payment of interest on all amounts on deposit at an effective
annual rate of interest of 6.5% on, and after January 1, 1995,
(6.885% for the period January 1, 1994 through December 31, 1994,
and 7.25% for the period January 1, 1993 through December 31,
1993).

The value of the Fixed Income Fund is based on contributions
invested and reinvested, interest earned, less withdrawals and
distributions.

The Equity Fund is a fund invested under the terms of a group
annuity contract with the Hartford in the Separate Account A,
which is a pooled separate account maintained by the Hartford
with respect to a portion of its assets, in connection with the
contract and other similar contracts issued by the Hartford. 
This fund invests primarily in equity securities such as common
stocks and securities convertible into common stock.  The Equity
Fund is valued based on a unit value as determined by the fund
manager as follows:

                                 12/31/95        12/31/94 
           Unit Value            $126.392         $91.101
           Total Units Held    25,293.156      26,210.454

The related cost of the Equity Fund at December 31, 1995 was
$2,245,895, and $2,060,686 at December 31, 1994.

The Advisers Fund is a fund invested under the terms of a group
annuity contract with the Hartford in the Separate Account V
which is a pooled separate account maintained by the Hartford
with respect to a portion of its assets, in connection with the
contract and other similar contracts issued by the Hartford. 
Assets in the Separate Account V are invested in the HVA Advisers
Fund, Inc.  The Hartford Investment Management Company is an
investment advisor to the fund, and Wellington Management is sub-advisor to
the fund.  This fund invests in common stocks, debt
securities, and money market instruments.  The Advisers Fund is
valued based on a unit of value as determined by the fund manager
as follows:

                                12/31/95        12/31/94 
         Unit Value              $1.708          $1.338
         Total Units Held      378,784.417     484,397.471

The related cost of the Advisers Fund at December 31, 1995 was
$531,228, and $603,983 at December 31, 1994.

The Mortgage Fund is a fund invested under the terms of a group
annuity contract with the Hartford in the Separate Account G
which is a pooled separate account maintained by the Hartford
with respect to a portion of its assets, in connection with the
contract and other similar contracts issued by the Hartford.  The
assets in the Separate Account G are invested solely in the
Hartford GNMA/Mortgage Securities Fund. Inc.  The Hartford
Investment Management Company is an investment advisor to the
fund.  This fund invests in mortgage related securities,
including securities issued by the Government National Mortgage
Association.  The Mortgage Fund is valued based on a unit value
as determined by the fund manager as follows:

                                   12/31/95       12/31/94
           Unit Value               $30.764        $26.623
           Total Units Held      10,065.191      8,936.394

The related cost of the Mortgage Fund at December 31, 1995 was
$269,734, and $233,084 at December 31, 1994.

Assets in any of the five funds may be invested in short term
government or other securities pending permanent investment. 
Earnings on each fund will be reinvested in that fund.

Each participant is permitted to elect to have his basic
contribution invested in any of the five funds in 10% increments. 
As of December 31, 1995 and 1994 the number of participants by
fund were as follows:

                              1995           1994      
     Stock Fund               1,541          1,293
     Fixed Income Fund          994            867
     Equity Fund                503            360
     Advisers Fund              225            128
     Mortgage Fund              142            104

As of the first day of any month, but not more frequently than
once in any six-month period, a participant may elect to transfer
any part of the value of his basic employee account or his
supplemental employee account, which is invested in one of the
funds, to any of the other funds except the Fixed Income Fund and
the Mortgage Fund.  Any such transfer must be in increments of 5%
of the amount invested in the fund  from which the transfer is
being made.

3.   Income Taxes
The Internal Revenue Service has issued a determination letter to
the effect that the Plan as amended through 1994 is a qualified
plan under Section 401(a) of the Internal Revenue Code of 1954
(the Code), as amended.

The Board of Directors of the Corporation amended the Plan,
effective as of July 1, 1989, to convert it to an employee stock
ownership plan.  The amendments to the Plan included both changes
to convert the Plan to an employee stock ownership plan and other
changes required or permitted by the Code.  Management and
counsel believe that these amendments will not effect the
qualified status of the Plan.

It is believed that, in general, the federal income tax
consequences of participation in the Plan under present law will
be as follows:

Participants are not subject to federal income tax on employer
contributions made under the Plan or on income earned by the
Trust until amounts are withdrawn or distributed.  Any withdrawal
from the Plan will be tax free to the extent of the participant's
contributions to the Plan prior to 1987.  If the amount exceeds
such pre-1987 contributions of the participant, the excess will
be treated as being in part a tax free return of the
participant's contribution made to the Plan after 1986 and in
part as a taxable distribution subject to federal income tax at
ordinary rates based on the ratio at the time of withdrawal of
the participant's total contributions after 1986 to the total
value of the participant's accounts.  If the withdrawal or
distribution qualifies as a lump sum distribution, amounts
attributable to participation in a predecessor plan prior to 1974
may qualify for capital gains treatment (phased out over the
years 1987-1991), and the ordinary income portion attributable to
post-1973 participation may be taxed under a special five-year
income averaging provision if the participant is over age 59 1/2
(or a special ten-year income averaging provision if the
participant turned 50 before January 1, 1986).  If a distribution
includes shares of common stock of Crompton & Knowles
Corporation, taxation of any appreciation in the value of such
shares over their cost to the Trust will be deferred until the
later sale or exchange of such shares.  Taxable withdrawals or
distributions after January 1, 1987, in addition to being taxed
as ordinary income will be subject to an additional 10% income
tax unless the withdrawal or distribution is on account of the
death or disability of the participant, is made after he turns
age 59 1/2 or retires after age 55, or is used for certain
deductible medical expenses.  A participant who receives total
distributions from all retirement plans in a single year in
excess of $150,000 ($144,551 in some cases) may be subject to an
excise tax of 15% of the excess amount.

The foregoing is only a brief summary of the tax consequences of
participation in the Plan.  Each participant should consult his
own personal advisor to review the tax consequences of making any
elections under the Plan and to determine his own tax liability.

4.   Participant Vesting
A participant in the Plan is fully vested in all of his accounts
under the Plan upon his death, retirement, disability, or
attainment of age 65 or upon change in control of the
Corporation.  A participant whose employment terminates for any
reason before his death or retirement is entitled to receive l00%
of his own contributions plus earnings thereon and will receive
his employer contribution account plus earnings thereon based
upon a schedule under which the account is 100% vested after five
years of participation in the Plan, or after completion of five
years of service with the Corporation.  The non-vested portion of
the employer contribution account will be forfeited under certain
circumstances and held to reduce future contributions to be made
by the Corporation to the Plan.

5.  Investments
A.  Unrealized appreciation in Crompton & Knowles Corporation
common stock:

                       12/31/95   12/31/94    12/31/93 

Unrealized
apprec. at the
beginning of
the year            $19,773,208  $31,807,154  $36,989,039

Unrealized
apprec. at the
end of the year      12,319,023   19,773,208   31,807,154

Increase/(decrease)
in unrealized
appreciation        $(7,454,185) $(12,033,946) $(5,181,885)

B.   Net purchases (sales) of shares of Crompton & Knowles
Corporation common stock consist of the following:

                       Contributions                   Net
                            And        Sales and    Purchases
                         Purchases    Withdrawals    (Sales)  


     1995
     No. of shares     283,757          151,659         132,098
     Cost amount    $4,307,961       $1,039,233      $3,268,728

     1994
     No. of shares     145,724           86,429          59,295
     Cost amount    $2,446,717          485,144      $1,961,573
 
     1993
     No. of shares     131,841          269,060       (137,219)
     Cost amount    $2,924,833       $1,275,893      $1,648,940


    C. Gain on sale of investments and withdrawals of Crompton &  
       Knowles Common Stock:
                   1995           1994         1993  
     Aggregate
     proceeds   $2,336,353    $1,727,888    $5,890,730

     Aggregate cost
    (FIFO)      1,039,233        485,144     1,275,893

     Net gain  $1,297,120     $1,242,744     $4,614,837


6.  Plan Expenses
Significant costs of Plan administration, which are payable from
the Trust or by the Corporation, are generally paid by the
Corporation.