Crompton & Knowles Corporation 

Crompton & Knowles is a worldwide producer and marketer of specialty chemicals
and equipment. The company's 48 million shares of common stock outstanding are
traded on the New York Stock Exchange under the symbol CNK. Dividends on the
stock have been paid for 252 consecutive quarters and have increased in each of
the last 19 years. Crompton & Knowles has gained leadership positions in its
chosen markets by providing quality products, technical service and performance
know-how to solve problems and add value to customers' products. The company's
businesses are grouped into two segments:

Specialty Chemicals

Crompton & Knowles is a major producer and marketer of dyes worldwide and a
major producer and marketer of specialty food and pharmaceutical ingredients
in North America.

Specialty Process Equipment and Controls

The company is a recognized world leader in extrusion systems, industrial blow
molding equipment and related electronic controls for the plastics industry.

Crompton & Knowles is a member of the Chemical Manufacturers Association and a
signatory of the Association's Responsible Care Program. The company is
committed to a continuous good faith effort to improve performance in health,
safety and environmental quality.

Financial Highlights
(In thousands of dollars, except per share data)
                                      1995            1994        %Change
Net sales                           $665,513        $589,757        13
Earnings before income taxes        $ 64,091        $ 79,969       (20)
Income taxes                          23,598          29,053       (19)
Net earnings                        $ 40,493        $ 50,916       (20)
Per common share:
     Net earnings                  $    .84        $   1.00        (16)
     Dividends                     $    .52        $    .46         13
     Book value                    $   5.00        $   4.60          9
Return on average common equity        17.4%           21.1% 
Common stock trading range:
     High                                20           24 1/8   
     Low                                 12           13 7/8   
Average shares outstanding
 (in thousands)                       48,448           51,152  
Shareholders of record                 4,700            4,800

(Bar Graph)
Sales Continuing Operations
(In millions of dollars)

(Bar Graph)
Earnings Per Share 
Continuing Operations

(Bar Graph)
Return on Average Common Equity 
Continuing Operations


Fellow shareholders:  Crompton & Knowles experienced significant change in 1995
with strong earnings gains in our specialty process equipment and controls
segment more than offset by lower earnings in our specialty chemicals business
as the dyes industry undergoes a worldwide restructuring.
     While total company sales increased to record levels, rising 13 percent to
$665.5 million, net earnings declined 20 percent to $40.5 million and earnings
per share declined 16 percent to 84 cents per share. 
     The decline in earnings is obviously a disappointment to all of us. We are
confident, however, that we have taken actions to become more efficient, to
reinforce our commitment to our customers and to focus our businesses on areas
of competitive strength. We are strengthening the foundations of our business
which will enable us to meet our long-term strategic goals and to enhance
shareholder value.
     In our specialty chemicals business segment, sales slipped two percent to
$385.6 million and operating profit declined 30 percent to $42.6 million. The
primary reason for the lower sales and operating profit was weak demand for dyes
in major markets around the world, resulting in excess capacity and competitive
pricing. These conditions were further exacerbated by decisions of key
competitors to realign their dyes operations and by producers in the Far East to
become more aggressive participants in international markets.
     We had anticipated that the worldwide dyes industry would undergo
restructuring. However, we were unable to avoid being impacted by the price
pressures and competitive maneuvering during 1995. Over the long-term we are
confident that Crompton & Knowles will benefit from the changes and prosper as
the industry stabilizes.
     We took a number of initiatives during the year to improve our position.
In our domestic operations we reduced costs by streamlining operations. We
improved our effectiveness by consolidating dyes management at a single location
in Charlotte, North Carolina, by broadening our sales and technical service
capabilities in key market niches and by consolidating major distribution
activities at Greenville, South Carolina. In 1995, we also completed
implementation of a fully integrated computer system for sales, technical
service and distribution.
     As a result, we now deliver 95 percent of our orders within 48 hours and
have gained market share in several key markets while lowering our inventory
requirements. For instance, even as total domestic apparel dyes sales continued
to decline during the year, we posted volume increases in specialized areas of
strength such as dyes for nylon activewear and fleecewear. Similarly, our sales
to the broadloom carpet industry increased during the year, reinforcing our
market position. 
     In Europe, the effects of the industry-wide dyes consolidation also
impacted results. While sales volume increased, operating profit decreased from
prior-year levels as a result of competitive pricing and currency effects. A
program to increase sales of dyes directly to key customers, rather than through
dealers, is paying dividends in terms of volume growth but, more importantly,
direct sales will enable us to offer our customers more value-added services to
help solve their problems through our technical and applications expertise.
     As 1995 came to a close we reached a strategic crossroads with our
specialty ingredients business. Sales in the business increased five percent to
$101.6 million, and we were encouraged by the gains resulting from our emphasis
on producing fully integrated ingredient systems for the food industry. However,
we also noted that the prices being paid for specialty ingredient businesses
were high relative to prices we were prepared to pay. Therefore, in
January 1996 we retained Salomon Brothers Inc. to assist in exploring
strategic alternatives to maximize shareholder value in the business. This is
a sound business with excellent capabilities and a line-up of strong new
products and we expect to have a resolution of our strategy for it within the
first half of 1996.
     The outstanding performance of our specialty process equipment and controls
segment continued from the prior year as sales rose 43 percent to $279.9 million
and operating profit increased 29 percent to $40.2 million. The performance
gains resulted from internal growth programs as well as from acquisitions. As
the leading North American supplier of specialized plastics extrusion
systems, cast film and precision coating equipment, we have set the standard
for efficient, cost effective designs to meet every customer need. This
capability, combined with recognized quality and problem-solving ability,
also enabled us to increase our international sales for this equipment by
48 percent in 1995 to $71 million.
     To further reinforce our international participation in this industry, in
early 1995 we acquired the extrusion business of McNeil Akron Repiquet S.a.r.l.
in France. In January, 1996 we also acquired ER-WE-PA, a leading producer of
extrusion coating, cast film and plastics extrusion equipment based in Germany.
These operations add approximately $60 million to our international sales.
     Retiring during 1995 was Warren A. Law, Ph.D., a member of our Board of
Directors for more than 20 years. His sharpness of mind and keen strategic sense
played a vital role in shaping Crompton & Knowles. We sincerely thank Dr. Law
for his contributions and we wish him well in his future activities.
     The bottom line is that the major worldwide changes in the dyes industry
during 1995 significantly impacted our specialty chemicals performance. The
double-digit gains in our equipment business did provide a partial offset, but
not enough, and our performance was less than expected. Yet, we are confident
that we will continue to outperform our competitors in our chosen businesses and
that our long-term objective of increasing shareholder value will be met.
     We are confident because our management thinking is guided by three key
strategic principles: 1) produce and market products for niche markets where our
company holds leadership positions, 2) add value for customers by providing
experience and technical service capabilities resulting in effective problem
solving and, 3) produce and market products which play a key role in improving
our customers' process, yield and quality. 
     Our experience tells us that a strategy of service, technology and
performance has and will continue to pay off for Crompton & Knowles and its
shareholders. The Board of Directors, management and every one of our employees
are conscientiously working to reinforce this strategy. We thank you for your
support and we will keep you informed.

Respectfully yours,
Vincent A. Calarco
Chairman, President & 
Chief Executive Officer
March 1, 1996

Sales of the specialty chemical segment were $385.6 million in 1995, two percent
below sales of $393.6 million the prior year. Operating profit of $42.6 million
declined 30 percent from the $60.8 million achieved in 1994. 

     These results primarily reflect the continuing weakness in worldwide demand
for dyes in key markets, which has created an overcapacity situation. These
conditions, combined with increased supply of dyes from the Far East, have
depressed dyes prices significantly. In addition, during 1995 several major
international dyes producers undertook consolidations and restructuring of their
businesses, which further destabilized the marketplace.
     High cotton prices and the weak retail environment reduced demand for
direct and reactive dyes for apparel, with declines also posted in the company's
hosiery, automotive, paper and leather markets. The company is confident that
its sales declines in these market segments were less than or equal to declines
experienced by its major competitors.
     The company's dyes business was unable to completely overcome the impact
of the industry-wide dislocations created by the weak demand and competitive
restructurings. As a result, worldwide dyes sales declined four percent to
$284.0 million, with a more significant decline in operating profit. In response
management took actions to reinforce and strengthen its operations, sales and
service capabilities.
     At the heart of this effort has been the company's longstanding commitment
to technical service and customer support. The completion of a $3 million
investment in a computerized order input, production, product tracking and
distribution system has enabled the company to achieve dramatic gains in
delivery times. With the new system, 95 percent of orders are delivered
within 48 hours and performance is still improving. Simultaneously, the new
system is enabling the company to reduce inventory levels of raw materials,
work in process and finished goods. To further enhance customer satisfaction,
product technology and technical support were realigned and selectively
augmented to coordinate more closely with sales activities, to speed new
product development and to focus on solving customer problems.
     In response to market opportunities and in keeping with its strategy of
offering a broad product line serving specialized niches in the dyes industry,
the company introduced new products and organized a new team focused on
exploiting growth opportunities in the continuous dyeing segment. New products
included specialized blue and yellow disperse dyes for polyester used in
automotive applications where high lightfastness is required. For cotton using
direct dyes, a new heavy black dye combined with a new fixative offers unique
technology which delivers color fastness equal to more costly alternatives
without their environmental concerns.
     The result of these customer-driven actions was that Crompton & Knowles
gained market share in certain key markets, while maintaining its competitive
position in other markets. A notable area of strength was the broadloom carpet
industry, where the company is a recognized leader both in products and dyeing
process technology. In the apparel industry, which had the most significant
declines, the company's strength in dyes for synthetic fibers such as nylon,
polyester and acetates enabled it to increase sales in applications such as
activewear and fleecewear. The company was also able to post gains in the
industrial sector, supplying unique dyes for can coating applications and
ink-jet computer printers.
     Just as the company reinforced its focus on value-added service for the
customer, it also took action to ensure its position as North America's largest
and most cost-efficient producer of dyes by implementing cost reductions. This
was achieved through ongoing debottlenecking of production facilities; the
relocation of senior division management into a single location in Charlotte,
North Carolina; the consolidation of a distribution center in Charlotte with a
more efficient facility in Greenville, South Carolina; a net decrease in
personnel and renegotiation of certain supply and service agreements. During the
year the company also completed the construction of waste treatment facilities
at its dyes production center in Lowell, North Carolina. The new facilities will
enable the company to continue to meet local and national standards of
environmental responsibility while remaining a cost-effective producer.
     International dyes operations also experienced competitive pricing
resulting from low demand for apparel as well as effects from the industry's
restructuring. In Europe, unit volume and sales revenues increased, but
profitability declined due in large part to pricing pressures as well as
exchange rate fluctuations. In December, as part of its strategy to bring
value-added technical service directly to key customers, Crompton & Knowles
acquired a key German distributor. To broaden its market participation
throughout the continent, the company introduced a line of disperse dyes
for polyester and acetates. In 1996, a further broadening of the product line
will include the marketing of reactive dyes for cotton. The company's primary
dyes offerings in Europe have been acid and pre-metallized dyes for wool
and nylon fibers. Rationalization of production between the company's two
European manufacturing facilities, in Belgium and France, combined with staff
reductions, achieved significant cost reductions in 1995, and should improve
operating results in 1996 and future years. 

Photo Captions:
Textiles for automotive seating demand specialized dyes with high lightfastness.
Apparel, hosiery and leather are important markets for dyes produced by Crompton
& Knowles. 
Broadloom carpet producers such as Carriage Industries, Inc. of Calhoun,
Georgia, depend on Crompton & Knowles for consistent performance, technical
service and customer support. Crompton's Nylanthrene liquid acid dyes for
nylon are used on automated equipment capable of producing broadloom carpet
at speeds of 60 to 200 feet per minute. Approximately 90 percent of broadloom
carpet is domestically made.
Continuous dyeing, used in the production of linens, sheets and towels, is a
segment of increased focus for Crompton & Knowles.

     During 1995 Crompton & Knowles' specialty ingredients sales rose five
percent to $101.6 million, deriving gains from the unit's three core areas of
expertise - flavored ingredients and seasonings, food systems including
sweeteners and high value pharmaceutical ingredients.
     This unique combination of product offerings and technical development
capabilities has enabled Crompton & Knowles to establish strong niche positions
in its chosen market segments.
     In the flavored ingredients and seasonings markets, the development of
proprietary reaction compound flavors has enabled the company to market unique
customized savory flavors used to duplicate tastes produced by home cooking.
These include sauces, gravies, condiments, side dishes and soups supplied to
food service companies and national brand producers of consumer convenience
foods. Newly-introduced rotisserie and grilled flavors for convenience foods and
prepared meats gained acceptance during 1995.
     The company's flavored seasonings business continued its gains in 1995 as
a result of the growth of the convenience food and snack markets, as well as the
growing popularity of spicy ethnic foods among consumers. Highly differentiated
flavored seasonings developed to meet very specific taste profiles enhance the
taste of a diverse line of products such as tortilla chips, pretzels, salad
dressings, frozen side dishes and microwaveable entrees. 
     In the food systems segment of the market, Crompton & Knowles' position as
the leading U.S. supplier of specialty sweeteners, including food grade molasses
for bakery, confectionery, cereal and convenience foods, has enabled it to
achieve a record of performance and customer service unmatched in the industry.
Specialized syrups, designed to meet customer needs by combining sweeteners with
flavored ingredients, reflected sales increases during 1995, especially with
producers of breakfast cereals seeking unique coatings and tastes.
     The technological strength of the company's food ingredients business was
demonstrated in late 1994 with the introduction of a functional filling system
that creates low-calorie and low-fat or no-fat fillings with the texture and
taste of full-fat systems. Called Miracle Middles, this new technology combines
the company's core competencies in flavors, colors sweeteners and seasonings
into one product line. 
     Miracle Middles gained growing interest in 1995 in the bakery, cereal,
snack and confectionery markets due to its properties of low water activity as
well as high heat stability. In fact, it can be customized to meet specific food
industry needs across a range of applications and manufacturing configurations.
     Growth also continued in the company's pharmaceutical ingredients business
which includes products such as coatings, colors, excipients and flavors used in
prescription and over-the-counter drugs. Crompton & Knowles' agreement to market
in the United States pharmaceutical grade lactose produced by a major European
supplier, while that company in turn sells Crompton & Knowles' proprietary
calcium coatings products in Europe and Asia, will benefit both companies.
Products on both sides of the reciprocal agreement have been well received and
met with increasing sales success. 
     To reinforce the growth of its pharmaceutical business, late in 1995 the
company brought onstream a multimillion dollar facility in Vineland, New Jersey.
A state-of-the-art manufacturing plant, Vineland meets all Pharmaceutical
General Management Practices codes, and resulted in reduced costs and the
closing of two less efficient facilities.
     In January 1996, the company retained Salomon Brothers Inc. to assist in
exploring strategic alternatives to maximize shareholder value in the specialty
ingredients business. A resolution is expected by mid-year 1996.

Photo Captions:
Specialized capabilities in savory flavors have enabled Crompton & Knowles to
grow its food ingredients business.
Miracle Middles, a unique no-fat filling with low water activity, was developed
by Crompton & Knowles and can be customized for use in a variety of foods. 
Technically sophisticated reaction flavors developed and marketed by Crompton &
Knowles are produced in automated reactors to assure high volume
reproducibility. These reaction flavors are marketed to major national
food companies for use in high value consumer entrees, fast food and food
service establishments. The pharmaceuticals industry is an important market
for Crompton's specialized coatings, excipients, colors and flavors.

Specialty process equipment and controls segment results were outstanding in
1995. Sales increased 43 percent to a record $279.9 million compared with $196.2
million in 1994. Operating profit also increased, rising 29 percent to $40.2
million from $31.2 million in the prior year.

     The strong growth was achieved through internal developments as well as
through acquisitions, both in North America and internationally. Gains were made
in all major market segments, with particularly notable strength in sales of
systems for production of plastic sheet for packaging, rubber extrusion systems
and industrial blow molding systems.
     The company's leading North American position was reinforced in existing
markets such as blown film, profiles, recycle/reclaim, wire and cable, fiber
systems, cast film, precision coating and medical tubing. Access to new markets,
domestically and overseas, was achieved with the strategic acquisition of three
operations. The largest of these was the January 1996 acquisition of ER-WE- PA,
a leading manufacturer of extrusion coating, cast film and plastics extrusion
equipment based in Erkrath, Germany. With annual revenues of $50 million,
ER-WE-PA significantly broadens the company's participation in the international
arena and reinforces the acquisition of McNeil Akron Repiquet S.a.r.l. in
January 1995. Repiquet has a production facility in Dannemarie, France and
makes and markets extrusion systems for pipe, profile, sheet and elastomer
applications.
     International sales of specialty process equipment and controls accounted
for 25 percent of total segment sales during 1995. The two European acquisitions
ensure the company's ability to provide essential customer service and technical
support necessary for the success of the business.
     The third acquisition completed in March 1995 was Killion Extruders, Inc.,
which broadened the company's capabilities in extrusion technology for specialty
laboratory equipment. Killion's complete range of precision laboratory and
medium sized production equipment is recognized for quality and
dependability, thereby blending well with Crompton & Knowles' existing
equipment operations which are broadly accepted as the standard setters for
the industry.
     Among the important new equipment offerings introduced to the market by
Crompton & Knowles during 1995 was a fiber optic cable system. Able to produce
tubing for fiber optic cable at speeds of up to 750 feet per minute, the line
incorporates all equipment from a payoff system for feeding optic fiber to the
system, to tube extrusion, to cooling systems and take-up equipment, all managed
by a single computerized control center tracking all production functions. 
     With the increasing complexity of extrusion and plastics processing
equipment, the company also introduced an advanced technology control system
based on the Windows computer operating system. Called EPIC III, the touch
screen control system includes data exchange, networking and multitasking
capabilities and can be expanded for future process control needs. Electronic
and computer control systems now account for approximately 13 percent of the
segment's sales and are expected to continue to increase. 
     As one of the world's leading producers and marketers of plastics extrusion
systems, Crompton & Knowles has also become one of the leading suppliers of
aftermarket systems and services, providing engineering, operating, maintenance,
parts and systems upgrade support. Technicians based in the United States,
England, France and Hong Kong provide around-the-clock problem-solving.
Aftermarket services accounted for nearly 15 percent of the segment's revenues
in 1995.
     The segment's equipment order backlog at the end of 1995 was $72 million. 

Photo Captions:
Snowboards made of colorful impact-resistant plastics are among the newer
applications of Crompton & Knowles' extrusion technology.
Childrens' playthings are made with the company's industrial blow molding
systems.
Medical tubing is produced on specialized extruders by Crompton & Knowles. 
Advanced polymer processing is made possible by computer-controlled twin screw
extruders designed and marketed  by Crompton & Knowles. Customers around the
world requiring polymer alloying, grafting and additive dispersion capabilities
are able to achieve output of up to three tons per hour using this
state-of-the-art equipment.

Financial Contents
Management's Discussion and Analysis of Financial Condition
  and Results of Operations                                        11
Consolidated Financial Statements                                  14
Notes To Consolidated Financial Statements                         18
Responsibility For Financial Statements                            25
Independent Auditors' Report                                       25
Eleven Year Selected Financial Data                                26
Board of Directors                                                 28
Corporate Officers and Operating Management         Inside Back Cover   
Corporate Data                                      Inside Back Cover

Management's Discussion and Analysis of Financial Condition and Results of
Operations

Financial Condition and Liquidity

Acquisitions 
     In January 1995, the Company acquired the business and certain assets of
McNeil Akron Repiquet S.a.r.l. in France. In March 1995, the Company acquired
Killion Extruders, Inc. Costs of these acquisitions were accounted for based on
the purchase method and, accordingly, the results of operations of these
businesses have been included in the Consolidated Statements of Earnings since
their dates of acquisition.

Liquidity and Capital Resources
     The December 30, 1995 working capital balance of $126.2 million increased
$4.6 million from the December 31, 1994 balance of $121.6 million, while the
current ratio declined to 1.8 from 1.9 at the end of 1994. The decline in the
current ratio is primarily attributable to the increase in notes payable. Days
sales in receivables increased slightly to 55 days in 1995 from 54 days in 1994.
Inventory turnover averaged 2.8 in 1995, compared to 3.0 in 1994.
     Cash flow from operating activities of $26.7 million increased $4.9 million
from $21.8 million in 1994 and was used with cash reserves and increased
borrowings to finance acquisitions, fund capital expenditures, pay cash
dividends and repurchase 272,800 shares of the Company's outstanding common
shares. Dividends paid in 1995 of $25.2 million represent a payout ratio of
62% of earnings. The Company's debt-to-capital ratio increased to 34% from
29% at year-end 1994.
     Capital expenditures of $18.2 million decreased $3.5 million from $21.7
million in 1994. Capital expenditures are expected to approximate $16 million in
1996 primarily for expansion and improvement of operating facilities in the
United States and Europe. The Company's long-term liquidity needs including such
items as capital expenditures and dividends are expected to be financed through
operations. The Company has available numerous uncommitted short-term lines of
credit, and a revolving credit agreement providing for borrowings up to $125
million through September 1998. At year-end, there were $60.4 million of
short-term borrowings outstanding and $60 million outstanding under the
revolving credit agreement.

Inflation
     During the last three years, inflation has not been a significant factor
in the net earnings of the Company. The LIFO method of accounting is used for a
major portion of the Company's inventories. Under this method, the cost of
products sold approximates current costs and thus reduces possible distortion of
reported earnings due to rising costs. The Company continually emphasizes cost
controls and efficient management of resources to mitigate the influence of
inflation.

International operations
     The lower U.S. dollar exchange rate versus primarily the Belgian Franc and
the French Franc accounted for the favorable adjustment of $4.5 million in the
accumulated translation adjustment account since year-end 1994. Changes in the
balance of this account are primarily a function of fluctuations in exchange
rates and do not necessarily reflect either enhancement or impairment of the net
asset values or the earnings potential of the Company's foreign operations.
     The Company operates manufacturing facilities in Europe which serve
primarily the European market. Exchange rate disruptions between the United
States and European currencies, and among European currencies, are not expected
to have a material effect on year-to-year comparisons of the Company's earnings.

Research and Development
     The company employs about 280 engineers, draftsmen, chemists, and
technicians responsible for developing new and improved chemical products and
process equipment systems for the industries served by the Company. Often, new
products are developed in response to specific customer needs. The Company's
process of developing and commercializing new products and product improvements
is ongoing and involves many products, no one of which is large enough to
significantly impact the Company's results of operations from year to year.
Research and development expenditures totaled $14.0 million, $12.1 million and
$11.2 million in the fiscal years 1995, 1994 and 1993, respectively.

Environmental Matters
     The Company's manufacturing facilities are subject to various federal,
state and local requirements with respect to the discharge of materials into the
environment or otherwise relating to the protection of the environment. Although
precise amounts are difficult to define, the Company spent approximately $15.8
million in 1995 to comply with those requirements, including approximately $4.9
million in capital expenditures.
     The Company has been designated, along with others, as a potentially
responsible party under the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, or comparable state statutes, at two waste disposal
sites; and an inactive subsidiary has been designated, along with others, as a
potentially responsible party at two other sites.
     While the cost of compliance with existing environmental requirements is
expected to increase, based on the facts currently known to the Company,
management expects that those costs, including the cost to the Company of
remedial actions at the waste disposal sites where it has been named a
potentially responsible party, will not be material to the results of the
Company's operations in any given year.

Operating Results - 1995 as Compared to 1994

Overview
     Consolidated net sales increased 13% to $665.5 million from $589.8 million
in 1994. Net earnings declined 20% to $40.5 million from $50.9 million in 1994.
Earnings per common share declined 16% to $.84 from $1.00 in the prior year.
Average shares outstanding decreased 2.7 million to 48.5 million primarily as a
result of the Company's share repurchase program.
     The gross margin percentage decreased to 28.8% from 31.5% in 1994 primarily
from lower margins in the specialty chemicals segment. Consolidated operating
profit of $72.3 million was 11% lower than 1994 as the specialty process
equipment and controls segment increased 29% while the specialty chemicals
segment decreased 30%.

Specialty Chemicals
     The Company's specialty chemicals segment reported sales of $385.6 million
representing a decline of 2% from 1994. The decrease was attributable to lower
selling prices (-4%), offset in part primarily by foreign currency translation.
The proportion of sales outside the United States increased slightly to 26% from
25% in 1994.
     Domestic dyes sales declined 8% reflecting lower selling prices (-5%) and
lower unit volume (-3%) as weak demand primarily for apparel dyes continued to
negatively affect the business. International dyes sales increased by 3% versus
1994 due primarily to foreign currency translation (6%) and unit volume (4%),
offset by lower selling prices (-7%). Sales of specialty ingredients increased
5% reflecting primarily increased unit volume.
     Operating profit declined 30% to $42.6 million from $60.8 million in 1994.
The decline was primarily due to domestic and international dyes. Domestic dyes
declined primarily due to lower pricing. International dyes declined primarily
due to lower pricing and exchange rate fluctuations among European currencies.
The percentage of operating profit outside the United States decreased to 13%
from 21% in 1994.

Specialty Process Equipment and Controls
     The Company's specialty process equipment and controls segment reported
sales of $279.9 million representing an increase of 43% from $196.2 million in
1994. Approximately 27% was attributable to the incremental impact of
acquisitions with the balance primarily from increased unit volume.
International sales of $71 million increased 48% from 1994 and accounted for
25% of total segment sales versus 24% in 1994. Operating profit increased 29% to
$40.2 million from $31.2 million in 1994.  Approximately 11% was attributable to
the incremental impact of acquisitions with the balance primarily
attributable to unit volume, offset in part by a lower-margin product mix.
The equipment order backlog totalled $72 million at the end of 1995 compared
to $66 million at the end of 1994.

Other
     Selling, general and administrative expenses increased 14% primarily due
to the impact of acquisitions. Depreciation and amortization increased 13% over
1994 primarily as a result of a higher fixed asset base including acquisitions.
Interest expense increased $6.2 million over 1994 reflecting the increased
levels of borrowings in 1995. Other income declined $876 thousand versus 1994
primarily due to lower foreign exchange gains. The Company's effective tax
rate of 36.8% was up slightly from the prior year level of 36.3%.

Operating Results - 1994 as Compared to 1993

Overview
     Consolidated net sales of $589.8 million increased 6% from $558.3 million
in 1993. Net earnings of $50.9 million declined 2% from $52 million in 1993.
Earnings per common share of $1.00 were unchanged from the prior year. Average
shares outstanding  decreased 1 million to 51.2 million primarily as a result of
the Company's share repurchase program.
     The gross margin percentage of 31.5% decreased slightly from 31.8% in 1993.
Consolidated operating profit of $81.1 million was 2% lower than 1993 as profit
of the specialty process equipment and controls segment increased 20% while the
specialty chemicals segment decreased 11%.

Specialty Chemicals 
     The Company's specialty chemicals segment reported sales of $393.6 million
representing a decline of 3% from 1993. The decrease was primarily attributable
to lower selling prices (-2%) and unit volume (-1%). The proportion of sales
outside the United States was 25% in 1994, unchanged from 1993.
     Domestic dyes sales declined 6% reflecting lower selling prices (-4%) and
lower unit volume (-2%) as demand for apparel dyes remained weak. International
dyes sales were 5% lower than 1993 due primarily to lower unit volume under a
long-term supply agreement. Specialty ingredients sales increased 5% reflecting
increased unit volume in all major product groups.
     Operating profit declined 11% to $60.8 million from $68 million in 1993 due
primarily to lower pricing and unit volume offset in part by lower dye
intermediate costs. The percentage of operating profit outside the United States
was 21% in 1994, unchanged from 1993.

Specialty Process Equipment and Controls
     The Company's specialty process equipment and controls segment reported
sales of $196.2 million representing an increase of 30% from $151 million in
1993. Approximately 21% was attributable to the acquisition of Egan Machinery
with the balance attributable equally between pricing and unit volume. Export
sales of $48 million increased 18% from 1993 and accounted for 24% of total
segment sales versus 27% in 1993. Operating profit increased 20% to $31.2
million from $26 million in 1993. Approximately 7% was attributable to the
acquisition of Egan Machinery with the balance attributable primarily to unit
volume and improved pricing offset in part by higher manufacturing costs. The
equipment order backlog totalled $66 million at the end of 1994 compared to
$38 million at the end of 1993.

Other
     Selling, general and administrative expenses increased 10% primarily due
to the acquisition of Egan Machinery and the impact of inflation. Depreciation
and amortization increased 10% over 1993 primarily as a result of the Egan
Machinery acquisition and a higher fixed asset base. Interest expense of $2.2
million was double the amount in 1993 reflecting the increased level of
borrowings in 1994. Other income declined $163 thousand versus 1993. The
Company's effective tax rate of 36.3% was slightly lower that the prior year
level of 37%.

Consolidated Statements of Earnings
Fiscal years ended December 30, 1995, December 31, 1994, and December 25, 1993
(In thousands of dollars, except per share data)
                                               1995        1994         1993
Net sales                                  $665,513    $589,757     $558,348 

Costs and Expenses      
Cost of products sold                       473,654     403,784      380,941
Selling, general and administrative         104,535      91,581       82,970 
Depreciation and amortization                15,035      13,298       12,076 
Interest                                      8,364       2,167        1,093 
Other income                                   (166)      (1,042)     (1,205)
  Total costs and expenses                  601,422      509,788     475,875

Earnings
Earnings before income taxes                 64,091       79,969      82,473
Income taxes                                 23,598       29,053      30,515 
Net earnings                               $ 40,493     $ 50,916    $ 51,958 
Net Earnings Per Common Share              $    .84     $   1.00    $   1.00

Consolidated Balance Sheets
Fiscal years ended December 30, 1995, December 31, 1994
(In thousands of dollars, except per share data)  
                                               1995          1994
Assets
Current Assets
Cash                                         $   918     $   1,832
Accounts receivable                          112,693        81,859
Inventories                                  154,846       157,356
Other current assets                          23,038        19,610
 Total current assets                        291,495       260,657

Non-Current Assets      
Property, plant and equipment                129,991       117,105 
Cost in excess of acquired net assets         51,922        43,429
Other assets                                  10,730        11,137
                                            $484,138      $432,328 
Liabilities and Stockholders' Equity 
Current Liabilities
Notes payable                               $ 60,439      $ 39,670
Accounts payable                              49,415        47,000
Accrued expenses                              35,136        33,369
Income taxes payable                           3,747         4,138
Other current liabilities                     16,578        14,865
 Total current liabilities                   165,315       139,042
Non-Current Liabilities 
Long-term debt                                64,000        54,000
Accrued postretirement liability               7,559         8,698
Deferred income taxes                          7,217         6,681


Stockholders' Equity    
Common stock, $.10 par value - 
 issued 53,361,072 shares                     5,336          5,336
Additional paid-in capital                   59,440         62,241 
Retained earnings                           234,113        218,837
Accumulated translation adjustment            6,320          1,858 
Treasury stock at cost                      (62,972)       (54,213)
Deferred compensation                        (2,190)       (10,152)
 Total stockholders' equity                 240,047        223,907
                                           $484,138       $432,328 

Consolidated Statements of Cash Flows 
Fiscal years ended December 30, 1995, December 31, 1994, and December 25, 1993 
Increase (decrease) to cash  (in thousands of dollars)
                                             1995         1994          1993
Cash Flows from Operating Activities     
Net earnings                              $40,493      $ 50,916     $ 51,958 
Adjustments to reconcile net
 earnings to net cash
 provided by operations:
 Depreciation and amortization             15,035        13,298       12,076
 Deferred income taxes                        729         2,389          340 
 Deferred compensation                        768          (332)       1,611
 Changes in assets and liabilities: 
 Accounts receivable                     (27,234)          5,815     (11,798) 
 Inventories                                8,247        (34,695)       (253) 
 Other current assets                      (3,080)        (2,735)        722 
 Other assets                                (485)          (943)          2
 Accounts payable and accrued expenses     (4,719)        (8,186)     (4,937) 
 Income taxes payable                         323         (7,986)      3,918  
 Other current liabilities                 (1,938)         4,777      (1,435)
 Accrued postretirement liability          (1,139)          (386)        310
 Other                                       (264)          (175)       (109)
Net cash provided by operations            26,736         21,757      52,405 
  
Cash Flows from Investing Activities
Acquisitions                                (9,538)        (13,734)       -
Capital expenditures                       (18,249)        (21,710)   (14,299)
Other investing activities                  (1,505)            590      1,972
Net cash used by investing
 activities                                (29,292)        (34,854)   (12,327) 

Cash Flows from Financing Activities
Proceeds from (payments on) 
 long-term borrowings                       10,000        40,000      (10,000)
Change in notes payable                     20,675        34,533         (282)
Treasury stock acquired                     (4,296)      (47,647)      (5,103) 
Treasury stock issued under
 stock options and other plans                 393         1,756        1,905
Dividends paid                             (25,217)      (23,309)     (19,482)
Net cash provided (used) by
 financing activities                        1,555         5,333      (32,962)

Cash    
Effect of exchange rates on cash              87             312         (273) 
Change in cash                             (914)         (7,452)        6,843 
Cash at beginning of year                  1,832          9,284         2,441
Cash at end of year                      $   918        $ 1,832       $ 9,284 


Consolidated Statements of Stockholders' Equity
Fiscal years ended December 30, 1995, December 31, 1994, and December 25, 1993
(In thousands of dollars, except per share data)
                                  1995              1994               1993
Common Stock    
Balance at beginning and end
 of year                        $  5,336          $  5,336          $  5,336

Additional Paid-in Capital
Balance at beginning of year      62,241            61,783            59,644
Stock options and other issuances   (410)            1,592             2,139
Return of shares from long-term
 incentive plan trust             (2,391)              -                 -
Issuance under long-term 
 incentive plan                       -             (1,134)              -
Balance at end of year             59,440            62,241            61,783

Retained Earnings       
Balance at beginning of year      218,837           191,230           158,754
Net earnings                       40,493            50,916            51,958
Cash dividends declared on
 common stock ($.525 per share
 in 1995, $.46 in 1994, and
 $.38 in 1993)                   (25,217)           (23,309)          (19,482) 
Balance at end of year            234,113            218,837           191,230

Accumulated Translation Adjustment
Balance at beginning of year       1,858               (557)            3,803
Equity adjustment for translation
 of foreign currencies             4,462               2,415           (4,360)
Balance at end of year             6,320               1,858             (557)

Treasury Stock  
Balance at beginning of year      (54,213)            (11,278)         (7,956)
Issued, primarily under stock 
 options (72,729 shares in 1995,
 58,957 shares in 1994, and
 489,976 in 1993)                     340                 276           1,781
Common stock acquired (272,800
 shares in 1995, 2,954,700 shares
 in 1994 and 280,000 in 1993)      (4,296)            (47,647)         (5,103)
Return of shares from long-term
 incentive plan trust
 (448,000 shares)                  (4,803)             -            -
Issuance under long-term
 incentive plan (261,399 shares)     -                  4,436          -
 Balance at end of year           (62,972)            (54,213)        (11,278)

Deferred Compensation   
Balance at beginning of year      (10,152)            (6,518)         (8,129)
Return of shares from long-term
 incentive plan trust                7,194                -              -
Issuance under long-term
 incentive plan                        -              (3,302)            -
Amortization                           768              (332)           1,611
Balance at end of year              (2,190)          (10,152)         (6,518)
Total stockholders' equity        $240,047           $223,907        $239,996


Notes to Consolidated Financial Statements
(In thousands of dollars, except per share data)

Accounting Policies

Principles of Consolidation
     The consolidated financial statements include the accounts of all
subsidiaries. Intercompany balances and transactions are eliminated in
consolidation. The Company's fiscal year ends on the last Saturday in December
for domestic operations and a week earlier for most foreign operations.

Translation of Foreign Currencies
     Foreign currency accounts are translated into U.S. dollars as follows:
exchange rates at the end of the period are used to translate all assets and
liabilities; average exchange rates during the year are used to translate income
and expense accounts. Gains and losses resulting from the translation of foreign
currency balance sheet accounts into U.S. dollars and related hedging
transactions are included in a separate caption, "Accumulated translation
adjustment," in the stockholders' equity section of the consolidated balance
sheets.

Property, Plant and Equipment
     Property, plant and equipment are carried at cost, less accumulated
depreciation. Depreciation expense ($13,204 in 1995, $11,935 in 1994 and $10,828
in 1993) is computed generally on the straight-line method using the following
ranges of asset lives: buildings and improvements - 10 to 40 years, machinery
and equipment - 5 to 15 years, and furniture and fixtures - 5 to 10 years.
     Renewals and improvements which extend the useful lives of the assets are
capitalized. Capitalized leased assets and leasehold improvements are
depreciated over their useful lives or the remaining lease term, whichever is
shorter. Expenditures for maintenance and repairs are charged to expense
as incurred.

Inventory Valuation
     Inventories are valued at the lower of cost or market. Cost is determined
using the last-in, first-out (LIFO) method for a significant portion of
chemicals inventories and the first-in, first-out (FIFO) method for the
remaining inventories.

Cost In Excess of Acquired Net Assets
     The cost of acquisitions in excess of tangible and identifiable intangible
assets in the amount of $51,922 has, in the opinion of management, incurred no
permanent impairment in value. This cost is being amortized using the
straight-line method over periods from twenty to forty years. Accumulated
amortization amounted to $8,281 in 1995 and $6,622 in 1994.

Research and Development
     Expenditures for research and development costs are charged to operations
as incurred ($14,027 in 1995, $12,106 in 1994, and $11,184 in 1993).

Income Taxes
     A provision has not been made for U.S. income taxes which would be payable
if undistributed earnings of foreign subsidiaries of approximately $72,400 at
December 30, 1995, were distributed to the Company in the form of dividends,
since it is management's intention to permanently invest such earnings in the
related foreign operations. If distributed, such earnings would incur income tax
expense at substantially less than the U.S. income tax rate, primarily because
of the offset of foreign tax credits. 

Statements of Cash Flows
     Cash includes bank term deposits of three months or less. Cash payments
during the years ended 1995, 1994 and 1993 included interest of $8,488, $2,005
and $1,556 and income taxes of $23,515, $35,319 and $24,347, respectively. 
<PAGE>
Earnings Per Common Share
     The computation of earnings per common share is based on the weighted
average number of common and common equivalent shares outstanding amounting to
48,447,686 in 1995, 51,151,525 in 1994 and 52,175,691 in 1993. A dual
presentation of earnings per common share has not been made since there is no
significant difference in earnings per share calculated on a primary or fully
diluted basis. 

Financial Instruments
     Financial instruments are presented in the accompanying consolidated
financial statements at either cost or fair value as required by generally
accepted accounting principles. The fair value of the Company's financial
instruments approximate carrying value. 

Other Disclosures
     Included in accounts receivable are allowances for doubtful accounts in the
amount of $3,269 in 1995 and $3,829 in 1994. Included in other current
liabilities are customer deposits in the amount of $11,322 in 1995 and $11,183
in 1994.

Acquisitions
     In January 1995, the Company acquired the business and certain assets of
McNeil Akron Repiquet S.a.r.l. in France at a cost of $4,638. In March 1995, the
Company acquired Killion Extruders, Inc. at a cost of $4,900. The acquisitions
have been accounted for using the purchase method and, accordingly, the acquired
assets and liabilities have been recorded at their fair values at the dates of
acquisition. The excess cost of the purchase price over fair value of net assets
acquired in the amount of $9,649 is being amortized over forty years. The
operating results of each acquisition are included in the Consolidated
Statements of Earnings since the date of the acquisition.

Inventories
                              1995                 1994   
Finished goods              $ 89,177              $ 90,386
Work in process               30,316                32,640
Raw materials and supplies    35,353                34,330
                            $154,846              $157,356

At December 30, 1995, inventories valued using the last-in, first-out (LIFO)
method amounted to $70,550 ($75,958 at December 31, 1994). The LIFO reserve was
not significant in 1995 and 1994.

Property, Plant and Equipment
                                    1995                   1994   
Land                             $  7,490               $  7,292
Buildings and improvements         71,677                 61,926
Machinery and equipment           133,111                113,296
Furniture and fixtures              4,030                  3,662
Construction in progress           12,975                 16,620
                                  229,283                202,796
Less accumulated depreciation      99,292                 85,691
                                 $129,991               $117,105
Leases
     The future minimum rental payments under operating leases having initial
or remaining non-cancellable lease terms in excess of one year (as of December
30, 1995) total $21,434 as follows: $5,533 in 1996, $4,254 in 1997, $3,637 in
1998, $3,223 in 1999, $1,676 in 2000 and $3,111 in later years.  Total rental
expense for all operating leases was $8,126 in 1995, $7,305 in 1994, and $6,509
in 1993.
     All long-term leases expire prior to 2013. Real estate taxes, insurance and
maintenance expenses generally are obligations of the Company and, accordingly,
are not included as part of rental payments. It is expected that, in the normal
course of business, leases that expire will be renewed or replaced by leases on
other properties.

Debt
     Long-term debt is summarized as follows:
                                   1995              1994   
Revolving credit loans            $60,000           $50,000 
Industrial revenue bonds            4,000             4,000
 Total long-term debt             $64,000           $54,000

     The industrial revenue bonds mature in 1997 and carry an interest rate that
fluctuates within the tax exempt market. The average interest rate incurred in
1995 was 3.8%. The bonds are secured by a bank letter of credit.
     In June 1995, the Company amended its credit agreement with a group of five
banks whereby the revolving credit loans available to the Company were increased
to $125,000 through September 28, 1998. The agreement calls for interest at the
prime rate on revolving loans, but offers pricing options based on certificate
of deposit and Eurodollar rates which generally are more favorable than the
prime rate option. The Company must pay an annual fee of .15% of the total
unused commitment. The covenants of the revolving credit agreement impose
restrictions on the Company with respect to debt and tangible net worth
levels. These restrictions are not expected to adversely affect the Company's
operations. At December 30, 1995, the $60,000 borrowed under the revolving
credit agreement bore an interest rate of 6.2%. At December 30, 1995, notes
payable outstanding of $60,439 bore an interest rate of 6.0%.
     The aggregate annual maturities of long-term debt are $4,000 in 1997 and
$60,000 in 1998. 

Income Taxes
     The components of pretax earnings and taxes are as follows: 
                            1995            1994                  1993   
PreTax Earnings:
Domestic                  $59,306          $67,555               $68,498 
Foreign                     4,785           12,414                13,975 
Total                     $64,091          $79,969               $82,473 

Taxes:
  Domestic
    Current taxes         $21,500          $23,361               $27,857 
    Deferred taxes          1,604            2,057                  (587)
                          $23,104          $25,418                $27,270 
  Foreign
    Current taxes         $ 1,369          $ 3,303                $ 2,318 
    Deferred taxes           (875)             332                    927 
                          $   494          $ 3,635                $ 3,245 
  Total
    Current taxes         $22,869          $26,664                $30,175 
    Deferred taxes            729            2,389                    340  
                          $23,598          $29,053                $30,515
 
     The following is a percentage reconciliation of computed "expected" tax
expense to actual tax expense:
                                       1995             1994            1993  
Computed "expected" tax expense        35.0%           35.0%           35.0%
State taxes (net of U.S. tax benefit)   4.3             3.6             3.6   
Foreign tax differential               (1.8)           (0.9)           (2.0)  
Other, net                             (0.7)           (1.4)             .4   
                                       36.8%           36.3%           37.0%

     Provisions have been made for deferred income taxes based on differences
between financial statement and tax bases of assets and liabilities using
currently enacted tax rates and regulations. The components of the net deferred
tax asset as of December 30, 1995 and December 31, 1994, are as follows: 
                                           1995                   1994   
Deferred tax asset:
 Inventory reserves                      $ 3,596                $ 3,239 
 Bad debt reserves                           515                    232 
 Deferred compensation liability             885                    638 
 Various expense accruals                  3,395                  4,475 
 Accrued postretirement liability          3,024                  3,598 
  Total deferred tax assets               11,415                 12,182 
Deferred tax liability - depreciation    (10,241)               (10,279)
  Net deferred tax asset                 $ 1,174                $ 1,903

     Total deferred tax assets for 1995 and 1994 include current assets of
$8,391 and $8,584, respectively. The deferred tax liability is non-current for
1995 and 1994.

Capital Stock
     The Company is authorized to issue 250,000,000 shares of common stock at
a par value of $.10. There are 53,361,072 common shares issued, of which
5,351,962 and 4,703,891 shares were held in the treasury at December 30, 1995
and December 31, 1994, respectively.
     The Company is authorized to issue 250,000 shares of preferred stock
without par value, none of which are outstanding.  Preferred share purchase
rights (Rights) outstanding with respect to each share of the Company's common
stock entitle the holder to purchase one eight-hundredth of a share of Series A
Junior Participating Preferred Stock at an exercise price of $18.75. The Rights
cannot become exercisable until ten days following a public announcement that a
person or group has acquired 20% or more of the common shares of the Company or
intends to make a tender or exchange offer which would result in their ownership
of 20% or more of the Company's common shares. The Rights also entitle the
holder under certain circumstances to receive shares in another company which
acquires the Company or merges with it.

Stock Incentive Plans
     The 1988 Long Term Incentive Plan (the 1988 Plan) authorizes the Board to
grant stock options, stock appreciation rights, restricted stock and long-term
performance awards to the officers and other key employees of the Company over
a period of ten years.  Non-qualified and incentive stock options may be granted
under the 1988 plan at prices not less than 100% of the market value on the date
of the grant. All outstanding options will expire not more than ten years and
one month from the date of grant. There were 4,000,000 shares of common stock
reserved for awards under the 1988 Plan. 
     The 1993 Stock Option Plan for Non-Employee Directors authorizes 100,000
shares to be optioned to non-employee directors at the rate of their annual
retainer divided by the stock price on the date of grant. The option will vest
over a two year period and be exercisable over a ten year period from the date
of grant, at a price equaling the fair market value on the date of grant.
     Under the 1988 Plan, 1,261,000 common shares have been transferred to an
independent trustee to administer restricted stock awards for the Company's long
term incentive program. At December 30, 1995 deferred compensation relating to
such shares in the amount of $2,190 is being amortized over an estimated service
period of six to fifteen years. In June 1995, the trustee returned 448,000
common shares to the Company representing those shares which have not yet
been earned under the incentive program. Compensation expense relating to
unearned shares is being accrued annually based upon the expected level of
incentive achievement.
     Changes during 1995, 1994 and 1993 in shares under option are summarized
as follows:         
                                       Price Per Share
                                     Range      Average         Shares   
Outstanding at 12/26/92         $ 1.29-22.78     $ 7.88      1,929,900 
Granted                          19.31-23.75      19.45        218,736 
Exercised                         1.29-18.31       2.87       (424,419)
Lapsed                            4.01-19.19      14.01         (6,667)

Outstanding at 12/25/93           2.15-23.75      10.57      1,717,550 
Granted                          14.63-21.44      14.83        282,647 
Exercised                         2.15-9.31        5.59        (57,473) 
Lapsed                           9.31-19.31       18.12        (27,001) 

Outstanding at 12/31/94          2.47-23.75       11.24      1,915,723 
Granted                          9.31-16.06       13.07        330,481 
Exercised                        2.49-9.31         6.40        (61,299)
Lapsed                           9.31-23.75       18.04        (23,791)

Outstanding at 12/30/95        $ 2.47-23.75      $11.59      2,161,114
Exercisable at 12/30/95        $ 2.47-23.75      $10.64      1,592,779
     
    Shares available for grant at December 30, 1995 and December 31, 1994 were
536,302 and 842,992, respectively. 
     The Company has an Employee Stock Ownership Plan that is offered to
eligible employees of the Company and certain of its subsidiaries. The
Company makes contributions equivalent to a stated percentage of employee
contributions. The Company's contributions were $2,020, $1,677 and $1,617
in 1995, 1994 and 1993, respectively.

Postretirement Health Care Benefits
     The Company provides health benefits attributable to past service of
eligible retired and active employees under the Company's postretirement health
care benefit plans. Effective January 1, 1992, the Company adopted the
provisions of FASB Statement No.106 "Employers' Accounting for Postretirement
Benefits Other Than Pensions." In 1994, the Company adopted several changes
to its postretirement health care benefit plans including an annual cap for
medical premiums paid by the Company, higher deductible amounts and
out-of-pocket limits on medical payments. The plan amendments resulted in a
prior service gain of $3,254 which is being amortized over the average
remaining employee service period of 15 years. Postretirement health care
benefit expense did not have a material effect on net earnings for the years
1995, 1994 and 1993.
     The financial status of the accrued postretirement liability is as
follows: 
                                              1995         1994
Retirees                                     $3,834       $2,812
Fully eligible active participants              662          608
Other active participants                     1,150        1,240
Total accumulated postretirement liability    5,646        4,660
Unrecognized actuarial gain (loss)           (1,113)         784
Unrecognized prior service gain               3,026        3,254
                                             $7,559       $8,698

     For measurement purposes, a 11.5% annual rate of increase in the per capita
cost of covered health care benefits was assumed for 1995. The rate is assumed
to decrease 1% per year to 6.5% in 2000 and remain at that level thereafter. The
weighted-average discount rate used in determining the accumulated
postretirement benefit obligation was 7.0%.  
     An increase in the assumed health care cost rate of 1% in each year would
increase the accumulated postretirement benefit obligation by approximately
$460.

Pensions
     The Company maintains a defined contribution pension plan for eligible
employees under provisions of section 401(k) of the Internal Revenue Code. The
plan provides for Company contributions at a certain percentage of each
participant's salary and allows voluntary tax-deferred employee contributions up
to a stated percentage of salary. Other foreign and domestic pension plans are
not significant. Total pension expense aggregated $4,516 in 1995, $4,251 in 1994
and $4,036 in 1993.

Contingencies
     In the normal course of its business, the Company is subject to
investigations, claims and legal proceedings, some of which concern
environmental matters, involving both private and governmental parties. In
some cases, the remedies sought or damages claimed may be  substantial. While
each of these matters is subject to various uncertainties as to outcome, and
some of them may be decided unfavorably to the Company, based on the facts
known to the Company and on consultation with legal counsel, management
believes that there are no such matters pending or threatened which will have
a material effect on the financial position of the Company or the results of
the Company's operations in any given year. 

Foreign Operations
     Financial data applicable to the Company's foreign operations are as
follows:
                           1995              1994             1993   
Net sales              $113,280           $97,848         $103,356
Net earnings           $  4,291           $ 8,779         $ 10,730
Assets                 $113,852           $90,508         $ 82,789

Business Segment Data
     Sales by segment represent sales to unaffiliated customers only.
Intersegment sales and transfers between geographic areas are nominal and have
not been disclosed separately. Consolidated operating profit is defined as total
revenue less operating expenses. In computing consolidated operating profit, the
following items have not been deducted: interest expense, other income and
income taxes. Identifiable assets by segment are those assets that are used
in the Company's operations in each segment. Corporate assets are principally
cash, prepayments and other assets maintained for general corporate purposes.
 
Information by Business Segment
                                  1995           1994        1993
Sales
Specialty chemicals            $385,647        $393,544     $407,280 
Specialty process equipment
 and controls                   279,866         196,213      151,068 
                               $665,513        $589,757     $558,348 
Operating Profit
Specialty chemicals            $ 42,609        $ 60,783     $ 68,067 
Specialty process equipment
 and controls                    40,154          31,195       25,967
General corporate expenses      (10,474)        (10,884)     (11,673)
                                 72,289          81,094       82,361
Interest expense                 (8,364)         (2,167)      (1,093)
Other income                        166           1,042        1,205
Earnings before income taxes   $ 64,091        $ 79,969     $ 82,473 
Identifiable Assets
Specialty chemicals            $318,020        $313,457      $281,804 
Specialty process equipment 
 and controls                   150,320         103,151        69,279 
                                468,340         416,608       351,083 
Corporate                        15,798          15,720        12,163 
                               $484,138        $432,328      $363,246 
Depreciation and Amortization
Specialty chemicals            $ 11,510        $ 11,141      $ 10,628 
Specialty process equipment
 and controls                     3,328           1,995         1,324 
                                 14,838          13,136        11,952 
Corporate                           197             162           124 
                               $ 15,035        $ 13,298      $ 12,076 
Capital Expenditures
Specialty chemicals            $ 15,076        $ 18,891      $ 12,057 
Specialty process equipment
 and controls                     3,087           2,756         2,131 
                                 18,163          21,647        14,188 
Corporate                            86              63           111 
                               $ 18,249        $ 21,710      $ 14,299
 
Information by Major Geographic Segment
                                  1995          1994            1993
 Sales
United States                  $552,233       $491,909       $454,992
Europe                           94,347         88,693         93,808
Other                            18,933          9,155          9,548
                               $665,513       $589,757       $558,348
Exports to Unaffiliated Customers
Included in United States sales:
Far East                       $ 16,895       $ 19,858       $ 26,244
Latin America                    12,225         15,027         10,183
Europe                           23,713          9,381          7,251
Other                            11,989         10,178          4,338
                                 64,822         54,444         48,016
Included in European sales:
Far East                            -           10,117          8,649
Latin America                     4,422          4,631          4,261
Other                             3,042          6,362          3,756
                                  7,464         21,110         16,666
                               $ 72,286       $ 75,554       $ 64,682
Operating Profit
United States                  $ 77,893       $ 79,148       $ 79,536
Europe                            4,166         12,038         13,736
Other                               704            792            762
                                 82,763         91,978         94,034
General corporate expenses      (10,474)       (10,884)       (11,673)
                               $ 72,289       $ 81,094       $ 82,361
Identifiable Assets
United States                  $370,286       $341,820       $280,457
Europe                          105,408         85,578         77,203
Other                             8,444          4,930          5,586
                               $484,138       $432,328       $363,246

Summarized Unaudited Quarterly Financial Data
                                          1995  
                              First     Second     Third     Fourth  
Net sales                  $168,193   $175,617  $159,065   $162,638
Gross profit                 51,634     51,818    44,606     43,801
Net earnings                 13,196     12,058     8,077      7,162
Net earnings
 per common share               .27        .25       .17        .15
Common dividends per share      .12       .135      .135       .135
Market price
 per common share:
  High                       17 3/8         20    15 3/4     14 7/8
  Low                        15 7/8     13 3/8    13 5/8     12 

                                          1994
                              First     Second     Third     Fourth  
Net sales                  $133,594   $154,452  $142,821   $158,890
Gross profit                 42,684     50,952    44,025     48,312
Net earnings                 12,758     16,107    10,224     11,827
Net earnings
 per common share               .25        .31       .20        .24
Common dividends
 per share                      .10        .12       .12        .12
Market price
 per common share:
 High                        24 1/8     23 5/8    18 1/2     16 5/8 
 Low                         19 5/8     17 3/8    15 7/8     13 7/8 
Responsibility for Financial Statements
     The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles and have been audited by KPMG Peat
Marwick LLP, Independent Certified Public Accountants, whose report is presented
herein.
     Management of the Company assumes responsibility for the accuracy and
reliability of the financial statements. In discharging such responsibility,
management has established certain standards which are subject to continuous
review and are monitored through the Company's financial management and internal
audit group.
     The Board of Directors pursues its oversight role for the financial
statements through its Audit Committee which consists of outside directors. The
Audit Committee meets on a regular basis with representatives of management, the
internal audit group and KPMG Peat Marwick LLP.

Independent Auditors' Report

The Board of Directors and Stockholders 
Crompton & Knowles Corporation 

     We have audited the consolidated balance sheets of Crompton & Knowles
Corporation and subsidiaries as of December 30, 1995 and December 31, 1994 and
the related consolidated statements of earnings, stockholders' equity and cash
flows for each of the fiscal years in the three-year period ended December 30,
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 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Crompton &
Knowles Corporation and subsidiaries at December 30, 1995 and December 31, 1994
and the results of their operations and their cash flows for each of the fiscal
years in the three-year period ended December 30, 1995 in conformity with
generally accepted accounting principles.

                                           /s/ KPMG Peat Marwick LLP 

Stamford, Connecticut
January  24, 1996

Eleven Year Selected Financial Data
(In thousands of dollars except per share data)
                                       1995          1994          1993
Summary of Operations
Net sales                              $665,513      589,757       558,348
Interest expense                       $  8,364        2,167         1,093
Pretax earnings                        $ 64,091       79,969        82,473
Income taxes                           $ 23,598       29,053        30,515
Earnings from continuing
 operations                            $ 40,493       50,916        51,958
Cumulative effect of
 accounting changes                    $    -           -             -
Extraordinary loss on early
 extinguishment of debt                $    -           -             -
Earnings (loss) from
 discontinued operations               $    -           -             -
Loss on disposal of
 discontinued operations               $    -           -             -
Net earnings                           $ 40,493       50,916       51,958

Per Share Statistics
Earnings from continuing
 operations before
 cumulative effect of
 accounting changes and
 extraordinary loss                    $  .84         1.00         1.00
Net earnings                           $  .84         1.00         1.00
Dividends                              $  .52          .46          .38
Book value                             $ 5.00         4.60         4.68
Common stock trading range:
 High                                      20       24 1/8       27 1/4
 Low                                       12       13 7/8       17 5/8
 Average shares outstanding
 (thousands)                           48,448       51,152       52,176  
Financial Position
Current assets                       $291,495      260,657      220,396  
PP&E, net                            $129,991      117,105       99,925    
Other assets                         $ 62,652       54,566       42,925
Total assets                         $484,138      432,328      363,246 
Current liabilities                  $165,315      139,042       95,439
Long-term debt                       $ 64,000       54,000       14,000
Accrued postretirement
 liability                           $  7,559        8,698        9,084    
Deferred income taxes                $  7,217        6,681        4,727
Stockholders' equity                 $240,047      223,907      239,996 
Current ratio                             1.8          1.9          2.3
Total debt-to-equity %                   51.8         41.8          8.0
Total debt-to-capital %                  34.1         29.5          7.4

Profitability Statistics (Continuing Operations)
% Effective tax rate                     36.8         36.3         37.0
% Return on sales                         6.1          8.6          9.3
% Return on average 
  total capital                          12.9         18.3         21.0
% Return on average
 common equity                           17.4         21.1         23.1

Other Statistics (Continuing Operations)
Capital spending                     $ 18,249       21,710       14,299
Depreciation                         $ 13,204       11,935       10,828
Sales per employee                   $    242          234          240
<PAGE>
Eleven Year Selected Financial Data
(In thousands of dollars except per share data)
                                      1992           1991           1990
Summary of Operations
Net sales                            $517,718      450,228       390,032 
Interest expense                     $  6,984        7,419         5,842 
Pretax earnings                      $ 68,337       56,600        47,260
Income taxes                         $ 25,072       20,659        17,250
Earnings from continuing
 operations                          $ 43,265       35,941        30,010
Cumulative effect of
 accounting changes                  $ (5,800)         -              -
 Extraordinary loss on early
 extinguishment of debt              $ (3,000)         -              - 
Earnings (loss) from 
 discontinued operations             $   -             -              -
Loss on disposal of
 discontinued operations             $    -            -              -
 Net earnings                        $ 34,465       35,941        30,010
Per Share Statistics
Earnings from continuing
 operations before
 cumulative effect of
 accounting changes and 
 extraordinary loss                 $    .87           .73           .61 
Net earnings                        $    .69           .73           .61
Dividends                           $    .31           .25           .20
Book value                          $   4.14          2.94          2.47
Common stock trading range:
 High                                 23 7/8        20 1/4        11 5/8
 Low                                  16             8 3/8         6 3/4
Average shares outstanding
 (thousands)                          49,967        49,317        49,270 

Financial Position
Current assets                      $207,383       185,235        164,442
PP&E, net                           $ 98,827        80,154         76,709
Other assets                        $ 44,505        43,173         41,493
Total assets                        $350,715       308,562        282,644 
Current liabilities                 $102,593        85,712         88,340     
Long-term debt                      $ 24,000        76,118         70,330
Accrued postretirement
 liability                          $  8,774           -              -   
Deferred income taxes               $  3,896         5,969          6,409
Stockholders' equity                $211,452       140,763        117,565 
Current ratio                            2.0           2.2            1.9
Total debt-to-equity %                  13.9          57.1           77.6     
Total debt-to-capital %                 12.2          36.3           43.7

Profitability Statistics (Continuing Operations)
% Effective tax rate                    36.7          36.5           36.5   
% Return on sales                        8.4           8.0            7.7 
% Return on average
 total capital                          19.3          18.9           19.8   
% Return on average
 common equity                          27.1          28.4           28.1 

Other Statistics (Continuing Operations)
Capital spending                    $ 12,835        11,434         16,374
Depreciation                        $ 10,394         8,813          7,156
Sales per employee                  $    237           222            218 


Eleven Year Selected Financial Data
(In thousands of dollars except per share data)
                                      1989          1988            1987 
Summary of Operations
Net sales                          $355,817       289,787         199,394
Interest expense                   $  6,006         3,606           2,042 
 Pretax earnings                   $ 38,588        26,943          20,353 
Income taxes                       $ 14,087        10,098           8,341 
Earnings from continuing
 operations                        $ 24,501        16,845          12,012 
Cumulative effect of
 accounting changes                $    -            -                - 
Extraordinary loss on early
 extinguishment of debt            $    -            -                -
Earnings (loss) from
 discontinued operations           $    -           (597)           (262)
 Loss on disposal of
 discontinued operations           $    -           (920)             -
Net earnings                       $ 24,501        15,328          11,750 

Per Share Statistics
Earnings from continuing
 operations before
 cumulative effect of
 accounting changes and
 extraordinary loss             $   .50            .36                .25 
Net earnings                    $   .50            .32                .24 
Dividends                       $   .15            .11                .08 
Book value                      $  2.08           1.75               1.59 
Common stock trading range:
 High                             7 7/8          4 1/2              3 7/8   
 Low                              3 3/4          2 1/2              2 1/4
Average shares outstanding
 (thousands)                     49,064         47,239             48,168

Financial Position
Current assets                  $127,216       120,584             94,069   
PP&E, net                       $ 50,847        43,685             29,085
  Other assets                  $ 39,787        41,373             12,075  
Total assets                    $217,850       205,642            135,229
  Current liabilities           $ 71,068        72,352             40,922
Long-term debt                  $ 41,213        44,594             12,927
  Accrued postretirement
 liability                      $   -             -                  - 
Deferred income taxes           $  6,668         6,775              5,575  
Stockholders' equity            $ 98,901        81,921             75,805  
Current ratio                        1.8           1.7                2.3  
Total debt-to-equity %              52.4          72.1               25.1  
Total debt-to-capital %             34.4          41.9               20.1  
Profitability Statistics (Continuing Operations)
% Effective tax rate                36.5          37.5               41.0  
% Return on sales                    6.9           5.8                6.0 
% Return on average
 total capital                      19.3          17.2               14.8
% Return on average
 common equity                      27.6          22.7               17.7 

Other Statistics (Continuing Operations)
Capital spending                $ 13,407          6,798              3,523 
Depreciation                    $  5,666          4,658              3,468  
Sales per employee              $    215            190                168  

Eleven Year Selected Financial Data
(In thousands of dollars except per share data)
                                                   1986                1985
Summary of Operations
Net sales                                        $178,256           163,287  
Interest expense                                 $    789               571
Pretax earnings                                  $ 16,800            15,443
Income taxes                                     $  7,421             7,122
Earnings from continuing operations              $  9,379             8,321
Cumulative effect of accounting changes          $    -                  -
Extraordinary loss on early
 extinguishment of debt                          $    -                  -
Earnings (loss) from discontinued
 operations                                      $  (678)             (746) 
Loss on disposal of discontinued
 operations                                      $ (7,700)              -
Net earnings                                     $  1,001             7,575

Per Share Statistics
Earnings from continuing operations before
 cumulative effect of accounting changes 
 and extraordinary loss                          $    .17              .15
Net earnings                                     $    .01              .14
Dividends                                        $    .08              .08
Book value                                       $   1.42             1.34
Common stock trading range: High                    2 1/2            1 3/4
                            Low                     1 5/8            1 1/4
Average shares outstanding (thousands)             50,974           51,694

Financial Position
Current assets                                    $ 95,931           87,400
PP&E, net                                         $ 28,511           30,376
Other assets                                      $ 10,349           12,146
Total assets                                      $134,791          129,922
Current liabilities                               $ 41,687           32,366
Long-term debt                                    $ 19,455           19,093
Accrued postretirement liability                  $    -                -
Deferred income taxes                             $  5,174            4,708
Stockholders' equity                              $ 68,475           73,755
Current ratio                                          2.3              2.7
Total debt-to-equity %                                47.0             30.5
Total debt-to-capital %                               32.0             23.4

Profitability Statistics (Continuing Operations)
% Effective tax rate                                  44.2             46.1
% Return on sales                                      5.3              5.1 
% Return on average total capital                     13.6             13.2
% Return on average common equity                     15.0             14.3

Other Statistics (Continuing Operations)
Capital spending                                  $  2,967            2,888
Depreciation                                      $  3,101            3,061
Sales per employee                                $    146              128
(Bar Graph) 
Return on Sales
Continuing Operations
(Bar Graph) 
Return on Average Total Capital 
Continuing Operations
(Bar Graph) 
Sales Per Employee 
Continuing Operations

Board of Directors

3     James A. Bitonti
      President and Chief Executive Officer 
      TCOM, L.P.
 
      Vincent A. Calarco
      Chairman of the Board
      President and Chief Executive Officer

2,3   Robert A. Fox
      President and Chief Executive Officer                          
      Foster Poultry Farms

2,3   Roger L. Headrick
      President and Chief Executive Officer
      Minnesota Vikings Football Club

1,2   Leo I. Higdon
      Dean
      The Darden Graduate School
      of Business Administration                                      
      University of Virginia  

1,3   Michael W. Huber
      Retired Chairman of the Board
      J.M. Huber Corporation

     Charles J. Marsden
     Vice President-Finance
     and Chief Financial Officer

1,2  C.A. Piccolo
     Chairman and Chief Executive Officer
     Caremark International Inc.

1    Patricia K. Woolf, Ph.D.
     Private Investor and Lecturer
     Department of Molecular Biology 
     Princeton University


1    Member of Audit Committee
2    Member of Nominating Committee
3    Member of Committee on Executive Compensation

Corporate Officers and Operating Management

Vincent A. Calarco
Chairman, President and 
Chief Executive Officer

Robert W. Ackley
Vice President 
President -
Davis-Standard

Nicholas Fern, Ph.D.
President -
Dyes and Chemicals - Asia

Gerald H. Fickenscher, Ph.D.
President -
Dyes and Chemicals - Europe

Edmund H. Fording
Vice President
President -
Dyes and Chemicals - Americas

Marvin H. Happel
Vice President - Organization

Charles J. Marsden
Vice President -
Finance and Chief Financial Officer 

Rudy M. Phillips
President -
Ingredient Technology

Peter Barna
Treasurer and 
Principal Accounting Officer

John T. Ferguson, II
General Counsel and Secretary

Robert A. Marchitello
Assistant Treasurer

Corporate Headquarters
One Station Place, Metro Center 
Stamford, CT 06902
(203) 353-5400

Auditors
KPMG Peat Marwick LLP          
Stamford, CT

Transfer Agent and Registrar
Chemical Mellon Shareholder Services L.L.C.   
85 Challenger Road
Ridgefield Park, NJ 07660
(800) 288-9541

Annual Meeting
The annual meeting of stockholders will be held at 11:15 a.m. on Tuesday, April
9, 1996, at the Sheraton Stamford Hotel, One First  Stamford Place, Stamford,
Connecticut 

Form 10-K
A copy of the Company's report on Form 10-K for 1995, as filed with the
Securities and Exchange Commission, may be obtained free of charge by writing to
the Secretary of the Corporation, One Station Place, Metro Center, Stamford, CT
06902