<PAGE>

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                                    UNITED STATES
                          SECURITIES AND EXCHANGE COMMISSION
                               WASHINGTON, D.C.  20549

                                      FORM 10-K

                [ X ]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
                     For the fiscal year ended December 31, 1996
                                          OR
              [   ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                        of the securities exchange act of 1934
      For the transition period from ___________________ to ___________________
                            Commission file number 0-1491
                                BEST LOCK CORPORATION
                (Exact name of registrant as specified in its charter)

               DELAWARE                                35-1092570
     (State or other jurisdiction of               (I.R.S. Employer
    incorporation or organization)                 Identification No.)




  P.O. BOX 50444, INDIANAPOLIS, INDIANA                  46250
(Address of principal executive offices)              (Zip Code)

Registrant's telephone number, including area code:  (317) 849-2250

             Securities registered pursuant to Section 12(b) of the Act:
    Title of each class               Name of each exchange on which registered
     -------------------               -----------------------------------------
          NONE

             Securities registered pursuant to Section 12(g) of the Act:
                      COMMON STOCK WITHOUT NOMINAL OR PAR VALUE
                                   (Title of class)

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

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

State the aggregate market value of the voting stock held by non-affiliates of
the registrant.  The aggregate market value shall be computed by reference to
the price at which the stock was sold, or the average bid and asked prices of
such stock, as of a specified date within 60 days prior to the date of filing.

(Any sales of the registrant's stock by nonaffiliates within 60 days prior to
the date of filing would have sold at a price unknown to the registrant.)

Indicate the number of shares outstanding of each of the registrant's classes of
common, as of February 7, 1997.

              COMMON STOCK             120,653.85 SHARES

Documents incorporated by reference:  List the following documents if
incorporated by reference and the part of the form 10-K into which the document
is incorporated:  (1) Any annual report to security holders; (2) Any proxy or
information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or
(c) under the Securities Act of 1993.  The listed documents should be clearly
described for identification purposes.

                                         NONE

<PAGE>

                                BEST LOCK CORPORATION


                              FORM 10-K ANNUAL REPORT

                                       INDEX





                             Item No.                                     Page
                             and Title                                     No.
                             ---------                                    ----

 1    Description of Business                                                3

 2    Properties                                                             6

 3    Pending Legal Proceedings                                              6

 4    Submission of Matters to a Vote of Security Holders                    6

 5    Market for the Registrant's Common Stock and Related Security-
        Holder Matters                                                       7

 6    Selected Financial Data                                                8

 7    Management's Discussion and Analysis of Financial Condition and
        Results of Operations                                               10

 8    Financial Statements and Supplementary Data                           13

 9    Disagreements on Accounting and Financial Disclosure                  38

10    Directors and Executive Officers of the Registrant                    39

11    Executive Compensation                                                40

12    Security Ownership of Certain Beneficial Owners and Management        42

13    Certain Relationships and Related Transactions                        44

14    Exhibits, Financial Statement Schedules and Reports on Form 8-K       44

      Signatures                                                            46

      Index to Exhibits                                                     47


                                          2


<PAGE>


                                       PART I

ITEM 1.  DESCRIPTION OF BUSINESS.

    (a)  GENERAL DEVELOPMENT OF BUSINESS.  Registrant was organized in 1928 as
a Corporation under the laws of the State of Delaware.  Neither the registrant
nor its subsidiary has ever been the subject of any bankruptcy, receivership or
similar proceedings.  There has not been any material reclassification, merger,
consolidation, nor changes in the mode of conducting business of the registrant
or its subsidiary during the fiscal year just ended.

    (b)  FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS.

              (1)  Industry segments.  Registrant is engaged in only one
industry segment.  All reports and comments in this Form 10-K apply to that one
industry.

              (2)  Lines of business.  Registrant is engaged in only one line
of business, i.e., the manufacture or sourcing, distribution and sale of access
control products and related services.

    (c)  NARRATIVE DESCRIPTION OF BUSINESS.

              (1)  The principal business of registrant is the manufacture or
sourcing, distribution and sale of access control products and services,
primarily including locks, lock components and adaptations.  Registrant
specializes in providing locking systems for commercial end-users, including
institutional, industrial and government facilities.

                        (i)  Registrant's mechanical locking system is built
around a removable key-controlled core and housing utilizing the tumbler system.
The sale of registrant's system of locks includes the adaptation of other lock
manufacturers' hardware to receive this removable key-controlled core and
housing which is manufactured by registrant.  Additionally, the registrant has
supplemented its product offerings to end-users with other access control and
auxiliary products.

                             Registrant's mechanical locks, lock components and
adaptations are manufactured or assembled in its plant located in Indianapolis,
Indiana and sold by registrant through sales representatives throughout the
United States, Canada and other countries.  Registrant's representatives are
independent representatives maintaining separate inventories, or corporate-owned
sales offices, both selling directly to end-users.

                             Registrant does not manufacture all of the access
control products it sells but purchases a number of such items from other
manufacturers.  Registrant is not exclusively represented by any regional
hardware house as are most of the large lock manufacturers but its products are
sold through many regional hardware houses as a modification of their regular
lines.  In connection with the sale of registrant's system of locks, registrant
assists in maintaining and setting up for its customers a masterkey plan for
proper control and security of the customer's locking system.

                             Registrant sells its products in the United States
and abroad.  Some of its foreign sales are made by its agent and totally-held
subsidiary, Best Universal Locks Limited, of the Province of Ontario, Canada.
Registrant's sales have generally increased during the past five years.


                                          3


<PAGE>

                             Information as to approximate percentage of total
sales revenue of classes of similar products for each of the specified fiscal
years is as follows.  It is not believed that the changes in percentages
represent a material change in the mix of the product line.

         Name of Class                 1996      1995      1994
         -------------                 ----      ----      ----
         Door Security Products          71%       68%       67%
         All Others                      29        32        33


                             There have not been any significant changes
in the kinds of products produced or services sold since the beginning of the
fiscal year.

                             Registrant is continuing its program of selling to
contract hardware houses in an attempt to enlarge its sales to new construction
projects.

                        (ii) There has not been any public announcement of a
new product or industry segment which would require the investment of a material
amount of the assets of registrant during the next fiscal year.

                       (iii) The raw materials essential to the registrant's
manufacturing business are standard metals in bar stock of various
cross-sectional shapes.  Approximately 80% of the shapes are standard and
approximately 20% are specially made for the registrant.  The majority of
essential raw materials are purchased from three midwestern suppliers.  There
are no significant problems related to the procurement of raw materials for
registrant's manufacturing business, other than the normal forces of supply and
demand, possible strikes or other production factors of the suppliers.

                        (iv) Patents and patent rights have been and are a
significant factor in registrant's business.  Registrant has a substantial
number of licenses and patent rights relating to the locking art and other
mechanical fields, and has engaged in substantial experimental and developmental
work in connection with such licenses and patent rights.  The first patent
rights acquired by registrant were related to the Best Universal removable core.
A number of the early patent rights licensed or otherwise acquired have expired.
Registrant has several registered trademarks regarding the use of the word
'Best' in association with security products.  These are considered important
and valuable assets of the company.

                        (v)  While there is no particular seasonal factor in
registrant's business, a backlog for its manufacturing business exists for
production planning.

                        (vi) There is no unusual working capital requirement
for the registrant.  Normal working capital requirements for inventory and
accounts receivable are met through internal funding or borrowings from outside
bank sources.

                       (vii) The manufacturing, sourcing, distribution or
selling business of the registrant is not dependent upon any one single
customer, or very few customers, the loss of which would have a material adverse
effect on the registrant.



                                          4


<PAGE>

                        (viii)    The backlog of orders as of the dates shown
below are believed to be firm:

              February 7, 1997              $4,702,439
              February 9, 1996               4,219,942

                             It is expected that 100% of the backlog on
February 7, 1997 will be filled within the current fiscal year.  The
registrant's sales and order flow do not generally reflect any seasonal
fluctuations.

                        (ix) It is not believed that any material portion of
the business of the registrant is subject to renegotiation of profits or
termination of contracts or subcontracts at the election of the government.

                        (x)  The business of the registrant is highly
competitive.  The principal methods of competition are in the areas of price,
product performance, delivery and service.  There are ten to fifteen major lock
manufacturing companies in the United States, some of which have substantially
greater sales and resources than the registrant.  These companies manufacture
and sell a wide variety of locks and locking hardware or other access control
products.  The major companies also sell masterkeyed systems of locks in
competition with registrant's lock systems.

                             Due to the fact that registrant has been engaged
in business for more than sixty-five years and has specialized in the sale of
masterkeyed systems of locks, it believes that it is a significant factor in
this specialized field.  Since industry statistics are not available, registrant
is not able to state its relative standing in the overall lock market or in the
more specialized masterkeyed system of locks market.

                        (xi) Registrant expended approximately $769,000,
$3,055,000 and $3,050,000 on research activities relating to the development of
new products or the improvement of existing products in the years ending
December 31, 1996, 1995 and 1994, respectively.

                             Registrant has not engaged in any material
customer sponsored research during the past three fiscal years.

                       (xii) Registrant does not believe there will be any
material effect that compliance with Federal, state or local provisions
regarding the discharge of materials into the environment, or otherwise relating
to the protection of the environment, will have upon the capital expenditures,
earnings and competitive position of the registrant or its subsidiary.

                             Registrant estimates it will voluntarily invest
approximately $336,802 during its current and succeeding fiscal year to continue
to enhance the Company's overall environmental standards.  This amount includes
capital expenditures ($78,000) and operating expenses of environmental
protection facilities.

                      (xiii) The total staff of registrant as of the close of
its fiscal year consisted of approximately 448 production and maintenance
employees; and 714 office, sales and executive employees.


                                          5


<PAGE>

    (d)  FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT
SALES.  The registrant is engaged, through its totally-held subsidiary, Best
Universal Locks Limited, in sales in Canada.  There are other foreign sales
throughout the world.  The total of all such foreign sales amounted to
approximately 6%, 6% and 7% of registrant's total sales during 1996, 1995 and
1994, respectively.  The risk and profitability of such business does not differ
substantially from domestic sales.

ITEM 2.  PROPERTIES.

    Manufacturing facilities and engineering and executive offices of
registrant are located in multipurpose brick and masonry buildings containing a
total of approximately 215,000 square feet of manufacturing space, 30,000 square
feet of warehouse space and 57,000 square feet of office space at 6161 East 75th
Street, Indianapolis, Indiana.  The buildings were built specifically for
registrant's use in four major phases in 1958, 1965, 1977 and 1989.  Registrant
is using the majority of the floor space in the premises.  The production
facilities located on the premises include stamping, drilling, broaching,
automatic screw machines and all other equipment used by registrant in its
manufacturing business.  Registrant also maintains an engineering department,
masterkey department, general accounting, marketing and executive offices in the
office portion of the buildings.  These buildings are located on an
approximately 50 acre tract of real estate owned in fee simple by registrant.

    The registrant and its totally-held subsidiary also occupy corporate sales
distribution offices, six of which are owned in fee simple and 24 of which are
leased.  All properties, both owned and leased, together with the related
machinery and equipment contained therein, are considered to be well maintained,
in good operating condition and suitable and adequate for present and
foreseeable future needs.

ITEM 3.  PENDING LEGAL PROCEEDINGS.

              None.

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

              None.


                                          6


<PAGE>

                                       PART II

ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY-HOLDER
MATTERS.

    The registrant's stock is classified as over-the-counter, and from time to
time may be listed in the National Quotation Bureau, Inc.'s "Pink Sheets."  Such
quotations may not necessarily represent the value of actual transactions.

    As determined by a third party professional appraiser each year for the
purpose of the Best Lock Corporation Stock Bonus Plan, the value of registrant's
shares as of December 31, 1996 and December 31, 1995 was $400.00 and $395.00 per
share respectively.

    There are 197 shareholders of record of registrant's stock as of February
7, 1997.

    Dividends have been declared and paid annually in the respective amounts of
$5.42 and $5.41 per share in 1996 and 1995, respectively.  There is no known
restriction on registrant's present or future ability to pay such dividends
other than the availability of sufficient funds and the requirement that
registrant comply with the provisions of registrant's unsecured bank line of
credit.  There is a present expectation that dividends will continue to be paid
in the future.

    Registrant is utilizing an independent clearinghouse to facilitate
submission of stock deemed to be "abandoned property" under various state laws.
During 1996, 1995, and 1994, 86, 8 and 0 shares respectively, were submitted to
the appropriate state authorities through this clearinghouse.  Such property
will be held for various periods of time as required by each state prior to
being placed on the market for disposition.


                                          7


<PAGE>

ITEM 6.   Selected Financial Data.

                         BEST LOCK CORPORATION AND SUBSIDIARY
                   CONSOLIDATED SUMMARY OF SELECTED FINANCIAL DATA
                  FOR THE YEARS ENDED DECEMBER 31, 1996 THROUGH 1992

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

The following consolidated summary of selected financial data should be read in
conjunction with the accompanying notes to consolidated financial statements:


<TABLE>
<CAPTION>

                                                  1996              1995            1994              1993          1992
                                               -------------    -------------    -------------    ------------   ------------
<S>                                           <C>              <C>              <C>              <C>            <C>
Net sales                                    $  122,358,592   $  117,705,629   $  103,954,763   $  98,895,807  $  84,865,287

Net income (loss) before cumulative
  effect of change in accounting principle        3,454,613       (4,204,498)       2,208,155       1,149,518      2,458,328

Net income                                        3,454,613       (4,204,498)       2,208,155       1,799,518      2,458,328

Total assets                                     68,882,543       69,016,896       71,003,419      64,216,989     62,259,855

Long-term obligations
  (excluding deferred taxes)                     18,213,399       19,067,424        4,444,971       4,745,065      4,552,378

Common stock and common stock of
  Universal and Best, redeemable under
  Stock Bonus Plan                                6,083,413        5,931,931        8,939,316           -              -
</TABLE>


Earnings and dividends per common share - see page 9.



                                          8


<PAGE>
                                 BEST LOCK COMPANIES
                         BEST LOCK CORPORATION AND SUBSIDIARY
      BEST UNIVERSAL LOCK CO. (A NONOPERATING HOLDING COMPANY) AND SUBSIDIARIES
        FRANK E. BEST, INC. (A NONOPERATING HOLDING COMPANY) AND SUBSIDIARIES

                   CONSOLIDATED SUMMARY OF SELECTED FINANCIAL DATA
                  FOR THE YEARS ENDED DECEMBER 31, 1996 THROUGH 1992

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                              1996           1995           1994           1993           1992
                                                          -------------  -------------  -------------  -------------  -------------
<S>                                                       <C>            <C>            <C>            <C>            <C>
Earnings (loss) per share of common stock:
   Best Lock Corporation and Subsidiary
      Weighted average shares outstanding:                  121,517.24     124,144.13     131,235.37     131,238.85     131,238.85
                                                          -------------  -------------  -------------  -------------  -------------
                                                          -------------  -------------  -------------  -------------  -------------
         Net income (loss) before cumulative effect of
            change in accounting principle                $      28.43   $     (33.88)  $      16.83   $       8.76   $      18.73
         Cumulative effect of SFAS 109 "Accounting
            for Income Taxes"                             $       0.00   $       0.00   $       0.00   $       4.95   $       0.00
                                                          -------------  -------------  -------------  -------------  -------------
         Net income (loss)                                $      28.43   $     (33.88)  $      16.83   $      13.71   $      18.73
                                                          -------------  -------------  -------------  -------------  -------------
                                                          -------------  -------------  -------------  -------------  -------------

   Best Universal Lock Co. and Subsidiaries
      Series A weighted average shares outstanding:          60,588.76      75,669.87      86,469.00      86,469.00      86,469.00
                                                          -------------  -------------  -------------  -------------  -------------
                                                          -------------  -------------  -------------  -------------  -------------
         Series A -
         Net income (loss)                                $       8.11   $      (9.95)  $       3.92   $       3.30   $       4.57
                                                          -------------  -------------  -------------  -------------  -------------
                                                          -------------  -------------  -------------  -------------  -------------

      Series B weighted average shares outstanding:         300,000.00     300,000.00     300,000.00     300,000.00     300,000.00
                                                          -------------  -------------  -------------  -------------  -------------
                                                          -------------  -------------  -------------  -------------  -------------
         Series B -
         Net income (loss)                                $       8.11   $      (9.95)  $       3.92   $       3.30   $       4.57
                                                          -------------  -------------  -------------  -------------  -------------
                                                          -------------  -------------  -------------  -------------  -------------

   Frank E. Best, Inc. and Subsidiaries
     weighted average shares outstanding:                   274,999.05     427,806.72     598,710.00     598,710.00     598,710.00
                                                          -------------  -------------  -------------  -------------  -------------
                                                          -------------  -------------  -------------  -------------  -------------

         Net income (loss)                                $       9.04   $      (7.61)  $       1.93   $       1.45   $       2.27
                                                          -------------  -------------  -------------  -------------  -------------
                                                          -------------  -------------  -------------  -------------  -------------

Dividends per share:
   Best Lock Corporation, common                          $       5.42   $       5.41   $       5.40   $       5.00   $       4.90
                                                          -------------  -------------  -------------  -------------  -------------
                                                          -------------  -------------  -------------  -------------  -------------

   Best Universal Lock Co. -
     Preferred (7% cumulative)                            $          -   $       7.00   $       7.00   $       7.00   $       7.00
                                                          -------------  -------------  -------------  -------------  -------------
                                                          -------------  -------------  -------------  -------------  -------------
     Series A Common (Note 2)                                     1.68           1.67           1.66           1.63           1.61
                                                          -------------  -------------  -------------  -------------  -------------
                                                          -------------  -------------  -------------  -------------  -------------
     Series B Common (Note 2)                                     1.11           1.10           1.09           1.06           1.04
                                                          -------------  -------------  -------------  -------------  -------------
                                                          -------------  -------------  -------------  -------------  -------------

   Frank E. Best, Inc. Common                             $       0.54   $       0.53   $       0.52   $       0.51   $       0.49
                                                          -------------  -------------  -------------  -------------  -------------
                                                          -------------  -------------  -------------  -------------  -------------
</TABLE>
                                          9

<PAGE>

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

Since Frank E. Best, Inc. and Best Universal Lock Co. are non-operating parents
of Best Lock Corporation, a discussion of Best Lock Corporation's business is
necessary in order to understand the character and development of the total
enterprise.  As the variations between the financial statements of these three
companies are not significant, the discussion and analysis of Best Lock
Corporation is representative of all.  The following, therefore, is a discussion
of the business of Best Lock Corporation.

RESULTS OF OPERATIONS - 1996 VS. 1995

Sales grew modestly in 1996, increasing 4.0% over 1995 to a record of $122
million.   The majority of the increase was generated from improved sales
volumes in the Best Locking Systems (distribution) Division.  A price increase
on selected product lines, which became effective late in the third quarter of
1996, also improved sales slightly.

The gross margin improved significantly over 1995, to 47.7% of sales, compared
to 41.0% in the prior year.  The Company experienced a number of cost increases
in 1995 which were either reduced or not experienced during 1996.  These costs
were for higher scrap rates (approximately $1.0 million), disposition of
obsolete inventory (approximately $2.1 million), and higher salaries, wages, and
fringe benefits associated with the manufacture of products ($1.9 million).
During 1996, a task force completed a project of decreasing manufacturing costs
associated with the production of the 9K lever handle lock.  In 1995, the
Company experienced approximately $1.8 million in increased material costs
associated with the 9K lock, due to a redesign of the product which occurred in
late 1994.  During the third quarter of 1996, the Company discovered that
mortise locksets manufactured since December of 1995 did not meet stated
standards and could, in certain situations, cause a security breach.  A $1.0
million charge to product service expense was recorded during the third quarter
of 1996 as a result.

Operating expenses decreased by $3.0 million from 1995, the majority which is
attributable to the following reasons.  Salaries, wages and fringe benefits were
$2.9 million lower than  1996, due to the 1995 $3.1 million restructuring charge
associated with an early retirement, voluntary and involuntary separation plans
for employees in certain job classifications, which was completed in 1996.  The
Company also made changes to the restructuring plan during 1996, which resulted
in a reduction in expense of $800 thousand.   Professional fees decreased $1.9
million from 1995, due to costs associated with development and installation of
new software for the order processing accounts payable and general ledger
functions which were incurred in 1995.  These decreases were partially offset by
increases in certain other expenses.  Depreciation expense associated with
non-production assets increased by $500 thousand, mainly due to depreciation on
approximately $4.4 million of computer equipment placed into service during
1995, the majority of which is being depreciated over three years.  Telephone,
rent, seminars and training, and dues, fees, and subscriptions increased $900
thousand over 1995.  The Company began leasing personal computers during 1996
which had previously been purchased, and a full year of costs associated with a
corporate computer network, which was installed during 1995, were recognized.

Operating income increased by $13.0 million, to 5.7% of sales, due to the
improved margins and lower operating expenses described above.  Interest expense
increased by $325 thousand in 1996, due to a full year of borrowing against a
bank line of credit which was established on February 15, 1995.

Net income increased by $7.7 million to $3.5 million, or 2.8% of sales in 1996.
Income tax expense was 42.8% of the income before tax in 1996, compared to a
benefit of  35.9% of the loss before tax in 1995.  The increase in the effective
tax rate is due to an increase in state tax expense.


                                          10


<PAGE>


RESULTS OF OPERATIONS - 1995 VS. 1994

Sales for 1995 were $117.7 million, which was a record, and was 13.2% higher
than 1994.   Improved sales volumes both at the Best Locking Systems Division
and at the Best Lock Manufacturing Division, as well as a decrease in the
backlog at Best Lock Manufacturing, attributed to the increase in sales.  The
1995 gross margin decreased from 47.9% to 41.0% of sales, mainly due to
increased material costs.  Approximately $1.8 million of the increase in
material costs was related to the redesign of the Company's 9K lever handle
lock, which occurred in late 1994.  The Company did not increase the price of
this product to its customers, even though the standard cost per unit increased
by approximately 18% due to the redesign.  Higher scrap rates in the production
of this product were also experienced during 1995, which increased costs by
approximately $1.0 million.  In addition, the Company disposed of obsolete
inventory during the year of approximately $2.1 million.  Salaries, wages and
fringe benefits associated with the manufacture of products increased by
approximately $1.9 million during 1995.

Selling, general and administrative, and engineering costs were $7.3 million
higher than 1994 levels.  During the fourth quarter of 1995, the Company
announced a restructuring plan with the goal of significantly reducing
payroll-related expenses.  The provisions of the plan included early retirement
as well as voluntary and involuntary separation for employees in certain job
classifications, mostly non-production related.  The Company recorded a $3.1
million restructuring charge in the fourth quarter of 1995 for costs associated
with this plan.  Professional fees were $3.0 million higher than 1994, mainly
due to assistance required for the development and installation of new software
for the order fulfillment, accounts payable, and general ledger functions.  This
software was put into production during the third quarter of 1995 and the first
quarter of 1996.  Sales commissions were $485,000 higher than 1994, due to
higher sales and a change in commission rates.  The remainder of the increase in
selling, general and administrative, and engineering expenses was mainly due to
higher travel expenses of $366,000.

Research and development expenditures for 1995 were approximately the same level
as 1994, at $3.1 million.  The Company began marketing its electronic access
security product during the fourth quarter of 1995.  Other research and
development expenditures related to the development of computer software.

As a result of the factors described above, operating income decreased by $8.9
million, or 7.6% of sales, to a loss of $6.1 million for 1995.  Interest expense
increased by $863 thousand, due to borrowings against a bank line of credit.
Proceeds from the borrowings were used to finance the purchase of an interest in
Best Lock Partnership (a newly-formed partnership created for the purpose of
acquiring shares of Best and Universal from Walter E. Best and certain other
family members and trusts) and for the payment of severance, vacation and bonus
payments to Walter E. Best, Robert W. Best, Richard E. Best, Marshall W. Best
and Edwina McLemore in exchange for their resignations.  $1.2 million of the
proceeds from the borrowings was also used for payment in exchange for covenants
not to compete from Walter E. Best, Robert W. Best, Richard E. Best, and
Marshall W. Best.

Other income increased by $748,000 from 1994 to 1995.  During 1994, the Company
accrued $701,000 of professional fees relating to the settlement of claims
arising from a derivative action against it by a director, as well as all claims
against the Chief Executive Office and another officer.  These expenses were
reflected in other income (expense) in 1994.

Net income decreased by $6.4 million to a loss of $4.2 million, or 3.6% of sales
in 1995.  Income tax benefit was 35.9% of the loss before tax in 1995.  For
1994, income tax expense was 8.1% of the income before tax, mainly due to the
generation of tax credits during 1993 that the company recognized in 1994.


                                          11


<PAGE>

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

The Company's current ratio was 2.5 at December 31, 1996, compared to 2.0 at
December 31, 1995.  Current assets increased by $3.9 million during 1996, due to
higher receivables.  These higher receivables are associated with higher sales
during the fourth quarter of 1996 of approximately $5.1 million.  Inventories
increased by $2.4 million, mainly at the manufacturing division, due to higher
order volume in the fourth quarter of 1996.  Estimated refundable income taxes
decreased $2.6 million due to the receipt of refunds associated with the 1995
net loss.

Property, plant and equipment additions decreased by $4.2 million to $1.4
million in 1996 from the 1995 total of $5.6 million.  Approximately $3.4 million
of the 1995 capital expenditures related to the installation of enhanced
computer systems and related software.  Capital expenditures for 1997 are
expected to be in the $3.5 million range, which includes approximately $1.5
million for improvements to manufacturing equipment and tooling.

Total liabilities decreased by $2.2 million from 1995 to 1996.  Approximately
$1.5 million of the decrease was in current liabilities.  Accrued restructuring
expense decreased $2.5 million, due to payouts of amounts expensed during 1995
and changes to the plan described in Note 14 to the consolidated financial
statements.  Accounts payable decreased approximately $802 thousand.  Accrued
income taxes increased $492 thousand, due to higher taxable income in 1996.  The
warranty accrual, established during 1996, increased $999 thousand.  This
accrual is for the estimated material, labor and travel costs to replace certain
parts in mortise locksets manufactured from December of 1995 through September
of 1996, as discussed above.

The Company desires to retain its strong credit rating, and therefore pays all
vendors according to terms and takes all discounts offered.

Cash provided by operating activities increased to $3.3 million in 1996,
compared with $1.4 million in 1995.  The $1.9 million increase was partially due
to the increase in net income of $7.7 million, offset by a $4.5 million increase
in accounts and notes receivable, and a $2.0 million decrease in accounts
payable, customer advances, and other liabilities.

During 1995, the Company negotiated a $25 million bank line of credit for the
purpose of acquiring an interest in Best Lock Partnership.  On February 15,
1995, $12.0 million was borrowed under the line of credit in order to finance
this transaction.  As of December 31, 1996, $15.0 million was outstanding.  The
remainder of the line remains available for additional funds, if required.  The
Company expects to repay the loan from future operating cash flows.  The Company
also believes that the amounts available from operating cash flows and under the
line of credit will be sufficient to meet its expected cash needs, including
planned capital expenditures.

OTHER

Foreign sales were approximately 6% of sales during 1996, which was the same
percentage as 1995 and a slight decrease from the 7% level in 1994.

The firm backlog of approximately $4.7 million as of February 7, 1997 is
approximately $500 thousand higher than the prior year.  The increase is
primarily due to a higher volume of orders in January 1997 compared with January
1996.

The Company has not experienced any unusual inflation in its purchases or sales
for the years 1996, 1995, or 1994.

The Company has not had and does not expect to incur any significant future
environmental liability.


                                          12


<PAGE>

ITEM 8.       FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.


(a)  1.       Financial Statements:

              Report of Independent Public Accountants

              Consolidated Balance Sheets, December 31, 1996 and 1995

              Consolidated Statements of Income (Loss) for the Years Ended
              December 31, 1996, 1995 and 1994

              Consolidated Statements of Shareholders' Equity for the Years
               Ended December 31, 1996, 1995 and 1994

              Consolidated Statements of Cash Flows for the Years Ended
              December 31, 1996, 1995 and 1994

              Notes to Consolidated Financial Statements

              Schedules Supporting Consolidated Financial Statements-

              Schedule
               Number
              --------
                II           Valuation and Qualifying Accounts - Corporate and
                               Consolidated - for the Years Ended December 31,
                               1996 through 1994


                                          13


<PAGE>



                        REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To Shareholders of Best Lock Corporation:

We have audited the accompanying consolidated balance sheets of BEST LOCK
CORPORATION (a Delaware corporation) AND SUBSIDIARY as of December 31, 1996 and
1995, and the related consolidated statements of income (loss), shareholders'
equity and cash flows for each of the three years in the period ended December
31, 1996.  These financial statements are the responsibility of the Company's
management.  Our responsibility is to express an opinion on these financial
statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Best Lock Corporation and
subsidiary as of December 31, 1996 and 1995, and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 1996 in conformity with generally accepted accounting principles.

Our audits were made for the purpose of forming an opinion on the consolidated
statements taken as a whole.  The schedule listed under Item 8 is the
responsibility of the Company's management and is presented for purposes of
complying with the Securities and Exchange Commission's rules and is not part of
the basic consolidated financial statements.  This schedule has been subjected
to the auditing procedures applied to the audit of the basic consolidated
financial statements and, in our opinion, fairly states in all material respects
the financial data required to be set forth therein in relation to the basic
consolidated financial statements taken as a whole.



                                                             ARTHUR ANDERSEN LLP


Indianapolis, Indiana,
February 6, 1997.


                                          14


<PAGE>



                         BEST LOCK CORPORATION AND SUBSIDIARY
                             CONSOLIDATED BALANCE SHEETS


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

<TABLE>
<CAPTION>

                                                                 December 31
                                                         ---------------------------
                                                             1996           1995
                                                         ------------   ------------
<S>                                                       <C>            <C>
CURRENT ASSETS
   Cash and cash equivalents (Note 1)                    $  2,049,022   $  1,348,876
   Trade receivables
      Direct                                               15,453,983     11,878,119
      Sales representatives and other                       2,486,882      1,893,871
      Allowance for uncollectible accounts                   (244,866)      (263,559)
   Estimated refundable income taxes                           51,632      2,628,103
   Current portion of notes receivable (Note 16)               64,909         14,895
   Inventories (Notes 1 and 4)                             13,779,015     11,383,058
   Deferred income taxes  (Note 5)                          3,224,592      4,239,578
   Prepaid expenses and other                                 490,872        379,906
                                                           -----------    -----------
         Total current assets                              37,356,041     33,502,847
                                                           -----------    -----------

PROPERTY, PLANT AND EQUIPMENT, at cost (Notes 1 and 3)
   Land and buildings                                      14,155,116     14,200,461
   Machinery and equipment                                 27,810,609     28,941,851
   Tooling                                                  8,633,648      8,519,483
   Furniture, fixtures and other                           12,314,557     11,034,048
   Construction work-in-progress                              184,311      2,473,290
                                                           -----------    -----------
                                                           63,098,241     65,169,133
   Less - accumulated depreciation                        (36,202,495)   (34,297,523)
                                                           -----------    -----------
         Total property, plant and equipment               26,895,746     30,871,610
                                                           -----------    -----------

OTHER ASSETS
   Long-term notes receivable (Note 16)                     3,303,799      3,358,972
   Other assets                                             1,326,957      1,283,467
                                                           -----------    -----------

         Total assets                                    $ 68,882,543   $ 69,016,896
                                                           -----------    -----------
                                                           -----------    -----------

</TABLE>


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


                                          15


<PAGE>

                         BEST LOCK CORPORATION AND SUBSIDIARY
                             CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>

------------------------------------------------------------------------------------
                                                                 December 31
                                                         ---------------------------
                                                             1996           1995
                                                         ------------   ------------
<S>                                                       <C>            <C>
CURRENT LIABILITIES
   Notes payable                                         $      2,500   $      2,500
   Current portion of retirement benefit obligation         1,364,671      1,362,431
   Trade accounts payable                                   2,685,191      3,487,402
   Customer advances                                        1,849,175      1,433,801
   Accrued liabilities
      Income taxes                                            923,254        430,953
      Property and other taxes                                876,669        976,765
      Payroll and vacation pay                              4,413,772      4,225,317
      Accrued restructuring (Note 14)                         999,111      3,462,508
      Accrued medical claims                                  750,000        970,000
      Accrued warranty                                        998,835              -
      Other                                                   154,155        194,497
                                                         ------------   ------------
         Total current liabilities                         15,017,333     16,546,174
                                                         ------------   ------------

LONG-TERM DEBT (Note 7)                                    15,000,000     15,197,079
RETIREMENT BENEFIT OBLIGATION (Note 10)                     3,213,399      3,870,345
DEFERRED INCOME TAXES (Note 5)                              2,305,265      2,120,957
                                                         ------------   ------------
         Total liabilities                                 35,535,997     37,734,555
                                                         ------------   ------------

COMMON STOCK AND COMMON STOCK OF UNIVERSAL
  REDEEMABLE UNDER STOCK BONUS PLAN (Note 8)                6,083,413      5,931,931
                                                         ------------   ------------

SHAREHOLDERS' EQUITY
   Common stock, no par value, 200,000 shares
      authorized; 145,128.85 shares issued;
      120,653.85 shares outstanding 1996,
      121,653.85 shares outstanding 1995                    1,407,841      1,407,841

   Accumulated earnings                                    47,568,339     44,826,657

   Cumulative translation adjustment (Note 1)                (228,605)      (141,496)

   Common stock and common stock of Universal
      redeemable under Stock Bonus Plan (Note 8)           (6,083,413)    (5,931,931)

   Treasury stock                                         (15,401,029)   (14,810,661)
                                                         ------------   ------------
         Total shareholders' equity                        27,263,133     25,350,410
                                                         ------------   ------------

         Total liabilities and shareholders' equity      $ 68,882,543   $ 69,016,896
                                                         ------------   ------------
                                                         ------------   ------------

</TABLE>


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


                                          16


<PAGE>

                                 This page not used.







                                          17


<PAGE>

                                 This page not used.








                                          18




<PAGE>
                                 BEST LOCK COMPANIES
                         BEST LOCK CORPORATION AND SUBSIDIARY
     BEST UNIVERSAL LOCK CO. ( A NON-OPERATING HOLDING COMPANY) AND SUBSIDIARIES
        FRANK E. BEST, INC. (A NON-OPERATING HOLDING COMPANY) AND SUBSIDIARIES

                       CONSOLIDATED STATEMENTS OF INCOME (LOSS)
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
                                                                                                   Year Ended December 31
                                                                                       -------------------------------------------
                                                                                            1996            1995           1994
                                                                                       -------------  -------------  -------------
<S>                                                                                    <C>            <C>            <C>
NET SALES                                                                              $ 122,358,592  $ 117,705,629  $ 103,954,763

COST OF GOODS SOLD                                                                        64,006,688     69,400,346     54,111,283
                                                                                       -------------  -------------  -------------
GROSS MARGIN                                                                              58,351,904     48,305,283     49,843,480

OPERATING EXPENSES
   Selling                                                                                33,230,790     30,656,814     26,997,950
   General and Administrative                                                             17,153,433     21,386,060     16,291,879
   Engineering, research and development                                                     997,249      2,336,673      3,775,743
                                                                                       -------------  -------------  -------------
      Total operating expenses                                                            51,381,472     54,379,547     47,065,572
                                                                                       -------------  -------------  -------------

OPERATING INCOME (LOSS)                                                                    6,970,432     (6,074,264)     2,777,908

   Interest expense                                                                       (1,194,986)      (870,062)        (6,809)
   Other income (expense), net                                                               272,102        380,427       (367,685)
                                                                                       -------------  -------------  -------------
INCOME (LOSS) before provision for income taxes                                            6,047,548     (6,563,899)     2,403,414

   Provision (benefit) for income taxes (Note 5)                                           2,592,935     (2,359,401)       195,259
                                                                                       -------------  -------------  -------------
NET INCOME (LOSS), Best Lock Corporation and Subsidiary                                    3,454,613     (4,204,498)     2,208,155

   Minority interest in net (income) loss, Best Lock Corporation and Subsidiary             (479,160)       521,623       (653,892)
   Corporate - Best Universal Lock Co. expense                                               (50,133)       (55,600)       (39,332)
                                                                                       -------------  -------------  -------------
NET INCOME (LOSS), Best Universal Lock Co. and Subsidiaries                                2,925,320     (3,738,475)     1,514,931

   Minority interest in net (income) loss, Best Universal Lock Co. and Subsidiaries         (513,071)       526,185       (339,232)
   Corporate - Frank E. Best, Inc. expense                                                    74,148        (42,848)       (22,409)
                                                                                       -------------  -------------  -------------
NET INCOME (LOSS), Frank E. Best, Inc. and Subsidiaries                                $   2,486,397  $  (3,255,138) $   1,153,290
                                                                                       -------------  -------------  -------------
                                                                                       -------------  -------------  -------------
<CAPTION>
                                                                                             Best Universal Lock Co.
                                                                             Best Lock    ---------------------------     Frank E.
Earnings (loss) per common share:                                          Corporation     Series A        Series B      Best, Inc.
                                                                          -------------   -----------   ------------   ------------
<S>                                                                      <C>             <C>           <C>            <C>
1996                                                                     $      28.43    $      8.11   $       8.11   $       9.04
                                                                          -----------     ----------    -----------    -----------
                                                                          -----------     ----------    -----------    -----------
1995                                                                     $     (33.88)   $     (9.95)  $      (9.95)  $      (7.61)
                                                                          -----------     ----------    -----------    -----------
                                                                          -----------     ----------    -----------    -----------
1994                                                                     $      16.83    $      3.92   $       3.92   $       1.93
                                                                          -----------     ----------    -----------    -----------
                                                                          -----------     ----------    -----------    -----------
Weighted average shares outstanding:
1996                                                                       121,517.24      60,588.76     300,000.00     274,999.05
                                                                          -----------     ----------    -----------    -----------
                                                                          -----------     ----------    -----------    -----------
1995                                                                       124,114.13      75,669.87     300,000.00     427,806.72
                                                                          -----------     ----------    -----------    -----------
                                                                          -----------     ----------    -----------    -----------
1994                                                                       131,235.37      86,469.00     300,000.00     598,710.00
                                                                          -----------     ----------    -----------    -----------
                                                                          -----------     ----------    -----------    -----------
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
                                          19
<PAGE>


                         BEST LOCK CORPORATION AND SUBSIDIARY
                   CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY



<TABLE>
<CAPTION>

--------------------------------------------------------------------------------------------------------------
                                                                                     December 31
                                                                    ------------------------------------------
                                                                        1996           1995            1994
                                                                    -------------  -------------  ------------
<S>                                                                 <C>            <C>            <C>
COMMON STOCK, no par value, 200,000 shares
   authorized; 145,128.85 shares issued; 120,653.85
   shares outstanding 1996, 121,653.85 shares outstanding
   1995, 131,185.85 shares outstanding 1994                        $  1,407,841   $  1,407,841   $  1,407,841
                                                                    -------------  -------------  ------------

ACCUMULATED EARNINGS
   Balance at beginning of year                                      44,826,657     49,523,858     48,024,394
   Net income (loss)                                                  3,454,613     (4,204,498)     2,208,155
   Cash dividends received                                              211,859        165,444           -
   Cash dividends paid (see below)                                     (653,938)      (658,147)      (708,691)
   Additional minimum liability for pension                            (270,852)         -               -
                                                                    -------------  -------------  ------------
   Balance at end of year                                            47,568,339     44,826,657     49,523,858
                                                                    -------------  -------------  ------------


COMMON STOCK AND COMMON STOCK OF UNIVERSAL AND
   BEST, REDEEMABLE UNDER STOCK BONUS PLAN (Note 8)                  (6,083,413)    (5,931,931)    (8,939,316)
                                                                    -------------  -------------  ------------

CUMULATIVE TRANSLATION ADJUSTMENT (Note 1)                             (228,605)      (141,496)      (197,955)
                                                                    -------------  -------------  ------------


TREASURY STOCK
   Balance at beginning of year                                     (14,810,661)      (784,355)      (763,950)
   Shares purchased                                                    (590,368)   (14,026,306)       (20,405)
                                                                    -------------  -------------  ------------
   Balance at end of year                                           (15,401,029)   (14,810,661)      (784,355)
                                                                    -------------  -------------  ------------
      Total shareholders' equity                                  $  27,263,133  $  25,350,410  $  41,010,073
                                                                    -------------  -------------  ------------
                                                                    -------------  -------------  ------------


Cash dividends per share                                                $  5.42        $  5.41        $  5.40
                                                                    -------------  -------------  ------------
                                                                    -------------  -------------  ------------

</TABLE>

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


                                          20


<PAGE>

                         BEST LOCK CORPORATION AND SUBSIDIARY
                        CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>

--------------------------------------------------------------------------------------------------------------
                                                                                Year Ended December 31
                                                                  --------------------------------------------
                                                                         1996            1995          1994
                                                                  --------------  -------------  -------------
<S>                                                               <C>             <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Cash received from customers                                   $  118,027,815  $ 119,115,867  $ 103,456,897
  Cash paid to suppliers and employees                             (115,372,089)  (116,012,304)   (92,551,180)
  Interest received                                                     190,183        494,908        137,171
  Interest paid                                                      (1,208,188)      (761,831)        (3,353)
  Income taxes refunded (paid)                                        1,686,335     (1,460,682)        14,044
                                                                  --------------  -------------  -------------
    Net cash provided by operating activities                         3,324,056      1,375,958     11,053,579
                                                                  --------------  -------------  -------------

CASH FLOWS FROM INVESTING ACTIVITIES
  Proceeds from sale of property, plant and equipment                    50,433         88,383        167,790
  Capital expenditures                                               (1,430,688)    (5,593,397)    (3,895,823)
  Note receivable from an officer                                          -              -        (3,400,000)
                                                                  --------------  -------------  -------------
    Net cash used in investing activities                            (1,380,255)    (5,505,014)    (7,128,033)
                                                                  --------------  -------------  -------------

CASH FLOWS FROM FINANCING ACTIVITIES
  Borrowings against unsecured line of credit                        30,300,000     29,064,607           -
  Payments on unsecured line of credit                              (30,497,079)   (14,100,000)          -
  Purchase of treasury stock                                           (559,973)   (13,793,834)       (20,405)
  Dividend receipts                                                     211,859        165,444           -
  Dividend payments                                                    (653,938)      (658,147)      (708,691)
                                                                  --------------  -------------  -------------
    Net cash (used in) provided by  financing activities             (1,199,131)       678,070       (729,096)
                                                                  --------------  -------------  -------------

EFFECT OF EXCHANGE RATE CHANGES ON CASH                                 (44,524)         7,779         (6,859)
                                                                  --------------  -------------  -------------

NET CHANGE IN CASH AND CASH EQUIVALENTS                                 700,146     (3,443,207)     3,189,591
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                        1,348,876      4,792,083      1,602,492
                                                                  --------------  -------------  -------------
CASH AND CASH EQUIVALENTS AT END OF YEAR                           $  2,049,022   $  1,348,876   $  4,792,083
                                                                  --------------  -------------  -------------
                                                                  --------------  -------------  -------------


RECONCILIATION OF NET INCOME (LOSS) TO NET CASH PROVIDED BY OPERATING ACTIVITIES
  Net income (loss)                                                $  3,454,613  $  (4,204,498)  $  2,208,155
  Adjustments-
    Depreciation and amortization                                     5,464,788      4,904,810      4,364,558
    Provision for losses on accounts receivable                         128,006        117,417         38,413
    Loss (Gain) on sale of property, plant and equipment                125,232         83,408         (4,875)
    Deferred income taxes (credit)                                    1,199,294       (821,068)    (1,200,306)
  Changes in assets and liabilities-
    (Increase) decrease in
      Accounts and notes receivable                                  (4,482,755)       600,453       (703,419)
      Refundable income taxes                                         2,576,471     (2,559,696)     1,484,991
      Inventories                                                    (2,431,366)     3,226,858       (139,575)
      Prepaid expenses and other                                         24,856       (227,564)      (786,074)
      Other assets                                                     (299,264)    (1,341,482)       222,977
    Increase (decrease) in
      Accounts payable, customer advances and accrued liabilities    (2,013,766)     2,630,801      4,905,541
      Income taxes payable                                              503,505       (439,319)       693,421
      Retirement benefit obligation                                    (654,706)      (594,162)       (30,218)
      Additional minimum liability for pension                         (270,852)          -              -
                                                                  --------------  -------------  -------------
NET CASH PROVIDED BY OPERATING ACTIVITIES                          $  3,324,056   $  1,375,958  $  11,053,589
                                                                  --------------  -------------  -------------
                                                                  --------------  -------------  -------------

</TABLE>

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


                                          21


<PAGE>

                                BEST LOCK COMPANIES

                      BEST LOCK CORPORATION AND SUBSIDIARY
  BEST UNIVERSAL LOCK COMPANY (A NONOPERATING HOLDING COMPANY) AND SUBSIDIARIES
      FRANK E. BEST, INC. (A NONOPERATING HOLDING COMPANY) AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.   NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

     a.  NATURE OF BUSINESS
          The principal business of the Best Lock Companies is the manufacture
or sourcing, distribution and sale of access control products and services.

     b.  PRINCIPLES OF CONSOLIDATION
          The consolidated financial statements for each parent company in the
Best Lock Companies include their respective subsidiaries as indicated below:

                                                                       Percent
     Parent Company                Subsidiaries                         Owned
     --------------                ------------                        -------
     Frank E. Best, Inc.         Best Universal Lock Co.                 83%
     (Best)
     Best Universal Lock Co.
     (Universal)                 Best Lock Corporation                   79%
     Best Lock Corporation
     (Lock or the Company)       Best Universal Locks Limited (Canada)  100%

     All significant intercompany accounts, investments and transactions have
been eliminated in the consolidations.

     Best and Universal, other than their investment in subsidiaries, have no
significant assets or liabilities.

     c.  CASH EQUIVALENTS
          The Company considers all highly liquid debt instruments purchased
with a maturity of three months or less to be cash equivalents.  Cash
equivalents are stated at cost, which approximates market value.

     d.  INVENTORIES
          Inventories are valued using the last-in, first-out (LIFO) method for
approximately 97% of consolidated inventories.  The remaining inventories are
valued at the lower of cost, first-in, first-out (FIFO) or market.

     e.  REVENUE RECOGNITION
          Sales are recognized when product is shipped to customers or when
service or installation is complete.


                                       22
<PAGE>

                                BEST LOCK COMPANIES
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


     f.  DEPRECIATION
          Depreciation is provided on the straight-line method for book purposes
and on an accelerated method for income tax purposes.

     g.  AMORTIZATION
          During 1995, the Company purchased covenants not to compete for
$1,240,000 which are being amortized ratably over the life of the covenants.
Amortization expense was $248,000 in 1996 and $206,667 in 1995.

     h.  RESEARCH AND DEVELOPMENT
          Research and development costs related to products are expensed as
incurred.    Development costs related to software for internal use are expensed
or capitalized as incurred, depending on the useful life of the expenditure.
The total amounts expensed were approximately $769,000, $3,055,000 and
$3,050,000 in 1996, 1995, and 1994, respectively.

     i.  CURRENCY TRANSLATION
          The accounts of Lock's Canadian subsidiary are translated whereby the
balance sheet accounts are translated at the exchange rate in effect at period
end, income accounts are translated at the average rate of exchange during the
period, and translation gains and losses are excluded from net earnings by being
recorded as a component of shareholders' equity (Cumulative Translation
Adjustment).  The consolidated financial statements include translation (losses)
gains of ($87,109), $56,459 and ($89,392) in 1996, 1995 and 1994, respectively,
all of which are reflected as a component of shareholders' equity.

     j.  NONCASH TRANSACTION
          The Company financed the purchase of $348,702 of treasury stock during
1995 by issuing a note payable.

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

2.  DIVIDENDS

     The Articles of Incorporation of Universal require that dividends on common
stock be distributed on a noncumulative basis as follows:  a) the first
approximately $138,000 in dividends are to be distributed equally to Series A
holders and to Series B holders and, b) the remainder is distributed on an equal
per share basis to Series A and B holders.  These disproportionate distributions
are reflected in calculating the minority interest of Best.


                                       23
<PAGE>

                                BEST LOCK COMPANIES
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


3.  PROPERTY, PLANT AND EQUIPMENT

     For financial reporting purposes, depreciation is provided using the
following straight-line rates:
          Buildings                     2.50%, 3% & 5%
          Land Improvements             6.67% & 10%
          Machinery and equipment       8.33%
          Tooling                       12.50% & 20%
          Furniture and fixtures        10% to 33%
          Vehicles                      20% to 50%

     A 3-year depreciation life was adopted in 1995 for certain items such as
computers, fax machines, copiers and telephone systems, to reflect a decreased
useful life resulting from accelerating technology changes.  The depreciable
life for additions of this type was 5 years in 1994 and years prior.  Computer
software is being depreciated using a 5 year life.

     Expenditures for property, plant and equipment are reflected as
construction work-in-progress until they are placed into service.  The type and
nature of the costs capitalized include only costs from unrelated third parties
for equipment and installation.

     Maintenance and repairs are expensed as incurred.  Replacements and
betterments which extend the useful life of an asset are capitalized in the
property accounts.

     Retirements are removed from property accounts at cost and the related
depreciation is removed from the accumulated depreciation accounts.  Gains or
losses on dispositions of property and equipment are reflected in other income
(expense), net in the consolidated statements of income (loss).

4.  INVENTORIES

     FIFO cost of inventories approximates replacement cost and exceeds LIFO
inventory by $7,923,000, $8,597,000, and $7,616,000 in 1996, 1995 and 1994,
respectively.

     Inventories reflected at LIFO cost were as follows:

                                                    December 31
                                     ---------------------------------------
                                         1996          1995         1994
                                     -----------   -----------  ------------

Finished goods                        $5,327,940    $4,958,614   $6,526,239
Work-in-process                        8,171,869     6,182,505    7,816,878
Raw material                             279,207       241,939      235,941
                                     -----------   -----------  ------------
Total Inventory                      $13,779,015   $11,383,058  $14,579,058
                                     -----------   -----------  ------------
                                     -----------   -----------  ------------


                                       24
<PAGE>

                                BEST LOCK COMPANIES
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


     The cost of materials, direct labor and manufacturing overhead associated
with the production of inventories is included in the valuation of inventory.

     During 1995, inventory quantities were reduced.  This reduction resulted in
a liquidation of LIFO inventory quantities carried at lower costs prevailing in
prior years as compared with the cost of 1995 purchases.  The effect of this
liquidation increased net income by approximately $480,000 or $3.87 per share of
common stock in 1995.

5.  INCOME TAXES

     The provision (benefit) for income taxes consisted of the following:

<TABLE>
<CAPTION>

                                                     Years Ended December 31
                                            ---------------------------------------
                                                1996           1995         1994
                                            ----------    ------------  -----------
<S>                                         <C>           <C>           <C>
      U.S. Federal -
           Current                          $  686,229    $(1,293,028)  $1,688,594
           Deferred                          1,101,944       (646,845)  (1,847,248)
      Foreign -
          Current                              144,207        203,810       12,880
          Deferred                               --             4,902       17,694
      State -
          Current                              563,205       (515,232)     462,885
          Deferred                              97,350       (113,008)    (139,546)
                                            ----------    ------------  -----------
                                            $2,592,935    $(2,359,401)    $195,259
                                            ----------    ------------  -----------
                                            ----------    ------------  -----------
</TABLE>

Earnings (loss) before income taxes were as follows:

                                                Years Ended December 31
                                       ---------------------------------------
                                           1996           1995         1994
                                       ----------    ------------  -----------

Domestic                               $5,704,209    $(7,060,863)  $2,335,442
Foreign                                   343,339        496,964       67,972
                                       ----------    ------------  -----------
                                       $6,047,548    $(6,563,899)  $2,403,414
                                       ----------    ------------  -----------
                                       ----------    ------------  -----------


                                       25
<PAGE>

                                BEST LOCK COMPANIES
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


The effective income tax rate varied from the U.S. Federal statutory rate for
the following reasons:

<TABLE>
<CAPTION>

                                                      Years Ended December 31
                                             ---------------------------------------
                                                 1996           1995         1994
                                             ----------    ------------  -----------
<S>                                          <C>           <C>           <C>
      Statutory Federal tax rate                  34.0%        (34.0%)        34.0%
      The statutory rate of tax provided
           was increased (decreased) by:
      State income taxes, net of
           Federal income tax benefit              7.2           (6.3)         8.8
      Foreign tax credit                          (7.4)             -        (27.3)
      Foreign income taxes                         0.5            0.6          0.3
      Alternative minimum tax credits
           and research and development
           tax credits                            -              -           (10.8)
      Nondeductible expenses                       7.5            5.5          5.0
      Other                                        1.1           (1.7)        (1.9)
                                             ----------    ------------  -----------
      Effective rate of tax provided
           (benefited)                            42.9%         (35.9)%        8.1%
                                             ----------    ------------  -----------
                                             ----------    ------------  -----------
</TABLE>

     At December 31, 1996, the Company had $605,000 of unutilized foreign tax
credits.  Of this amount, approximately $158,000 must be used by 1998; the
balance expires in 2001.  The Company believes these foreign tax credits will be
utilized during the carryover period and thus has recorded the benefit of the
credits as a reduction to the provision for income taxes for the year ended
December 31, 1996.

     The Company also has alternative minimum tax credits available to offset
future U.S. tax obligations.  These credits have no expiration date and were
generated as a result of the carryback of the 1995 net operating loss to 1992
and 1993.  The benefit of the balance of these credits of $147,000 has been
reflected as a reduction to the provision for income taxes for the year ended
December 31, 1996.


                                       26
<PAGE>

                                BEST LOCK COMPANIES
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


     The tax effect of temporary differences giving rise to the Company's
consolidated current and noncurrent deferred income taxes are as follows:

<TABLE>
<CAPTION>
                                                   Asset (Liability) as of December 31
                                                   -----------------------------------
                                                                1996         1995
                                                            ----------    -----------
<S>                                                        <C>            <C>
      Current deferred income taxes:
      Vacation accrual                                        $819,419     $768,760
      Inventory capitalized for tax purposes,
           expensed for book purposes                          228,699      209,286
      Current portion of pension and qualified
           retirement benefit obligations                      692,502      625,097
      Restructuring accrual                                    398,029    1,382,926
      Medical claims accrual                                   213,679      301,547
      Inventory reserve                                        119,820      119,820
      Current portion of foreign tax credit                    202,990      307,467
      Current portion of AMT credit                            147,155      287,037
      Warranty accrual                                         265,956           --
      Other                                                    136,343      237,638
                                                            ----------    -----------
                                                            $3,224,592   $4,239,578
                                                            ----------    -----------
                                                            ----------    -----------
      Noncurrent deferred income taxes:
      Excess tax over book depreciation                    $(3,811,799) $(4,366,125)
      Noncurrent portion of foreign tax credit                 401,769      508,612
      Noncurrent portion of AMT credit                              --      345,788
      Noncurrent portion of pension and
           qualified retirement benefit obligations          1,094,384    1,337,114
      Other                                                     10,381       53,654
                                                            ----------    -----------
                                                           $(2,305,265) $(2,120,957)
                                                            ----------    -----------
                                                            ----------    -----------
</TABLE>

                                       27
<PAGE>

                                BEST LOCK COMPANIES
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


6.  LICENSE AGREEMENT

     Under the terms of a 1928 license agreement between Lock and its parent
companies (Universal and Best), Lock agreed to issue a companion share of stock
to Universal for each share of voting stock sold or otherwise disposed of during
the full period of the corporate existence.

7.  DEBT

     The Company has an agreement with a financial institution for letters of
credit available primarily for issuance to a foreign vendor.  At December 31,
1996, the Company had no outstanding letters of credit.

     The Company entered into a $25.0 million line of credit agreement on
February 15, 1995, which was amended effective December 31, 1996 and December
31, 1995.  The agreement expires on May 5, 1998 and bears interest at a variable
rate, based upon the prime rate or LIBOR, at the Company's election.  The line
of credit is secured by a blanket lien on all accounts and notes receivable,
inventory, machinery and equipment, and intangible assets with a negative pledge
on real estate.  The agreement contains financial covenants including those
relating to debt service coverage, tangible net worth, and liabilities to
tangible net worth.  As of December 31, 1996, the Company was in compliance with
all required covenants.

8.  STOCK BONUS PLAN

     The Best Lock Corporation Stock Bonus Plan (Stock Bonus Plan) is available
to Lock employees meeting certain eligibility requirements.  The Stock Bonus
Plan is noncontributory and is qualified pursuant to the applicable provisions
of the Internal Revenue Code.  Lock did not contribute to the Stock Bonus Plan
in 1996, 1995, and 1994. Contributions are determined by Lock's Board of
Directors.

     Plan participants, upon reaching certain eligibility requirements, may
receive cash or shares of Lock, Universal and/or Best common stock.  In the
event the participants elect or are required to receive shares, the participants
have the right to require Lock to repurchase such shares in cash at its fair
market value.  As a result, the fair market value of the shares, determined
based on an independent appraisal, held by the Stock Bonus Plan, has been
reflected in the accompanying consolidated balance sheets as "Common stock and
common stock of Universal and Best, redeemable under Stock Bonus Plan."  The
Stock Bonus Plan was amended in 1996 to allow 1996 retirees to receive
distributions earlier than the plan previously provided.  The accelerated payout
for the 1996 retirees is based on a formula which considers age and years of
service.

     On December 28, 1995, Lock purchased all of the common stock of Best held
by the Stock Bonus Plan at an independently appraised value as of December 27,
1995, of $29.74 per share.  The purpose of this transaction was to provide
liquidity to the Stock Bonus Plan in anticipation of payments out of the plan
pursuant to the early retirement plan discussed in Note 14.


                                       28
<PAGE>

                                BEST LOCK COMPANIES
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


     9.  SEGMENT REPORTING

     The Best Lock Companies are engaged in the manufacture and sale of access
control products and services only, and as such do not report on a segment
basis.  Sales outside the U.S. amounted to approximately 6% of total sales
during 1996 and 1995 and 7% of total sales during 1994.

10.  RETIREMENT PLANS

     Effective September 1, 1989, the Company adopted a noncontributory defined
benefit Employees' Pension Plan (the Plan) to provide retirement benefits to
substantially all current and retired U.S. employees as of September 1, 1989.
The Company has received a favorable determination letter for the Plan from the
Internal Revenue Service.  The Plan provides benefits for past service only.
The monthly benefit is based on the employee's years of service and compensation
as of September 1, 1989.  The benefits for retired employees were based upon
amounts specified in the Plan.  Under the Plan's provisions, all participants
were 100% vested at September 1, 1989.  Normal retirement age is 65 with
provisions for earlier retirement with reduced benefits.  After several years of
accelerated funding, the Company is currently making quarterly contributions to
the Plan in amounts necessary to meet minimum governmental funding requirements.
Company contributions are made to a trust fund whose assets consist of
investments in high-quality short-term money market instruments.

     A summary of the components of net periodic pension cost in 1996, 1995 and
1994 for the Plan follows:

                                               1996        1995       1994
                                             ---------   --------   --------
     Interest cost on projected
       benefit obligation                    $557,686    $691,987   $230,566
     Actual return on plan assets            (277,736)   (351,395)  (198,724)
     Net amortization and deferral           (204,119)      --         --
                                             ---------   --------   --------
     Net periodic pension costs               $75,831    $340,592    $31,842
                                             ---------   --------   --------
                                             ---------   --------   --------

Plan assumptions in 1996, 1995 and 1994 were:

     Discount rate . . . . . . . . . . . . . . . . . . . . . . . .     8.0%
     Expected long-term rate of return on Plan assets. . . . . . .     8.0%


                                       29
<PAGE>

                                BEST LOCK COMPANIES
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


     The following table sets forth the Plan's funded status and amounts
recognized in the consolidated balance sheet at December 31, 1996:

<TABLE>
<S>                                                                   <C>
      Actuarial present value of benefit obligation                    $7,631,924
      Plan assets at fair value                                         6,298,993
                                                                       ----------
      Projected benefit obligation in excess of plan assets             1,332,931
      Unrecognized net gain (loss)                                       (376,747)
      Prior service cost not yet recognized                              (164,879)
      Remaining net asset at transition                                   259,065
      Intangible asset                                                    164,879
      Charge to equity                                                    117,682
                                                                       ----------
      Net pension liability                                            $1,332,931
                                                                       ----------
                                                                       ----------
</TABLE>

     In addition to the Plan adopted on September 1, 1989, the Company executed
supplemental retirement benefit agreements with certain retirees and officers.
For financial reporting purposes, the actuarial present value (discounted at 8%)
of the benefits to be provided under the terms of these agreements were
recognized in 1989 and subsequent years.  Prior to 1995, the agreement with the
Company's former President was amortized over his estimated remaining service
life.  Effective in 1994, the actuarial present value of the benefit to be
provided to the Company's former President under the terms of the agreement was
fully recognized.  This change in assumptions resulted in an increase in 1994
expense of approximately $800,000.  The benefits under these agreements will be
paid monthly by the Company over the lifetime of the recipients and, upon their
death, 50% of the scheduled amount for the lifetime of the surviving spouse.

     A summary of the components of net periodic pension cost in 1996, 1995 and
1994 for the supplemental retirement benefit agreements follows:

<TABLE>
<CAPTION>

                                                   1996        1995        1994
                                                --------    --------    ----------
<S>                                             <C>         <C>         <C>
      Interest cost on projected
         benefit obligation                     $226,858    $356,758    $1,030,833
      Actual return on plan assets                 --          --            --
      Net amortization and deferral                4,325       --            --
                                                --------    --------    ----------
      Net periodic pension costs                $231,183    $356,758    $1,030,833
                                                --------    --------    ----------
                                                --------    --------    ----------
</TABLE>


                                       30
<PAGE>

                                BEST LOCK COMPANIES
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


Supplemental retirement benefit agreement assumptions  in 1996, 1995 and 1994
were:

     Discount rate. . . . . . . . . . . . . . . . . . . . .   8.0%
     Expected long-term rate of return on assets. . . . . .   8.0%

The following table sets forth the funded status of the supplemental retirement
benefit agreements and amounts recognized in the consolidated balance sheet at
December 31, 1996:

          Actuarial present value of benefit obligation          $2,991,444
          Plan assets at fair value                                 114,311
                                                                 -----------
          Projected benefit obligation in excess of plan assets   2,877,133
          Unrecognized net gain (loss)                             (153,170)
          Remaining net asset (obligation) at transition            (34,596)
          Intangible asset                                           34,596
          Charge to equity                                          153,170
                                                                 -----------
          Net pension liability                                  $2,877,133
                                                                 -----------
                                                                 -----------

          A summary of the retirement benefit obligations included in the
consolidated balance sheets is presented below:

                                                         1996          1995
                                                     ----------    ----------
          Defined Benefit Employees Pension Plan     $1,332,931    $1,777,989
          Supplemental Retirement Benefit
            Agreements                                2,877,133     3,035,429
          Other                                         368,453       419,358
                                                     ----------    ----------
                                                     $4,578,517    $5,232,776
                                                     ----------    ----------
                                                     ----------    ----------
          Current Portion                            $1,365,118    $1,362,431
          Noncurrent Portion                          3,213,399     3,870,345
                                                     ----------    ----------
                                                     $4,578,517    $5,232,776
                                                     ----------    ----------
                                                     ----------    ----------

     The Company implemented a 401(k) profit sharing plan (the 401(k) Plan)
during 1994.  Employees are eligible after reaching age 21 and completing one
year of continuous service as of the enrollment dates each year.  Employer
contributions to the 401(k) Plan are determined by the Company's Board of
Directors.  Participants begin vesting in the employer contributions after 1
year of service at which time they are 20% vested.  Employees become 100% vested
after 5 years of service.  Company contributions to the 401(k) Plan amounted to
$541,000, $571,000 and $221,000 in 1996, 1995 and 1994, respectively.


                                       31
<PAGE>

                                BEST LOCK COMPANIES
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


11.  CONTINGENCIES

     From time to time the Company is a party to litigation incidental to its
business.  Management is of the opinion that the ultimate resolution of known
claims will not have a material adverse impact on the Company's financial
position or results of operations.

     The Company leases various office and warehouse facilities and other
vehicles under noncancelable lease arrangements.  Lease terms are from one to
ten years and most provide options to renew.  Future minimum lease payments
under noncancelable operating leases as of December 31, 1996 are as follows:

                                             Amount
                                          ----------
                              1997        $  991,592
                              1998           774,249
                              1999           452,072
                              2001           223,066
                              2001-2005      448,784
                                          ----------
                                          $2,889,763
                                          ----------
                                          ----------

     Rent expense charged to operations totaled $956,413, $761,024 and $852,565
in 1996, 1995, and 1994, respectively.

12.  UNDISTRIBUTED EARNINGS

     In general, it is Lock's intention to reinvest the earnings of its foreign
subsidiary in its operations and to repatriate these earnings only when it is
advantageous to do so.  Also, it is Universal's and Best's intention to
minimize, if not eliminate, any income taxes associated with amounts distributed
by its domestic subsidiaries.  As a result, it is expected that the amount of
income taxes resulting from a repatriation will not be significant.
Accordingly, deferred tax amounts are not being recorded related to
undistributed earnings.  The cumulative amounts of undistributed earnings on
which income taxes have not been recognized are as follows:

                                            December 31
                                   -----------      -----------
                                       1996             1995
                                   -----------      -----------
                Best               $17,436,000      $15,607,000
                Universal           21,920,000       19,954,000
                Lock                 2,056,000        1,934,000


                                       32
<PAGE>

                                BEST LOCK COMPANIES
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


13.  RECLASSIFICATIONS

     Certain reclassifications have been made to the consolidated statements of
income (loss) and balance sheet for the prior years to conform to the current
year presentation.

14.  RESTRUCTURING

     During 1995, the Company recorded a restructuring charge of $3.1 million in
connection with the announcement of a board approved early retirement, voluntary
and involuntary separation plan.  The Company's plan was to reduce the number of
employees in all divisions and centralize certain functions in the distribution
division.

     As of December 31, 1996, 63 employees had separated or agreed to separate
under the voluntary separation or early retirement provisions of the plan.  In
conjunction with the acceptances, the Company accrued approximately an
additional $1 million in restructuring expenses during 1996, due to the
additional expenses associated with voluntary separation and early retirement.
The total number of anticipated separations was reduced from approximately 340
in the original plan to 63, resulting in an approximate $1.8 million reduction
in the reserve.  The number of anticipated separations was reduced due to a
change in the management of the sales and marketing areas of the Company, which
resulted in a revision to the plan to eliminate positions in those areas.

15.  PARTNERSHIP INTEREST

     On February 15, 1995, the Company settled all claims arising from a
derivative action threatened against it by a director, as well as all claims
against Lock's Chief Executive Officer and another officer.  The material
components of the settlement included:  (i) the resignation of Walter E. Best
from the Board of Directors and as President of each of Lock, Universal, Best,
and Walter E. Best Company, Inc.; (ii) the resignation of Richard E. Best and
Marshall W. Best as officers and employees of Lock and the resignation of Robert
W. Best and Marshall W. Best as officers and employees of Lock and the
resignation of Robert W. Best as an employee; (iii) the payment of the total sum
of $2,134,349 as severance, vacation and bonus payments to Walter E. Best,
Robert W. Best, Rich E. Best, Marshall W. Best and Edwina McLemore, an employee
of Lock; (iv) the payment of the total sum of $1,240,000 in exchange for
covenants not to compete from Walter E. Best, Robert W. Best, Richard E. Best
and Marshall W. Best; and (v) the payment of the total sum of $8,178,296 for the
acquisition of shares of Lock and interests in a partnership as described below.

     On February 15, 1995, Lock purchased for cash an 87% non-voting interest in
a partnership for $5,582,626.  The purpose of the partnership, which was newly
formed, is to acquire and hold securities for investment purposes.    The
partnership purchased directly or indirectly 204,053 shares of Best common
stock, 8,787 shares of Universal Series A common stock and 11.25 shares of
Universal preferred stock.    In addition, Lock acquired 6,742 shares of its own
common stock at an appraised value of $385.00 per share or $2,595,670.  Lock's
acquisition of its interest in the partnership and its redemption of its own
common shares were funded through the utilization of a portion of the line of
credit of $25,000,000 as discussed in Note 7.


                                       33
<PAGE>

                                BEST LOCK COMPANIES
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


     The Company accounted for the purchase of the Lock shares and the 87%
partnership interest as treasury stock, which resulted in a reduction to
shareholders' equity of Lock of $8,178,296, Universal of $5,582,626 and Best of
$5,077,403.  As a result of these transactions, the minority interest of
Universal decreased from 27% to 23% and the minority interest of Best decreased
from 22% to 21%.

     During 1995, in addition to the above transactions, the Company acquired
shares of Lock, Universal and Best which were accounted for as treasury stock.
This treatment resulted in a reduction to shareholders' equity of Lock of
$5,848,082, Universal of $4,773,932 and Best of $3,869,643.  As a result of
these transactions, the minority interest of Universal decreased from 23% to 21%
and the minority interest of Best decreased from 21% to 17%.

16.  RELATED PARTY TRANSACTIONS

     On May 5, 1994, Lock's Board of Directors approved a loan of $3.4 million
to Russell C. Best, Chief Executive Officer, under the terms of an Employment
Agreement entered into by Lock and Russell C. Best.  On May 18, 1994, $3.4
million was borrowed, with interest at 7.2%, by Russell C. Best. The terms of
the loan include repayment over a thirty (30) year period in equal annual
installments of principal and interest totaling $279,519.

     The Company entered into a split dollar life insurance agreement as of
December 29, 1995 with a trust established by Russell C. Best, pursuant to which
the Company and the trust will share in the premium costs of a whole life
insurance policy that has a face value death benefit of $5,000,000.  Under the
agreement, the Company will pay approximately $55,000 each policy year for the
first 15 years of the policy.  The Company is not obligated to make its share of
the annual premium.  Only the trustee may cancel or surrender the policy.  Upon
the death of Mr. Best, the Company will receive the cumulative amount of its
premium payments.  Prior to Mr. Best's death and prior to the 30th year of the
policy, upon cancellation or surrender of the policy, the Company will receive
the lesser of its cumulative premium payments or the cash surrender value of the
policy.  To the extent the policy is not canceled or surrendered in its first 30
years, the Company will receive its cumulative premium payments in the 30th year
of the policy.

     Walter E. Best, former President of the Company, is the President and owns
in excess of 10% of the stock of Best Aircraft Corporation.  The Company leased
automobiles from Best Aircraft Corporation during 1995 and 1994, paying $30,030
and $183,470 for such services, respectively.  Larry W. Rottmeyer, employed
during 1994, became a Director and Vice President of the Company during 1995.
Mr. Rottmeyer resigned as a Director on February 26, 1996 and was removed as a
Vice President on March 5, 1996.  During Mr. Rottmeyer's employment, he was also
a Director and a greater than 10% equity owner of Marcon, Inc. until June 9,
1995.  The Company purchased market research services from Marcon, Inc., during
1995, paying $547,942 for such services.  Eric M. Fogel, Director from October
30, 1995 until March 1, 1996, is a partner in the law firm of Holleb & Coff.
The Company paid Holleb & Coff $438,399 and $112,221 in 1996 and 1995 for legal
services.


                                       34
<PAGE>

                                BEST LOCK COMPANIES
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


17.  REDEMPTION OF BEST UNIVERSAL LOCK CO. STOCK

     On July 1, 1995, Universal redeemed all 63 shares of its outstanding
preferred stock at $105 per share plus cumulative dividend, for a total of
$7,056.

18.  OUTSTANDING SHARES

   The number of outstanding shares of Universal and Best used in the
calculation of earnings per share differs from the number of outstanding shares
shown on the cover page of the 10-K for each of the two companies.  The cover
page of the 10-K reflects all shares legally outstanding.  The earnings per
share disclosures reflect as treasury stock shares held by subsidiaries of
Universal and Best that are still legally outstanding, in accordance with
generally accepted accounting principles.


                                       35

<PAGE>

                                                                     SCHEDULE II

                               BEST LOCK COMPANIES
                      BEST LOCK CORPORATION AND SUBSIDIARY
    BEST UNIVERSAL LOCK CO. (A NONOPERATING HOLDING COMPANY) AND SUBSIDIARIES
      FRANK E. BEST, INC. (A NONOPERATING HOLDING COMPANY) AND SUBSIDIARIES

         VALUATION AND QUALIFYING ACCOUNTS - CORPORATE AND CONSOLIDATED
               FOR THE YEARS ENDED DECEMBER 31, 1996 THROUGH 1994

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
                                                                                         Collections     Deductions
                                                                            Additions    of Accounts    For Accounts
                                                            Balance        Charged to     Previously     Receivable      Balance
               Description                                 January 1        Income       Written off    Written off    December 31
--------------------------------------------              -----------      -----------  -------------  -------------- -------------
<S>                                                       <C>              <C>          <C>            <C>            <C>
CORPORATE

     Best Universal Lock Co. - 1996                          $  -           $  -           $  -           $  -           $  -
                                                              -------        -------        -------        -------        -------
                                                              -------        -------        -------        -------        -------
      Best Universal Lock Co. - 1995                         $  -           $  -           $  -           $  -           $  -
                                                              -------        -------        -------        -------        -------
                                                              -------        -------        -------        -------        -------
      Best Universal Lock Co. - 1994                         $  -           $  -           $  -           $  -           $  -
                                                              -------        -------        -------        -------        -------
                                                              -------        -------        -------        -------        -------


      Frank E. Best, Inc. - 1996                             $  -           $  -           $  -           $  -           $  -
                                                              -------        -------        -------        -------        -------
                                                              -------        -------        -------        -------        -------
      Frank E. Best, Inc. - 1995                             $  -           $  -           $  -           $  -           $  -
                                                              -------        -------        -------        -------        -------
                                                              -------        -------        -------        -------        -------
      Frank E. Best, Inc. - 1994                             $  -           $  -           $  -           $  -           $  -
                                                              -------        -------        -------        -------        -------
                                                              -------        -------        -------        -------        -------
CONSOLIDATED  (Best Lock
      Corporation and Subsidiaries)

      Allowance for uncollectible
          accounts receivable - 1996                      $  263,559      $  128,006      $  41,820    $  (188,519)    $  244,866
                                                             -------         -------         -------      ---------       -------
                                                             -------         -------         -------      ---------       -------
      Allowance for uncollectible
          accounts receivable - 1995                      $  244,829      $  117,417      $  28,522    $  (127,209)    $  263,559
                                                             -------         -------         -------      ---------       -------
                                                             -------         -------         -------      ---------       -------
      Allowance for uncollectible
          accounts receivable - 1994                      $  350,136       $  38,413       $  4,134    $  (147,854)    $  244,829
                                                             -------         -------         -------      ---------       -------
                                                             -------         -------         -------      ---------       -------

Note:  Best Universal Lock Co. and the Frank E. Best, Inc. are nonoperating holding companies and do not have
       any significant assets or liabilities, other than their investment in subsidiaries.
</TABLE>

                                       36

<PAGE>

                               This page not used.








                                       37

<PAGE>

ITEM 9.  DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

         None.

                                       PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

    The directors and officers have not been selected as such under any
arrangement or understanding between them and any other person(s).

    (a)  IDENTIFICATION OF DIRECTORS.  Russell C. Best, 35, holds the position
of Director, Chief Executive Officer and President.  He has served as a director
since 1991.  Mariea L. Best, 33, Director, has served in this position since
1995.  Gregg A. Dykstra, 40, served as Director and Vice President of Best Lock
until February 17, 1997 when he resigned his officer and director positions.  He
has served as a director since 1995.  All directors serve until the next annual
meeting or until their successor is elected and qualified.

    (b)  IDENTIFICATION OF EXECUTIVE OFFICERS.  Russell C. Best, 35, has served
as Chief Executive Officer since 1994 and as President since 1995.  Gregg A.
Dykstra, 40, served as Vice President from 1995 until February 17, 1997, when he
resigned his officer position.  Mark G. Ahearn, 42, has served as Secretary
since 1995.  Stephen J. Cooper, 49, has served as Treasurer since 1996.  Paula
J. Tinkey, 39, has served as Controller since 1996.  All officers serve until
their successor is appointed.


    (c)  IDENTIFICATION OF CERTAIN SIGNIFICANT EMPLOYEES.

         None.

    (d)  FAMILY RELATIONSHIPS.  Mariea L. Best is the spouse of Russell C.
Best.

    (e)  BUSINESS EXPERIENCE OF DIRECTORS AND EXECUTIVE OFFICERS DURING THE
PAST FIVE YEARS.

         (1)  Russell C. Best, Chief Executive Officer and Director, has served
registrant in the capacity of CEO since May, 1994; Executive Vice President of
registrant from June 1992 to May 1994; Marketing Director of registrant from
1989-1992; served registrant as Director since June, 1990 and Chairman of the
Board since March, 1995.

              Mariea L. Best, Director, has served as a Director of registrant
since 1995; sole shareholder and president of Best Event and Travel, Inc. from
1991-1994; Special Event Coordinator for Wiersma from 1987-1990.

              Gregg A. Dykstra, Vice President and Director, has served as Vice
President of registrant since 1995 until February 17, 1997; Treasurer of
registrant from March 1995 to March 1996; Secretary of registrant from March
1995 to October 1995; General Counsel of registrant from November 1989 to July
1995; served registrant as Director since 1995.

              Mark G. Ahearn, Corporate Secretary, has served registrant as
General Counsel since July of 1995; Secretary since December of 1995; Associate
Counsel for registrant from April 1994 to July 1995; Staff Attorney for
registrant from August 1992 to April 1994; self employed private legal practice
from July 1991 to August 1992; State Director for United States Senator Dan
Coats of Indiana from January 1989 to June 1991.


                                          38


<PAGE>

              Stephen J. Cooper, Treasurer, has served registrant as Treasurer
since March of 1996; Senior Manager of Finance of registrant from June 1992 to
March 1996; Controller of registrant from October 1986 to June 1992.

              Paula J. Tinkey, Controller, has served registrant as Controller
since May of 1996; Manager of General Accounting of registrant from June 1992 to
May 1996; Manager of Accounting for Hook Drugs Division, Hook-SupeRx, Inc. from
April 1987 to April 1992.

         (2)  Directorships.  Russell C. Best, who was a Director of registrant
thorough December 31, 1996, was also a Director of Frank E. Best, Inc. and Best
Universal Lock Co. through December 31, 1996.  Mariea L. Best and Gregg A.
Dykstra became Directors of registrant, Frank E. Best, Inc. and Best Universal
Lock Co. in 1995.

    (f)  INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS.  To the knowledge of the
registrant, none of the directors within the previous five years has filed a
petition under the Bankruptcy Act or any state insolvency law nor was a
receiver, fiscal agent or similar officer appointed for such persons or any
partnership in which they may have been general partners or any corporation of
which they were executive officers.  Furthermore, to the knowledge of the
registrant no director or executive officer has been convicted in a criminal
proceeding (except traffic violation or other minor offense) or is subject to a
criminal proceeding presently pending, nor to the knowledge of management is any
director subject to any order, judgment or decree by any Court of competent
jurisdiction, permanently or temporarily enjoining such director from acting as
an investment adviser, underwriter, broker or dealer in securities or as an
affiliated person, director or employee of any investment company, bank, savings
and loan association or insurance company or from engaging in or conducting any
conduct or practice in connection with such activity or in connection with the
purchase or sale of any security.

ITEM 11.  EXECUTIVE COMPENSATION.

    (a)  COMPENSATION.  The information in the following table discloses all
remuneration paid to the Chief Executive Officer and the other most highly
compensated executive officers or directors of registrant whose total annual
salary and bonus exceeds $100,000, for services in all capacities to the
registrant and its subsidiary during the fiscal years ended December 31, 1996,
1995 and 1994.

    (b)  SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>

         Name & Principal
         Position                  Year      Total Salary(3)  Total Bonus(4)   Total Other(5)
          --------                  ----      --------------   -------------    -------------
<S>                                 <C>       <C>              <C>              <C>
   Russell C. Best                 1996          $629,942         $      0          $138,945
      Chief Executive Officer      1995           597,745                0            96,487
                                   1994           406,657          343,665            13,562

   Gregg A. Dykstra(1)             1996           265,196                0            19,093
      Vice-President               1995           260,687          100,000             9,581
                                   1994           155,832           11,475             7,760

   Larry W. Rottmeyer(2)           1996           210,794                0             8,655
      Vice-President               1995           273,986          100,000            10,565
                                   1994            41,539              270                43

</TABLE>

(1)  Resigned as an officer effective February 17, 1997.

(2)  Removed as an officer effective March 5, 1996.


                                          39


<PAGE>


(3) In the case of Russell C. Best, the salary amount includes $735 and $7,867
in taxes paid by the Company on the value of a trip paid by the Company in 1996
and 1995, respectively.  In the case of Gregg A. Dykstra, the salary amount
includes an auto stipend of $11,380 and $11,577 in 1996 and 1995, respectively.
The 1996 salary amount for Gregg A. Dykstra also includes $735 in taxes paid by
the Company on the value of a trip paid by the Company.  The 1995 salary amount
for Gregg A. Dykstra also includes an amount equal to $80,033 as a retroactive
base pay adjustment for 1995 which was paid in 1996.  In the case of Larry W.
Rottmeyer, the salary amount includes an auto stipend of $3,602 and $17,300 in
1996 and 1995, respectively, and $735 and $7,228 in taxes paid by the Company on
the value of a trip paid by the Company in 1996 and 1995, respectively.   The
1995 salary amount for Larry W. Rottmeyer also includes an amount equal to
$64,584 as a retroactive base pay adjustment for 1995 which was paid in 1996.

(4)  In 1995, the bonus payments were discretionary and were paid in 1996 in
recognition of services provided in 1995.  In the case of Russell C. Best, the
bonus amount for 1994 includes an amount equal to $340,000 in recognition of
services provided in calendar year 1994, payable in accordance with the
employment agreement between the Company and Mr. Best. In 1994, the bonus
payments consisted of a flat base amount plus a percentage based on the
employee's achievement of certain business objectives.

(5)  In the case of Russell C. Best, this amount includes the value of group
term life premiums in excess of $50,000 ($746, $920, and $459 respectively, in
1996, 1995 and 1994), the annual lease value of his company vehicle ($15,250,
$16,449, and $12,316 respectively, in 1996, 1995 and 1994), the amount paid by
the Company for tax return preparation and legal fees on his behalf ($7,268,
$14,882, and $787 respectively in 1996, 1995 and 1994), contributions by the
Company to the 401(k) plan on his behalf ($3,000 each in 1996 and 1995), $10,130
and $317 in disability insurance premiums paid on his behalf in 1996 and 1995,
respectively, $547 in spousal travel paid by the Company in 1995, $3,100 and
$11,205 in value of a trip paid by the Company in 1996 and 1995, respectively,
$5,000 in value of a home security system paid by the Company on his behalf in
1996, and $94,451 and $49,168 in 1996 and 1995, respectively, reflecting the
present value of the economic benefit of the portion of a split dollar life
insurance premium paid by the Company, based on the time period between the date
the premiums were paid and December 29, 2025, the earliest date the Company
could receive a refund, without interest, of the premium paid.  In the case of
Gregg A. Dykstra, this amount includes the value of group term life premiums in
excess of $50,000 ($436, $149, and $218 respectively, in 1996, 1995 and 1994),
the annual lease value of his company vehicle ($6,100 each in 1995 and 1994),
the excess of market value over purchase price of his company vehicle of $12,557
in 1996, the value of spousal travel paid by the Company ($332 in 1995), $3,100
in value of a trip paid by the company 1996, the amount paid by the Company for
tax return preparation fees on his behalf ($375 in 1994), and contributions by
the Company to the 401(k) plan on his behalf ($3,000, $3,000 and $1,067
respectively in 1996, 1995 and 1994).  In the case of Larry W. Rottmeyer, this
amount includes the value of group term life premiums in excess of $50,000
($340, $190 and $43 respectively, in 1996, 1995 and 1994), the excess of market
value over purchase price of a computer purchased by the company of $1,720 in
1996, $332 in spousal travel paid by the Company in 1995, $3,100 and $10,043 in
value of a trip paid by the Company in 1996 and 1995, respectively, and
contributions by the company to the 401(k) plan on his behalf of $699 in 1996.

    (c)  COMPENSATION PURSUANT TO PLANS.

         (1)  The Best Lock Corporation Stock Bonus Plan is a qualified
noncontributory defined contribution plan available to all employees above the
age of 21 with one year of full-time service.  Voluntary contributions by
Registrant to the plan are made upon the authority of the Board of Directors,
and are allocated on the basis of annual compensation and years of service.  The
funds of the Plan are to be invested primarily in securities of the Registrant
or its affiliates.  Amounts are distributed from the Plan upon the resignation,
retirement, termination, or death of the employee in accordance with Plan
provisions.  Employer contributions for the account of the individuals named in
the Summary Compensation Table are less than $50,000 in each year presented.


                                          40


<PAGE>

         (2)  Russell C. Best, along with other employees, participates in a
qualified noncontributory defined benefit pension plan approved by the Board of
Directors in 1989.  The monthly benefit payable thereunder is based on the
employee's compensation and years of past service as of September 1, 1989.
Normal retirement age is 65, with provisions for earlier retirement with reduced
benefits.  Such payments are to be made for their lifetime, following which 50%
of the monthly amount will be provided for the lifetime of a surviving spouse.
The monthly benefit payable to Russell C. Best under this plan is $490.

    (d)(e)(f) OTHER COMPENSATION.  There was no other compensation paid to the
named individuals exceeding 10% of the compensation reported for such
individual.

    (g)  COMPENSATION OF DIRECTORS.  Directors are paid $25,000 per calendar
year for services rendered, effective April 1, 1995.

    (h)  EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE IN
CONTROL ARRANGEMENT.  On May 5, 1994, the registrant and Russell C. Best entered
into an Employment Agreement (the "Agreement") pursuant to which Russell C. Best
assumed the duties of Chief Executive Officer of the Corporation.  The initial
term of the Agreement expires December 31, 1998; however, the term is
automatically extended by one additional year on December 31 of each year unless
earlier terminated such as by notice by either party to the other at least
thirty (30) days prior to December 31 of such year.

    The Agreement provides for a base salary of $425,000 per year, subject to
increases for inflation and other factors, plus the participation of Russell C.
Best in all general and executive compensation and benefit plans of the Company,
including any incentive or bonus plans.  The Agreement further provides for a
loan of up to $3,400,000 to Russell C. Best, to be repaid to the Company over a
thirty year period with interest at 7.2% per annum.  Such loan must be secured
by acceptable collateral, but in any event by all assets acquired with the
proceeds of the loan.  The loan is secured by a pledge of certain of the shares
of Frank E. Best, Inc. acquired with its proceeds and certain shares of Best
Universal Lock Co. owned by Russell C. Best.  Such shares will be released from
this pledge pro rata as the principal of the loan is repaid to the Company.

    The Agreement also provides severance benefits in the event of termination
of employment under certain circumstances.  In the event of termination of
employment by the Company without "cause" or by Russell C. Best with "cause" (as
such terms are defined in the Agreement), he will receive in each year
throughout the unexpired portion of the term of the Agreement, including any
extensions occurring prior to the date of termination, his then current base
salary, plus the average of the aggregate amounts of any bonuses, incentive
payments, and/or contingent compensation received by him in each of the three
immediately preceding calendar years.  If the Company terminates Russell C.
Best's employment with "cause," or if he terminates employment without "cause,"
Russell C. Best would forfeit all compensation and benefits following such
termination.

    Consistent with the terms of the Agreement, on May 18, 1994, the Company
loaned $3,400,000 to Russell C. Best pursuant to the terms of a Loan Agreement
dated May 5, 1994, to which the Company and Russell C. Best are parties.  The
terms of the loan were as provided in the Agreement.

    On May 16, 1994, the Company entered into an Agreement Respecting Sale of
Stock (the "Put Agreement") with Russell C. Best.  The Put Agreement provided
that Russell C. Best had the right, exercisable at any time on or before
December 31, 1994, to require the Corporation to purchase from him any shares of
Frank E. Best, Inc. owned by him at the time of exercise at a price of $29.36
per share.  The Put Agreement expired unexercised on December 31, 1994.  There
are no compensatory plans or arrangements with respect to any individual named
in the Summary Compensation Table, resulting from the individual's resignation,
retirement, or any changes following a change in control of the registrant.


                                          41


<PAGE>

    (i)  COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION.  There
are no interlock or insider participation arrangements involving any executive
or board member of registrant.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

    (a)  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS.  The following
information is given as of February 7, 1997:

                          (1)                (2)            (3)          (3) (4)

     Title of          Name and            Type of        Amount     Percent
      Class             Address           Ownership        Owned    of Class
----------------------------------------------------------------------------
Common stock,        Best Universal      Of Record       95,556.34        79%
no par value           Lock Co.,                          Shares
                c/o Best Lock Corporation
                     P. O. Box 50444
                     Indianapolis,
                     Indiana 46250

Common stock,      The NBD Bank, N.A.    As Trustee     10,537.19         9%
 no par value     One Indiana Square,    for Stock       Shares
                      Indianapolis,      Bonus Plan
                      Indiana 46204

    (b)  SECURITY OWNERSHIP OF MANAGEMENT.  The following information is given
as of February 7, 1997:

                                                      Amount          Percent
    Title of Class                               Beneficially Owned  of Class
    --------------                               ------------------  --------
Common stock, $1 par value, of Frank E.
  Best, Inc., (registrant's parent)

    (Owned by Russell C. Best, Director and
      President)                                      317,364.00 (1)    71%

    (Owned by Mariea L. Best, Director and                  1.00         0%
      Vice President)

    (Owned by Gregg A. Dykstra, Director
      and Vice President)(2)                                1.00         0%

    (Owned by Directors and Officers of regis-
      trant, as a group, 3 in number)                 317,366.00        71%


                                          42


<PAGE>

Series A, common stock, no par value, of Best
  Universal Lock Co., (registrant's parent)

    (Owned by Russell C. Best, Director and
      President)                                       38,176.00 (3)    57%

    (Owned by Mariea L. Best, Director and
      Vice President)                                       1.00         0%

    (Owned by Gregg A. Dykstra, Director and
      Vice President)(2)                               27,263.00 (3)    41%

    (Owned by Directors and Officers of the
      registrant, as a group, 3 in number)             38,178.00        57%

Series B, common stock, no par value, of Best
  Universal Lock Co., (registrant's parent)

    (Owned by Russell C. Best, Director and
      President)                                      300,000.00 (4)   100%

Common stock, no par value, of registrant

    (Owned by Russell C. Best, Director and
      President)                                      107,779.53 (5)    89%

    (Owned by Mariea L. Best, Director)                     1.00         0%

    (Owned by Gregg A. Dykstra, Director and
      Vice President)(2)                               10,537.19 (4)     9%

    (Owned by Directors and Officers of the
      registrant, as a group, 2 in number)            107,780.53        89%

(1) This figure represents Russell C. Best's direct and beneficial ownership by
    virtue of his power to vote or direct the voting of 113,311 shares held by
    him and 204,053 shares held by Best Lock Partnership.

(2) Gregg A. Dykstra resigned his Director and Vice President positions
    effective February 17, 1997.

(3) This figure represents the named individual's direct and beneficial
    ownership by virtue of his power to vote or to direct the voting of shares
    held in his own name (or in the case of Russell C. Best, 8,787 shares owned
    by Best Lock Partnership), and shared power to direct the disposition of
    27,262 shares held by the Best Lock Corporation Stock Bonus Plan.

(4) This figure represents Russell C. Best's beneficial ownership by virtue of
    his power to vote or to direct the voting of 300,000 shares held by Frank
    E. Best, Inc., of which he has voting control.

(5) This figure represents the named individual's direct and beneficial
    ownership by virtue of his power to vote or to direct the voting of shares
    held in his own name (or in the case of Russell C. Best, 95,556.34 shares
    owned by Best Universal Lock Co., of which he has voting control), and
    shared power to direct the disposition of 10,537.19 shares held by the Best
    Lock Corporation Stock Bonus Plan.


                                          43


<PAGE>

    (c)  CHANGES IN CONTROL.  There are no arrangements known to registrant,
the operation of which may at a subsequent date result in a change in control
of the registrant.

    (d)  SECTION 16(A) REPORTING DELINQUENCIES.       Based solely upon a
review of Forms 3 and 4 and amendments thereto provided to the Corporation
during the most recent fiscal year and Form 5 and amendments thereto
furnished to the Corporation with respect to its most recent fiscal year and
written representations from its directors, officers and more than 10%
shareholders, the following sets forth certain information concerning Section
16(a) reporting delinquencies by the above-referenced persons during the
Corporation's most recently completed fiscal year.

         With respect to Section 16(a) of the Exchange Act, the following
insider filings were delinquent:  Paula J. Tinkey, Form 3.

Item 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

       (a)   TRANSACTIONS WITH MANAGEMENT AND OTHERS.      On May 5, 1994,
Best Lock Corporation's Board of Directors approved a loan of $3.4 million to
Russell C. Best, Chief Executive Officer, under the terms of an Employment
Agreement entered into by Best Lock Corporation and Russell C. Best.  On May
18, 1994, $3.4 million was borrowed by Russell C. Best under the terms of the
loan, which include repayment over a thirty (30) year period in equal annual
installments of $279,519, including interest at 7.2%

       (b)   CERTAIN BUSINESS RELATIONSHIPS. Larry W. Rottmeyer, employed
during 1994, became a Director and Vice President of the Company during 1995.
Mr. Rottmeyer resigned as a Director on February 26, 1996 and was removed as
a Vice President on March 5, 1996.  During Mr. Rottmeyer's employment, he was
also a Director and a greater than 10% equity owner of Marcon, Inc. until
June 9, 1995.  Registrant purchased market research services from Marcon,
Inc., during 1995 and 1994, paying $547,942 and $291,716 for such services,
respectively. Eric M. Fogel, Director from October 30, 1995 until March 1,
1996, is a partner in the law firm of Holleb & Coff.  Registrant paid Holleb
& Coff $438,399 in 1996 and $112,221 in 1995 for legal services.

      (c)   INDEBTEDNESS OF MANAGEMENT.  There was no indebtedness to the
registrant at any time since the beginning of the registrant's last fiscal
year in an amount in excess of $60,000 by any (1) executive officer,
director, nominee for director, immediate family member of the preceding; (2)
entity in which any executive officer or director is an executive officer or
partner or is, directly or indirectly, the beneficial owner of 10% or more of
any class of equity securities; or (3) trust or estate in which any executive
officer or director has a substantial beneficial interest or as to which he
serves as a trustee or in a similar capacity, other than the indebtedness
described in (a) above.

                                       PART IV

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

         (a)  FINANCIAL STATEMENTS of registrant unconsolidated are omitted
because (1) consolidated financial statements are included; and (2)
registrant is an operating company and the subsidiary included in the
consolidated financial statements is totally-held.

                   All required financial statements and schedules are either
included in Item 8 of this Form 10-K or are omitted because the required
information is included in the financial statements or in the notes thereto.


                                          44


<PAGE>

         (b)  REPORTS ON FORM 8-K:  None filed in last quarter of 1996.

                   Exhibits are omitted because they are not required or
because the required information is included in the notes to consolidated
financial statements.


                                          45
<PAGE>
                                   SIGNATURES

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


                                        Date:  March 31, 1997

                                        BEST LOCK CORPORATION



By: /s/ Russell C. Best                 By: /s/ Mariea L. Best
    ---------------------                   --------------------
    Russell C. Best                         Director
    Chief Executive Officer
    and Director


By: /s/ Paula J. Tinkey
    ---------------------
    Controller
    Principal Accounting Officer


                                       46
<PAGE>
                                INDEX TO EXHIBITS



          EXHIBIT


3(ii)  Bylaws

21     Subsidiaries (incorporated by reference in Note 1 to the consolidated
       financial statements)

27     Financial Data Schedule



                                       47