<PAGE>
<PAGE>

                             SECURITIES AND EXCHANGE
                                   COMMISSION

                             Washington, D.C. 20549

                                   FORM 10-K/A
                ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 1995
                         Commission file number: 1-3462

                         BELDING HEMINWAY COMPANY, INC.
             (Exact name of registrant as specified in its charter)

                  Delaware                                  13-1574754
       (State or other jurisdiction of                   (I.R.S. Employer
       incorporation or organization)                   Identification No.)

      1430 Broadway, New York, New York                        10018
   (Address of principal executive offices                  (Zip Code)

        Registrant's telephone number, including area code: (212)556-4700

           Securities registered pursuant to Section 12(b) of the Act:

                                                       Name of each exchange
             Title of each class                        on which registered

   Common Stock, par value $0.01 per share            New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: Not applicable

        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  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. Yes__ No X.

        As of March 1, 1996,  7,400,282 shares of Registrant's Common Stock were
outstanding,  and  the  aggregate  market  value  of the  voting  stock  held by
non-affiliates  of  Registrant  was  approximately  $7,701,000.  This figure was
calculated  on the  basis of the  closing  price of a share of  common  stock of
Registrant  on the New York Stock  Exchange  on March 1, 1996.  As used  herein,
non-affiliates  means  all  stockholders  of  Registrant  other  than  executive
officers, directors and 5% shareholders.

        The  information  required  by Part IV of Form 10-K is  incorporated  by
reference   to   the  proxy   materials  of   the   Registrant   distributed  to
stockholders in connection with its annual meeting scheduled for May 9, 1996.


                                        1

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<PAGE>





ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.


                   INDEX TO FINANCIAL STATEMENTS AND SCHEDULES

Report of Independent Public Accountants - December 31, 1995.................3

Consolidated Balance Sheets- December 31, 1995 and 1994......................4

Consolidated Statements of Operations -
 
      Company - for the Years Ended December 31, 1995 and 1994 and
                the Three Months December 31, 1993
      Predecessor - for the Nine Months September 30, 1993...................6

Consolidated Statements of Cash Flows -

      Company - for the Years Ended December 31, 1995 and 1994 and
                the Three Months December 31, 1993
      Predecessor - for the Nine Months September 30, 1993...................7
     
Consolidated Statements of Stockholders' Equity
  
      for the year ended December 31, 1995 and
      for the period October 1, 1993 to December 31, 1994....................8

Notes to Consolidated Financial Statements
      for the Year Ended December 31, 1995...................................9



                                        2

<PAGE>
<PAGE>



                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Stockholders and Board of Directors
of Belding Heminway Company, Inc.

     We have audited the  accompanying  consolidated  balance  sheets of Belding
Heminway Company,  Inc. (a Delaware corporation) and subsidiaries as of December
31, 1995 and 1994, and the related consolidated  statements of operations,  cash
flows and  stockholders'  equity for the years ended  December 31, 1995 and 1994
and the period October 1, 1993 to December 31, 1993 (post-acquisition basis). We
have also audited the  accompanying  consolidated  statements of operations  and
cash flows for the nine month period ended  September 30, 1993  (pre-acquisition
basis).  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 Belding Heminway Company,
Inc. and subsidiaries as of December 31, 1995 and 1994, and the results of their
operations, cash flows and stockholders' equity for the years ended December 31,
1995  and  1994  and  the  periods   October  1,  1993  to  December  31,  1993,
(post-acquisition   basis)  and   January  1,  1993  to   September   30,   1993
(pre-acquisition   basis)  in  conformity  with  generally  accepted  accounting
principles.

     Our  audits  were made for the  purpose  of forming an opinion on the basic
financial  statements taken as a whole. The 1995, 1994 and 1993 schedules listed
in the index of financial statements and schedules are presented for purposes of
complying with the Securities and Exchange  Commission's  rules and are not part
of the basic financial statements. These 1995, 1994 and 1993 schedules have been
subjected  to the  auditing  procedures  applied  in  the  audits  of the  basic
financial statements and, in our opinion,  fairly state in all material respects
the  financial  data  required to be set forth  therein in relation to the basic
financial  statements  taken as a whole.

                                                             ARTHUR ANDERSEN LLP
New York,  New York
February 23, 1996 (Except  for the  amendment to the Credit  Agreement  (Notes 4
                   and 9) as to which the date is March 15, 1996)



                                        3

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                         BELDING HEMINWAY COMPANY, INC.
                                AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>

                                                     DECEMBER 31, 1995             DECEMBER 31, 1994
                                                     -----------------             -----------------
 ASSETS
 Current Assets:

<S>                                                      <C>                          <C>     
     Cash and cash equivalents                           $    629                     $  1,015
     Accounts receivable trade  (net of allowance
        of $2,127 and $2,376 respectively)                 11,314                       10,815

    Inventories                                            18,360                       15,733
    Federal income taxes receivable                           787                          525
    Current deferred tax asset                                313                        2,180
    Other current assets                                      953                        1,250
                                                         --------                     --------
                                                           32,356                       31,518
                                                         --------                     --------

 Property, plant and equipment, at cost:
    Land                                                    2,283                        1,986
    Building and improvements                              13,312                       16,477
    Machinery and equipment                                17,418                       14,370
                                                         --------                     --------
                                                           33,013                       32,833

 Less: Accumulated depreciation and amortization           (3,538)                      (1,763)
                                                        ---------                   ----------
                                                           29,475                       31,070
                                                        ---------                   ----------

 Goodwill (net of amortization of 
   $2,947 and $1,467 respectively)                         20,450                       33,481
 Deferred tax assets                                        9,515                          469
 Net assets of discontinued operations                        ---                       29,049
 Other assets                                               2,328                        2,865
                                                         --------                     --------
     Total Assets                                        $ 94,124                     $128,452
                                                         ========                     ========
</TABLE>


                 See Notes to Consolidated Financial Statements


                                        4

<PAGE>
<PAGE>





                         BELDING HEMINWAY COMPANY, INC.
                                AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                        DECEMBER 31, 1995   DECEMBER 31, 1994
                                                        -----------------   -----------------
<S>                                                           <C>              <C>     
 LIABILITIES AND STOCKHOLDERS' EQUITY
 Current Liabilities:
     Accounts payable                                         $  5,593         $  4,127
     Current maturities of long-term debt                        4,029            4,123
     Federal income taxes payable                                   --              773
     Other current liabilities                                  12,948           12,140
                                                              --------         --------
                                                                22,570           21,163
                                                              --------         --------
 Long-Term Debt                                                 44,666           40,365
 Other Liabilities                                              19,386           19,865
                                                              --------         --------
Total Liabilities                                               86,622           81,393
                                                              --------         --------
 Redeemable Preferred Stock, par value $0.01 per share
     20,805,060 shares authorized;
     Shares issued and outstanding:
        Series A - None
        Series B - 20,805,060                                   20,805           20,805
     Accumulated dividends on preferred stock                    1,374               92
                                                              --------         --------
                                                                22,179           20,897
                                                              --------         --------
 Common Stock, par value $0.01 per share
      20,000,000 shares authorized;
     Shares issued and outstanding:
          December 31, 1995: 7,409,282                              74               74
          December 31, 1994: 7,429,032

 Paid in Capital                                                19,859           19,863
 Retained Earnings                                             (34,610)           6,225
                                                              --------         --------
 Total Common Stockholders' Equity                             (14,677)          26,162
                                                              --------         --------
 Total Liabilities and Stockholders' Equity                   $ 94,124         $128,452
                                                              ========         ========
</TABLE>

 See Notes to Consolidated Financial Statements


                                        5

<PAGE>
<PAGE>



                         BELDING HEMINWAY COMPANY, INC.
                                AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                  (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)


<TABLE>
<CAPTION>
                                                                 COMPANY                 PREDECESSOR
                                                   -----------------------------------  --------------
                                                       YEARS ENDED        THREE MONTHS    NINE MONTHS
                                                       DECEMBER 31,        DECEMBER 31,  SEPTEMBER 30,
                                                    1995         1994          1993          1993
                                                   -------------------    -------------  -------------
<S>                                              <C>           <C>           <C>           <C>     
Net sales                                        $ 88,654      $ 76,767      $ 17,978      $ 57,766
Cost of sales                                      65,905        54,043        11,767        39,241
                                                 --------      --------      --------      --------
                                                   22,749        22,724         6,211        18,525
Selling, general & administrative expenses         15,940        15,846         3,881        21,910
Other (income) expense -- net                        (324)         (507)          (78)        2,402
Impairment charge                                  25,000            --            --            --
Restructuring charge                                   --            --            --        18,548
                                                 --------      --------      --------      --------
Income (loss) from continuing operations
  before interest and income taxes                (17,867)        7,385         2,408       (24,335)
Interest expense                                    4,000         3,245           864         2,136
                                                 --------      --------      --------      --------
Income (loss) from continuing operations
before income taxes                               (21,867)        4,140         1,544       (26,471)
Provision (benefit) for income taxes                 (314)        2,113           605        (7,917)
                                                 --------      --------      --------      --------
Income (loss) from continuing operations          (21,553)        2,027           939       (18,554)
Less dividends on preferred stock                   1,282         2,342           607            --
Gain on preferred stock redemption                     --         4,099            --            --
                                                 --------      --------      --------      --------
Income (loss) applicable to common
stock from continuing operations                  (22,835)        3,784           332       (18,554)
                                                 --------      --------      --------      --------
Income (loss) from discontinued operations,
net of income tax provision                           (17)        1,497           611         1,130
Loss on disposal of discontinued operations,
net of income tax benefit                         (17,983)           --            --            --
                                                 --------      --------      --------      --------
Income (loss) applicable to common stock         $(40,835)     $  5,281      $    943      $(17,424)
                                                 ========      ========      ========      ========
Earnings per common share:
Continuing operations                            $  (3.08)     $    .72      $    .07      $  (9.45)
Discontinued operations                             (2.43)          .28           .12           .58
                                                 --------      --------      --------      --------
  Total                                          $  (5.51)     $   1.00      $    .19      $  (8.87)
                                                 ========      ========      ========      ========
Dividend declared per common share                   None          None          None      $    .32
                                                 ========      ========      ========      ========
Weighted average common shares
outstanding (in thousands)                          7,414         5,265         5,000         1,964
                                                 ========      ========      ========      ========
</TABLE>


See Notes to Consolidated Financial Statements.

Effective October 1, 1993, the Company revalued its assets and liabilities to
reflect the price paid to purchase 100% of the Predecessor's issued and
outstanding common stock. Accordingly, the Predecessor's Consolidated Statement
of Operations is not comparable to the Company's Consolidated Statement of
Operations.



                                        6

<PAGE>
<PAGE>



                         BELDING HEMINWAY COMPANY, INC.
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                   COMPANY                PREDECESSOR
                                                                  -------------------------------------   ------------
                                                                         YEARS ENDED       THREE MONTHS   NINE MONTHS
                                                                         DECEMBER 31,       DECEMBER 31,  SEPTEMBER 30,
                                                                       1995        1994         1993          1993
                                                                   ----------------------    -----------    ----------
<S>                                                                <C>           <C>           <C>           <C>      
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) from continuing operations                           $(21,553)     $  2,027      $    939      $(18,554)
Reconciliation of net income (loss) from continuing operations
to net cash  provided (used) by operations:
  Depreciation and amortization                                       3,278         2,251           936         1,295
  Noncash impairment charge                                          25,000          --            --            --
  Noncash restructuring charge                                         --            --            --          15,549
  Deferred tax provision (benefit)                                     (674)          825           770        (6,949)
  Changes in operating assets and liabilities:
     Accounts receivable trade                                          294          (630)         (170)        2,265
     Inventory                                                         (564)          169           504           260
     Other current assets                                               157           678           (22)       (4,220)
     Other assets                                                       137          (662)           (6)         (185)
     Accounts payable                                                    94        (1,969)          496          (666)
     Federal income taxes payable                                      (773)         --            --            (571)
     Other current liabilities                                       (3,070)       (1,482)       (1,333)        1,390
  Cash flow from discontinued operations                              6,018         3,677         1,012         7,021
                                                                   --------      --------      --------      --------
                                                                      8,344         4,884         3,126        (3,365)
                                                                   --------      --------      --------      --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of  operating companies noncash net assets              (3,050)       (8,390)      (64,542)         --
Adjustments related to acquisitions                                     (57)       (4,470)       (6,560)         --
Proceeds from asset sales                                              --          18,747         3,098         9,620
Capital expenditures                                                 (3,820)       (3,617)         (764)         (844)
Investments in other assets                                            (123)       (2,524)         --             318
                                                                   --------      --------      --------      --------
                                                                     (7,050)         (254)      (68,768)        9,094
                                                                   --------      --------      --------      --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of preferred stock                                            --            --          40,500          --
Acquisition related increase in long-term debt                         --            --          47,000          --
Acquisition related repayments of long-term debt                       --            --         (19,500)         --
Proceeds from revolving credit facility and
  capitalized lease obligations                                      40,551        21,906          --          21,386
Repayments of short-term borrowings                                    --            --            --         (23,843)
Repayment of long-term debt and capital lease obligations           (39,219)      (27,031)       (1,223)       (3,409)
Acquisition related payments                                           (290)         (145)         --            --
Changes in other long-term liabilities                               (2,722)         (432)       (1,921)         --
Other, net                                                             --            --            --            (112)
                                                                   --------      --------      --------      --------
                                                                     (1,680)       (5,702)       64,856        (5,978)
                                                                   --------      --------      --------      --------
Decrease in cash and cash equivalents                                  (386)       (1,072)         (786)         (249)
Cash and cash equivalents beginning of period                         1,015         2,087         2,873         3,122
                                                                   --------      --------      --------      --------
Cash and cash equivalents end of period                            $    629      $  1,015      $  2,087      $  2,873
                                                                   ========      ========      ========      ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
  Interest                                                         $  4,349      $  2,762      $    818      $  2,427
                                                                   ========      ========      ========      ========
  Income taxes                                                     $  1,146      $    935      $     68      $    826
                                                                   ========      ========      ========      ========
</TABLE>

See Notes to Consolidated Financial Statements



                                        7

<PAGE>
<PAGE>



                 BELDING HEMINWAY COMPANY INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                  PREFERRED STOCK                     
                          ------------------------------------------- 
                                                                      
                             Series A         Series B                
                          ------------------------------------------- 
                                                              Accum.  
                          Shares  Amount   Shares    Amount  Dividend 
                          ------  ------   -------   ------  -------- 
<S>                            <C>       <C>         <C>      <C>     
OCTOBER 1, 1993                -     -            -        -       -  
Issuance of stock              5  $500   40,000,000  $40,000          
Dividends accrued on
  preferred stock                                             $1,085  
Net income                                                            
                           -----  ----   ----------  -------  ------  
DECEMBER 31, 1993              5  $500   40,000,000  $40,000  $1,085  
                           -----  ----   ----------  -------  ------  
Series B Common
  Shares Issued                                                         
Series B Common
  Shares Returned                                                       
Dividends accrued
  on preferred stock                                           2,342  
Dividends paid on
  12/4/94                                                     (3,335) 
Conversion of
  Series B Preferred                    (19,694,940) (19,695)         
Gain on preferred   
  conversion                                                            
Conversion of Series A
  Pfd. to B Pfd.              (5) (500)     500,000      500
Reclassification
  of Series Common                                                      
Net income                                                            
Legal fees related to
  recapitalization                                                      
                           -----  ----   ----------  -------  ------  
DECEMBER 31, 1994              -     -   20,805,060  $20,805      92  
                           -----  ----   ----------  -------  ------  
Net loss                                                              
Dividends accrued
  on preferred stock                                           1,282  
Common stock returned                                                 
                           -----  ----   ----------  -------  ------  
DECEMBER 31, 1995              -     -   20,805,060  $20,805  $1,374  
                           =====  ====   ==========  =======  ======  


<CAPTION>
                                               COMMON STOCK
                             ----------------------------------------------
                                                                                  Paid In  Retained
                                Series A           Series B          Common       Capital  Earnings
                             ------------------------------------------------------------------------
                                            
                             Shares   Amount    Shares   Amount  Shares  Amount
                             ------   ------    ------   ------  ------  ------
<S>                         <C>        <C>    <C>         <C>   <C>        <C>      <C>          <C>
OCTOBER 1, 1993                     -     -           -     -          -       -         -         -
Issuance of stock           3,542,404  $708   1,457,596  $292 
Dividends accrued on                              
  preferred stock                                                                             $ (606)
Net income                                                                                     1,550
                            ---------  ----   ---------   ---  ---------   -----    ------  --------
DECEMBER 31, 1993           3,542,404  $708   1,457,596   292          -                 -       944
                            ---------  ----   ---------   ---  ---------   -----    ------  --------
Series B Common                             
  Shares Issued                                 128,000    26
Series B Common
  Shares Returned                                (2,000)
Dividends accrued
  on preferred stock                                                                          (2,342)
Dividends paid on
  12/4/94                                                        333,543       3    $2,738
Conversion of
  Series B Preferred                                           1,969,489      20    16,170
Gain on preferred
  conversion                                                                                   4,099
Conversion of Series A
  Pfd. to B Pfd.
Reclassification
  of Series Common         (3,542,404) (708) (1,583,596) (318) 5,126,000      51       975
Net income                                                                                     3,524
Legal fees related to
  recapitalization                                                                     (20)
                            ---------  ----   ---------   ---  ---------   -----    ------  --------
DECEMBER 31, 1994                   -     -           -     -  7,429,032     $74   $19,863  $ $6,225
                            ---------  ----   ---------   ---  ---------   -----    ------  --------
Net loss                                                                                     (39,553)
Dividends accrued                               
  on preferred stock                                                                          (1,282)
Common stock returned                                            (19,750)               (4)
                            ---------  ----   ---------   ---  ---------   -----   -------  --------
DECEMBER 31, 1995                   -     -           -     -  7,409,282   $ 74    $19,859  $(34,610)
                            =========  ====   =========   ===  =========   =====   =======  ========
</TABLE>


See Notes to Consolidated Financial Statements



                                        8

<PAGE>
<PAGE>



                 Belding Heminway Company, Inc. and Subsidiaries
                   Notes to Consolidated Financial Statements


1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:


     Nature of  Operation:  The Company  and its  subsidiaries  manufacture  and
market  industrial and consumer threads and distribute a line of home sewing and
craft products, principally buttons. The Company was organized under the laws of
the State of Delaware in 1947.

     Consolidation:  The accompanying  consolidated financial statements include
the  accounts  of  the  Company  and  all  subsidiaries   after  elimination  of
intercompany items and transactions. (C)

     Revenue Recognition: Revenue is recognized upon shipment of merchandise.

     Sales returns:  The Company  estimates an allowance for sales returns based
on  historical  sales and sales  returns  and  records a related  allowance,  if
significant.

     Allowance  for  doubtful  accounts:  The  Company  maintains  a reserve for
doubtful  accounts  which includes 100% of all invoices past due 61 days or more
and other items that management deems doubtful of collection.

     Depreciation and  Amortization:  Depreciation and amortization are computed
principally  by the  straight-line  method  for each  class of  depreciable  and
amortizable  asset  based  on  their  estimated  useful  lives.   Buildings  and
improvements,  machinery and equipment,  and  furniture,  fixtures and leasehold
improvements  are  generally  depreciated  over periods of 20-35,  5-25 and 5-10
years, respectively.

     Income  taxes:  Deferred  income taxes are  determined  using the liability
method whereby the future expected consequences of temporary differences between
the tax basis of  assets  and  liabilities  and their  reported  amounts  in the
financial statements are recognized as deferred tax assets and liabilities.

     Impairment:  Long term assets are reviewed  for  impairment  following  the
provisions of SFAS Number 121. Goodwill not associated with particular assets is
reviewed for impairment  based on an analysis of undiscounted  future cash flows
associated with the related operation.

     Goodwill: Goodwill is amortized over a thirty year period.

     Environmental  liabilities:  The Company accrues for losses associated with
environmental  remediation  obligations  when  such  losses  are   probable  and
reasonably  estimable.   Accruals  for  estimated  losses   from   environmental
remediation  obligations  generally  are recognized no later than completion  of
the  remedial  feasibility  study.   Such  accruals  are  adjusted   as  further
information  develops or  circumstances  change.  Costs  of  future expenditures
for  environmental  remediation  obligations are not discounted to their present
value.

     Cash Equivalents:  The Company considers all highly liquid investments with
a maturity of three months or less when purchased to be cash equivalents.

     Use of Estimates:  The  preparation  of financial  statements in conformity
with  generally  accepted  accounting  principles  requires  the Company 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



                                        9

<PAGE>
<PAGE>


financial  statements and the reported  amounts of revenues and expenses  during
the reporting period. Actual results could differ from those estimates.

2. THREAD DIVISION ASSET  IMPAIRMENT:

     During  1995,  the  Thread  division's  results  were  substantially  below
historical levels and the levels expected when the Company was acquired in 1993.
Based on the performance  and expected  future levels of operations,  management
determined that the book value of certain property, plant, and equipment,  which
was adjusted to reflect the 1993  acquisition,  was impaired.  As a result,  the
Company  recorded an impairment  charge of $6.4 million to adjust the book value
of the  equipment to its  estimated  December,  1995 fair value.  Fair value was
based on estimated  realizable value in a sale. The amounts actually realized in
the future could differ  materially  from the amounts assumed in determining the
impairment charge.  Among other factors,  the write down reflects the failure of
plant consolidations made in connection with the acquisition to achieve expected
results and the  estimated  effect of future cost  reduction  activities  on the
revenues  associated  with those  assets.  A  proportionate  amount of  goodwill
allocated to the Thread  division in connection  with the 1993  acquisition  was
also written-off  following the principals in Statement of Financial  Accounting
Standard  No. 121. The goodwill  write off was $17.4  million and other  related
charges  were $1.2  million.  The  Company's  adoption of Statement of Financial
Accounting  Standard No. 121 (Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed Of). was effective January 1, 1995, and
the adoption had no impact on the consolidated  financial  statements as of that
date.

3. DISCONTINUED OPERATIONS:

     During the fourth  quarter of 1995,  the Company  announced its decision to
divest the Home Furnishings division. Consequently, the results of operations of
the  Home  Furnishings  division  for  1995  and all  prior  periods  have  been
classified as discontinued  operations.  In connection  with this decision,  the
Company  has  retained  an  investment  banker  and has  begun  the  process  of
identifying  prospective  buyers. It is anticipated a sale could be completed by
mid year 1996.

     As a result of the  decision  to sell the Home  Furnishings  division,  the
Company  recorded an estimated  loss on disposition in the amount of $18 million
net of income tax  benefit  during the fourth  quarter of 1995,  including  $7.6
million of goodwill write-off. The resulting book value of the division is a net
liability  of $793  thousand  and is  classified  as a current  liability  as of
December 31, 1995. The Home Furnishings division had revenues of (in thousand of
dollars) $39,324,  $40,734 and $30,084 during the years ended December 31, 1993,
1994 and 1995 respectively.

     The loss on discontinued operations includes the Company's best estimate in
December  1995 of the  amounts  expected  to be realized on the sale of the Home
Furnishings  division.  The amounts the Company will  ultimately  realize  could
differ  materially in the near term from the amounts  assumed in arriving at the
loss on disposal of the discontinued operations.

4. LIQUIDITY:

     At  December  31,  1995,  the Company was in default on certain of its loan
covenants.  On March 15, 1996, the Company  amended its Credit  Agreement  dated
October 29, 1993, as amended ("Credit


                                       10

<PAGE>
<PAGE>


Agreement").  As further described in Note 9, $4.029 million principal amount of
the  Company's  long term  debt must be paid in 1996,  and  $44.488  million  or
substantially  all of the  Company's  long-term  debt  must be paid in 1997.  In
addition,  a schedule of fees is required to be paid beginning July 31, 1996, if
the sale of the Home  Furnishings  division has not been  completed and progress
toward completion or completion of other asset sales has not taken place.  Based
on its  current  1996  budgets,  progress  to  date  on  the  sale  of the  Home
Furnishings  division,  and preliminary  discussions regarding the sale of other
assets,  the  Company  believes  that it will  remain  in  compliance  with  the
provisions of the revised Credit Agreement  through December 31, 1996.  However,
there can be no  assurance  that  budgets  will be achieved or that asset sales,
including the sale of the Home Furnishings division, will take place at expected
prices or take place at all.  Failure of these events to occur as expected could
result in non-compliance with the terms of the revised Credit Agreement in 1996.
If such  non-compliance  occurred and the lender demanded  payment or refused to
make further loans and the Company was unable to obtain alternate financing, the
lack of adequate liquidity would have a material adverse effect on the Company's
results of operations and its ability to continue as a going concern.

5. ACQUISITION BY NOEL GROUP, INC.:

     On July 21,  1993 Noel  Group,  Inc.  ("Noel"),  through  its  wholly-owned
subsidiary, BH Acquisition Corporation ("BH Acquisition"),  accepted for payment
1,434,712 shares of common stock,  par value $1.00 per share (the "Shares"),  of
the  Predecessor,  representing  approximately  73% of all  outstanding  shares,
pursuant to a tender offer to the  stockholders of the Predecessor at $30.25 per
share,  net to the seller in cash (the "Offer").  The Offer was made pursuant to
an Agreement and Plan of Merger dated as of June 16, 1993 among the Predecessor,
Noel and BH  Acquisition.  In October 1993, BH  Acquisition  was merged with and
into the Predecessor (with the Company being the surviving corporation) pursuant
to a merger among the Predecessor,  Noel, and BH Acquisition. The total purchase
price for 100% of the Shares,  including the 27%, acquired  following the tender
offer was approximately $64.5 million.

     Effective  October 1, 1993, the Company  increased the carrying  amounts of
its net assets to reflect the price paid for 100% of its common stock, a process
generally referred to as "push down" accounting.

6. INCENTIVE PROGRAM:

     As of December  6, 1994,  the  Company's  voting  stockholders  adopted the
Belding Heminway Company,  Inc. 1994 Incentive  Program ("the Program").  Grants
under the Program may consist of incentive  stock options,  non-qualified  stock
options, stock appreciation rights in tandem with stock options or freestanding,
restricted stock grants,  or restored  options.  In connection with the Program,
500,000  shares of Common  Stock were  available  for grants at the start of the
Program. The following table summarizes stock option activity under the Program:

<TABLE>
<CAPTION>
                                                             Option
                                                      ---------------------
(Dollars in thousands except per share amounts)       Shares          Price       Aggregate
-----------------------------------------------       ------          -----       ---------
<S>                                                   <C>         <C>               <C>
Outstanding at December 31, 1993                         --             --            --
Granted                                               190,000         $10.00        $1,900
Exercised                                                --             --            --
Cancelled                                                --             --            --
                                                      -------      -----------      ------
Outstanding at December 31, 1994                      190,000         $10.00         1,900
Granted                                                76,000      $7.50-$3.13         402


                                       11

<PAGE>
<PAGE>


Exercised                                                --             --            --
Cancelled                                             (20,000)        $10.00          (200)
                                                      -------      -----------      ------
Outstanding at December 31, 1995                      246,000      $10.00-$3.1      $2,102
                                                      =======      ====== ====      ======
</TABLE>

     At December 31, 1995, 1994 and 1993  exercisable  options totaled  123,400,
38,000 and none, respectively.

     In 1996,  the Company  entered  into an agreement  with a consultant  for a
specified amount of cash  consideration and 200,000 stock options (See Note 23).


                                       12

<PAGE>
<PAGE>


7. Inventories:

     The  components  of  inventories  as of December 31, net of reserves are as
follows (dollars in thousands):

<TABLE>
<CAPTION>
                                     1995        1994
                                     ----        ----
<S>                                <C>         <C>    
Manufacturing supplies             $ 1,346     $ 1,291
Raw materials and greige goods       3,189       3,872
Work in progress                     6,033       5,106
Finished goods                       7,792       5,464
                                   -------     -------
                                   $18,360     $15,733
                                   =======     =======
</TABLE>

     At  December  31,  1995 and 1994,  $12,455  and  $11,718  respectively,  of
inventories  were  valued  by the  last-in  first-out  ("LIFO")  method.  If the
first-in,  first-out ("FIFO") method (which  approximates  replacement costs) of
inventory  accounting had been used by the Company,  inventories  would not have
been materially affected.

     Inventories  are  stated  at lower of cost or market  with cost  determined
principally on an average cost, or LIFO basis.

8. OTHER CURRENT LIABILITIES AND OTHER LIABILITIES:

     Other  liabilities  as of December 31 consist of the following  (dollars in
thousands):

<TABLE>
<CAPTION>
CURRENT                                               1995        1994
-------                                             -------     -------
<S>                                                 <C>         <C>    
Insurance                                           $ 2,754     $ 3,383
Salaries, wages, bonuses and other compensation       2,741       1,628
Plant consolidations                                  1,187       1,907
Net liabilities of discontinued operations              793        --
Other                                                 5,473       5,222
                                                    -------     -------
                                                    $12,948     $12,140
                                                    =======     =======
LONG TERM                                              1995        1994
---------                                           -------     -------
Pension liability                                   $ 6,483     $ 6,647
Environmental liabilities                             4,600       4,523
Other post-retirement benefits                        4,249       4,315
Other                                                 4,054       4,380
                                                    -------     -------
                                                    $19,386     $19,865
                                                    =======     =======
</TABLE>


                                       13

<PAGE>
<PAGE>


9. DEBT:

     Debt obligations as of December 31 consist of (dollars in thousands):


<TABLE>
<CAPTION>
                                                     1995        1994
                                                   -------     -------
<S>                                                <C>         <C>    
Senior Bank Facilities
  Term facility (a) ..........................     $20,650     $18,339
  Revolving facility (a) .....................      25,450      26,000
Capitalized lease obligations ................       2,508         149
Note Payable Connecticut Development Authority          87        --
                                                   -------     -------
                                                    48,695      44,488
Less:  Current installments ..................       4,029       4,123
                                                   -------     -------
                                                   $44,666     $40,365
                                                   =======     =======
</TABLE>

     (a) The Senior Bank Facilities under the Credit Agreement  consist of (i) a
$25.0 million  amortizing  senior term loan facility (the "Term  Facility")  and
(ii) a $29.0 million senior revolving credit facility (the "Revolving Facility")
up to $2.5 million of which is available as standby and trade  letters of credit
(which letters of credit are subject to certain fees).

     On  December  31,  1995,  the Company was in default on certain of its loan
covenants specified in the Credit Agreement. As a result, on March 15, 1996, the
Credit Agreement was amended to provide, among other changes, the following:

          Defaults at December 31, 1995 were waived.

          Maturity  of Senior Bank  Facilities  was changed to July 1, 1997 from
          December 31, 1999.

          Loans bear interest at the rate of NationsBank  prime rate plus 1.75%.
          Previously  the Company had the option of selecting  an interest  rate
          equivalent  to (a) 1.75%  plus the higher of (1)  NationsBank's  prime
          rate and (2) the Federal funds rate plus 1/2 of 1% or (b) a rate based
          upon  certain  rates  offered for U.S.  dollar  deposits in the London
          interbank market plus 2.75%.

          If  Revolving  Facility  advances  exist  against the  Company's  Home
          Furnishings  division  receivables  and inventory on July 31, 1996 and
          August 31, 1996,  the Company will pay fees of $100,000 and  $200,000,
          respectively.

          If the Company has not  refinanced or repaid the Term Facility in full
          by December  31, 1996,  the Company  will be obligated to  demonstrate
          progress  towards  disposition  of  assets  in  addition  to the  Home
          Furnishings  division  and  complete a sale of those assets by the due
          date, at  sufficient  levels to repay the Term  Facility,  in order to
          avoid the payment of fees as follows:  September  30, 1996,  $300,000;
          November 15, 1996, $700,000; December 31, 1996, $1,500,000.

          The  requirement  for the Company to  maintain  an  interest  rate cap
          agreement  was  deleted.  (See  Note  10  to  Consolidated   Financial
          Statements)

          Financial covenant tests were revised.

          Terms of the  Revolving  Facility  were  revised  to  reduce  advances
          available against work in process inventory effective September 30 and
          December 31, 1996.

     On the basis of preliminary  discussions  with financial  institutions  and
financial consultants, the Company believes that it can complete the sale of its
Home Furnishings Division on or prior to July 31, 1996 (and use the net proceeds
to repay existing credit facility advances against the Company's Home


                                       14

<PAGE>
<PAGE>


Furnishings  Division  receivables  and inventory) and thus avoid the fees which
would  otherwise be payable  under the credit  facility if advances  against the
Home Furnishings Division remain outstanding on that date.

     There  can be no  assurance  the  Company  will  complete  a sale  of  Home
Furnishings  prior to July 31. If the transaction is not completed by that date,
the  Company  believes  that  the  fees  could  be  funded  by cash  flows  from
operations.  However, there can be no assurance such funds will be available. If
the Company is unable to pay those fees when due it will be in default under the
credit facility.

     In addition, the Company may not generate sufficient proceeds from the sale
of Home  Furnishings to repay the revolving  credit facility  advances  existing
against the  Company's  Home  Furnishings  Division.  If the  Company  generates
insufficient  proceeds  from the sale,  the Banks could  prevent the sale or the
Company could be in default under the credit agreement.

     In order to meet the  requirements of the Term Facility and thus avoid fees
payable on September 30,  November 15 and December 31, the Company  expects that
it will have to  refinance  the Term  Facility by  September  30,  1996.  If the
Company is not successful in refinancing the Term Facility by September 30, 1996
it will be  obligated  to  demonstrate  progress  toward  the sale of  assets in
addition to the Home Furnishings division by September 30 and complete a sale of
these  assets by  December  31,  1996,  at  sufficient  levels to repay the Term
Facility by December  31,  1996,  in order to avoid the payment of fees.  If the
Company  refinances  the Term  Facility,  it is  likely  that the new  borrowing
arrangements  will carry higher rates of interest and  increased  administrative
costs.  If the Company  raises funds  through  asset sales to discharge the Term
Facility,  the reduction in interest  expense  resulting  therefrom  will not be
sufficient to offset the  diminution in income that would result from such asset
sales.  There can be no assurance that the Company will be able to refinance the
Term  Facility  on  commercially  acceptable  terms  or  demonstrate  sufficient
progress  towards  asset  sale(s) by the dates  fees are due  and/or  complete a
transaction  sufficient  to discharge the Term Facility by December 31, 1996. If
the Company cannot satisfy those  conditions,  the Company would be obligated to
pay fees under the agreement. There is no assurance that the Company's cash flow
would be  sufficient  to pay those fees.  If the Company is unable to pay any of
the fees when due it will be in default under the Term Facility.

     The Company's ability to make interest and installment  principal  payments
on  outstanding  debt  also  depends  on  generating  sufficient  cash flow from
operations as well as maintaining  certain levels of receivables  and inventory.
However, there can be no assurance the Company will have sufficient cash flow or
working capital levels will be sufficient to make such payments.  If the Company
is unable to make installment  principal and interest  payments when due it will
be in default of the Credit Agreement.

     If the Company is not  successful in refinancing  the Credit  Agreement and
thereby does not repay all of the amounts outstanding under the Credit Agreement
on its final maturity date of July 1, 1997 or meet other covenant  provisions it
will be in default under the Credit Agreement.

     Any such default or non-compliance  with the Credit Agreement would entitle
the lender to require immediate  payment of the outstanding  indebtedness and to
refuse advances and to exercise  various rights against the Company,  including,
without  limitation,  the  right  to  foreclose  its  security  interest  in the
Company's  assets and realize  upon its  collateral  by any  available  judicial
procedure  and/or to take  possession  of and sell any or all of the  collateral
with or without judicial process. If such non-compliance occurred and the lender
demanded  payment or refused to make further loans and the Company was unable to
obtain  alternative  financing,  the lack of appropriate  liquidity would have a
material  adverse effect on the Company's  results of operations and its ability
to continue as a going concern.

     The Company paid a fee of $150,000 for this amendment.



                                       15

<PAGE>
<PAGE>



     The  Company  was  also in  default  on one  covenant  of  certain  leasing
arrangements  totaling  $2.2 million in debt at December  31, 1995.  The leasing
arrangements  have been amended on substantially  similar terms to the amendment
of the Credit  Agreement.  The maturity  date has been moved to July 1, 1997 and
interest  rate  increased  to prime rate plus  1.50%.  Lessor has also  received
second  lien on certain  Company  assets.  The  Company  believes  it will be in
compliance with the provisions of these leasing arrangements during 1996. If the
Company does not comply with the provisions and is unable to obtain  alternative
financing,  the Company  would be in default and the lender  could take back the
equipment  under  lease  which  would  have an adverse  effect on the  Company's
operations.

     Loans  outstanding  as of December 31, 1995,  under the Term Facility total
$20.650  million and are repayable in consecutive  quarterly  installments:  one
installment  of $.804  million,  three  installments  of $.902 million each, two
installments  of $1.263  million each, and one  installment of $14.614  million.
Each  bank is  entitled  to a  commitment  fee of 1/2% per  annum on the  unused
portion of its commitment under the Senior Bank Facilities, payable quarterly in
arrears. In addition, NationsBank is entitled to an administrative agency fee of
$100 thousand payable annually in advance for the life of the Facilities.

     The Senior Bank Facilities are guaranteed,  subject to certain limitations,
by all direct and indirect domestic subsidiaries of the Company. The Senior Bank
Facilities  are  secured  by a first  priority  lien  or  security  interest  in
substantially all the assets of the Company.  The Senior Bank Facilities contain
representations  and warranties,  covenants and events of default  customary for
credit facilities of this nature. Such customary covenants include  restrictions
on the ability to borrow more debt, acquire other companies,  pay dividends, and
the use of proceeds from the sale of assets.  The Company must maintain  certain
current  asset and debt to equity  ratios.  In  addition,  the Company must meet
certain coverage tests related to interest and cash flow.

     Payments on  principal of long-term  debt  outstanding,  as of December 31,
1995, required are as follows (dollars in thousands):

                             1996          $ 4,029
                             1997           44,488
                             1998               72
                             1999               78
                             2000               28
                                           -------
                                           $48,695
                                           =======

     These payments may be adjusted  based on the Company's  proceeds from asset
sales and "excess cash flow" as defined in the Credit Agreement.

     Interest expense for the nine months ended September 30, 1993 includes $150
thousand of interest on BH Acquisition  debt. This interest expense is reflected
in the Company's  historical cost financial  statements  because the Company was
obligated to repay the debt. In addition,  interest  expense for that nine month
period  reflects  $99  thousand  on $7.3  million  loaned to the  Company  by BH
Acquisition.


                                       16

<PAGE>
<PAGE>



10. INTEREST RATE CAP AGREEMENT:

     The Company has a two-year 6% interest rate cap agreement with  NationsBank
in the  notional  amount of $12  million  for the  purpose  of  hedging  against
increases in interest  rates on its bank debt.  The  agreement,  dated April 22,
1994  provides  for a  quarterly  determination  of  the  amount  by  which  the
three-month  LIBOR rates exceed 6%. If the three-month  LIBOR rate exceeds 6%, a
payment  will be made to the Company  three  months in arrears.  Payments of $19
thousand were made to the Company under this  agreement in 1995. The cost of the
agreement to the Company was $139  thousand  which is being  amortized  over the
life of the agreement.


11. LEASE PAYMENTS:

     The following is a schedule by year of future  minimum lease payments under
capital and  non-cancelable  operating leases with initial or remaining terms of
one year or more at December 31, 1995 (dollars in thousands):

<TABLE>
<CAPTION>
                                                        CAPITAL         OPERATING
                                                        -------         ---------
<C>                                                      <C>             <C>   
1996 ..........................................          $  702          $  757
1997 ..........................................           2,041             576
1998 ..........................................              63             502
1999 ..........................................              63             486
2000 ..........................................              21              40
Later Years ...................................            --              --
                                                         ------          ------
Total minimum lease payments ..................          $2,890          $2,361
                                                         ------          ======
Amount representing interest ..................             382
                                                         ------
Present value of future minimum
  lease payments (including current
  portion of $519) ............................          $2,508
                                                         ======
</TABLE>

     Rental  expense for  premises and  machinery  and  equipment  leased by the
Company under operating leases was as follows (dollars in thousands):

<TABLE>
<CAPTION>
                                                  COMPANY                PREDECESSOR
                                  -----------------------------------   --------------
                                      YEARS ENDED        THREE MONTHS    NINE MONTHS
                                      DECEMBER 31,       DECEMBER 31,   SEPTEMBER 30,
                                  1995          1994         1993           1993
                                  ------------------         ----           ----
<S>                               <C>           <C>           <C>           <C> 
Premises ...............          $532          $573          $ 86          $562
Machinery ..............          $104          $151          $115          $349
</TABLE>


12. FINANCIAL INSTRUMENTS:

     The  Company's   financial   instruments   are  comprised  of  cash,   cash
equivalents,  accounts  receivable,  debt and Series B  Preferred  Stock and the
interest rate cap agreement.  The carrying amounts of cash, cash equivalents and
accounts  receivable  approximate fair values due to the short-term  maturity of
the instruments.  It was not practicable to obtain an estimate of the fair value
of the Company's outstanding debt obligations or Series B Preferred Stock.


                                       17

<PAGE>
<PAGE>


13. PENSION PLAN:

     The Company  sponsors a defined benefit plan which requires no contribution
from the  employees.  The plan was frozen as of December  31,  1994,  and no new
employees are eligible to join this plan after that date.  Prior to December 31,
1994, the Plan covered substantially all employees.  The employees covered under
this plan do not receive any  additional  accruals  for service  rendered  after
December  31, 1994.  Plan assets  consist  principally  of common  stocks,  U.S.
Government and corporate obligations.

     Net periodic  pension  cost of the pension plan was as follows  (dollars in
thousands):

<TABLE>
<CAPTION>
                                                        COMPANY               PREDECESSOR
                                       -----------------------------------   -------------
                                           YEARS ENDED        THREE MONTHS    NINE MONTHS
                                           DECEMBER 31,        DECEMBER 31,  SEPTEMBER 30,
                                         1995         1994         1993          1993
                                       --------------------      -------       -------
<S>                                    <C>          <C>          <C>           <C>    
Service cost on benefits earned
  during the year ................     $  --        $   338      $    16       $   164
Interest cost on projected benefit
  obligations ....................       1,455        1,354           65           674
Actual return on plan assets .....      (3,558)         (67)         (18)         (186)
Amortization, net ................       2,271       (1,013)        --           --   
                                       -------      -------      -------       -------
  Net periodic pension costs .....     $   168      $   612      $    63       $   652
                                       =======      =======      =======       =======
</TABLE>

     The benefits under the plans are determined based on formulas which reflect
the employees' years of service and compensation during their employment period.
The projected  unit credit method is used to determine  pension  costs.  Funding
requirements  for the plan are based on the unit credit  method.  The  Company's
policy is to fund pension cost as required by ERISA.

     During 1995, the Danfield  pension plan was merged into the Company's plan.
The Danfield plan, which was also frozen as of December 31, 1994, was overfunded
in the amount of $611 thousand as of that date.

     As of December 31, 1994, as required by the purchase  method of accounting,
a  liability  was  recorded  reflecting  the excess of the  Company's  projected
benefit obligation measured at an 8.5% discount rate over the fair value of plan
assets.

     The following  table sets forth  information  on the plan as of December 31
(dollars in thousands):

<TABLE>
<CAPTION>
                                                     1995          1994         1993
                                                     ----          ----         ----
<S>                                                <C>           <C>          <C>     
Actuarial present value of benefit obligations
  Vested .....................................     $ 19,352      $ 15,644     $ 26,293
                                                   ========      ========     ========
  Accumulated ................................     $ 19,407      $ 16,370     $ 26,370
                                                   ========      ========     ========
  Projected ..................................     $ 19,407      $ 16,370     $ 27,150
Fair value of plan assets ....................       17,202        11,713       21,592
                                                   --------      --------     --------
Unfunded projected benefit obligation ........        2,205         4,657        5,558
Unrecognized gain ............................         (583)         --           --
                                                   --------      --------     --------
Accrued pension cost .........................     $  2,788      $  4,657     $  5,558
                                                   ========      ========     ========
</TABLE>


                                       18

<PAGE>
<PAGE>


Assumptions used in measuring the pension obligation at December 31 were:

<TABLE>
<CAPTION>
                                                    1995        1994        1993
                                                    ----        ----        ----
<S>                                                  <C>         <C>        <C> 
Weighted average discount rate                       7.5%        8.5%       7.5%
Rate of increase of compensation levels              N/A         5.0%       5.0%
Expected long-term rate of return on assets          9.5%        9.5%       9.0%
</TABLE>


     In addition to its liability for the Company  sponsored  plan,  the Company
also had an  additional  pension  liability  in the amount of $3.6 million as of
December 31, 1995 in connection with a terminated multi-employer plan.

14. OTHER POST-RETIREMENT BENEFITS:

     The  Company  provides  certain  health  and life  insurance  benefits  for
eligible  retirees and their  dependents.  The  Predecessor  adopted,  effective
January 1, 1993, SFAS No. 106 "Employers' Accounting for Postretirement Benefits
Other Than Pensions," whereby the cost of  post-retirement  benefits are accrued
during  employees'  working careers.  These costs were previously  recognized by
Predecessor as a charge to income in the period the benefits were paid. The plan
is not funded. The Company's policy is to pay the cost of benefits as incurred.

     Certain benefits are available to full-time employees who were over age 30,
as of January 1, 1992, provided such employees work for the Company for 25 years
and reach certain ages, but not less than age 55.  Employees hired after January
1, 1993 will not be eligible to receive benefits under this Plan.

     In its historical financial statements, the Predecessor elected to amortize
the January 1, 1993 obligation over a 20 year period.  As of October 1, 1993, as
required by the purchase method of accounting, the liability as of that date was
recorded in the Company's consolidated financial statements

     The present  value of the  postretirement  benefit  accrual at December 31,
1995 and 1994  measured  in  accordance  with  the  standard  at a 7.5% and 8.5%
discount rate, respectively, is estimated as follows (dollars in thousands):

<TABLE>
<CAPTION>
                                             1995       1994
                                             ----       ----
<S>                                         <C>        <C>   
Retirees ..............................     $3,388     $3,279
Fully eligible active plan participants        647        557
Other active participants .............        769        479
                                            ------     ------
  Subtotal ............................      4,804      4,315
Unrecognized net loss .................        555       --
                                            ------     ------
                                            $4,249     $4,315
                                            ======     ======
</TABLE>

     An 8.5%  discount  rate  was used to  measure  expense  for the year  ended
December 31, 1995. A 7.5% discount rate was used to measure expense for the year
ended  December 31, 1994 and the three month period ended December 31, 1993. The
assumed  discount  rate was 8.5% at January 1, 1993 for purposes of  determining
the Predecessor's  1993 net  postretirement  benefit expense and for determining
the accumulated postretirement benefit obligation at January 1, 1993.



                                       19

<PAGE>
<PAGE>


<TABLE>
<CAPTION>
                                                              COMPANY                 PREDECESSOR
                                               ------------------------------------  -------------
                                                  YEARS ENDED          THREE MONTHS   NINE MONTHS
                                                  DECEMBER 31,         DECEMBER 31,  SEPTEMBER 30,
                                               1995          1994          1993          1993
                                               ------------------          ----          ----
<S>                                            <C>           <C>           <C>           <C> 
Service Cost ........................          $ 33          $ 32          $ 14          $ 33
Interest Cost .......................           367           352            81           243
Amortization of Transition Obligation           --            --            --            147
                                               ----          ----          ----          ----
                                               $400          $384          $ 95          $423
                                               ====          ====          ====          ====
</TABLE>

     The assumed  health care cost trend rate used in measuring the  accumulated
postretirement  benefit  obligation  at  December  31,  1995  was 11% for  1995,
decreasing  gradually to 5.5% by the year 2005. A one-percentage  point increase
in the  assumed  health  care cost  trend rate would  increase  the  accumulated
postretirement  benefit  obligation  as of December 31, 1995 by $72 thousand and
the sum of service costs and interest costs on an annual basis by $6 thousand.

15.  STOCKHOLDERS' EQUITY:
     COMMON STOCK

     Each  share of  Common  Stock is  entitled  to one  vote per  share.  As of
December 31, 1995 there were  20,000,000  shares of Common Stock  authorized and
7,409,282  shares  outstanding.  Payment of  dividends  on the common  stock are
prohibited under the current terms of the Company's bank credit facility.

     PREFERRED STOCK
     Each share of Series B  Preferred  Stock is entitled to one vote per share.
As of December 31, 1995 there were 20,805,060 shares of Series B Preferred Stock
authorized  and  outstanding.  The Series B  Preferred  Stock is  entitled  to a
preference  on  liquidation  equal  to $1 per  share  plus  accrued  and  unpaid
dividends at the rate of $.06 per annum per share.

     Twenty  percent  of the shares of Series B  Preferred  Stock  amounting  to
approximately  $4.2  million are  scheduled  to be redeemed by the Company  from
funds legally available therefore, on March 15th of each year commencing in 1995
and  ending  in  1999.  Such  shares  may  also be  redeemed  at any time at the
Company's option.

     Dividends  on the Series B Preferred  Stock  accrue at an annual rate of 6%
and are payable  quarterly on March 15, June 15,  September 15, and December 15.
Both the preferred  stock  redemptions and the quarterly  dividend  payments are
subject to approval of the banks participating in the Company's credit facility.
The Company was notified as of March 15, 1995 that the banks  declined  approval
of the dividend and redemption  payments and no such payments have been made. As
a result, additional dividends will accrue on the scheduled but unpaid dividends
at a rate of 6% per annum. Dividends in arrears as of December 31, 1995 and 1994
were $1,374,000 and $92,000 respectively. Because of its holdings of both Common
and Preferred stock,  Noel has  approximately  76.3% of the vote with respect to
the Company's capital stock.


                                       20

<PAGE>
<PAGE>


16. EXCHANGE OF PREFERRED STOCK:

     On November 14, 1994,  the Board of  Directors  adopted the 1994  Voluntary
Recapitalization  Plan (as subsequently  amended,  the "Plan") pursuant to which
the Company offered its preferred  stockholders  the right to exchange up to 50%
of their  outstanding  shares of Series B  Preferred  Stock (and all accrued but
unpaid dividends thereon through December 4, 1994) for shares of Common Stock of
the Company on the basis of one share of common  stock for each ten dollars face
amount of Series B Preferred  Stock.  The  Company  also  allowed the  preferred
stockholders to exchange the accrued but unpaid  dividends on their  unexchanged
shares of Series B Preferred  Stock and their shares of Series A Preferred Stock
for shares of Common Stock of the Company on the same basis.

     Pursuant to the Plan, the preferred stockholders exchanged an aggregate sum
of 19,694,940 shares of Series B Preferred Stock (representing approximately 49%
of the then issued and outstanding  shares of Series B Preferred  Stock) and all
of the accrued but unpaid dividends on the Series A and Series B Preferred Stock
through  December 4, 1994, for 2,303,032  shares of Common Stock. The difference
between the carrying value of preferred stock and accrued  dividends  exchanged,
$23.0 million, and the fair value of the common stock issued, $18.9 million, has
been recorded as a gain on redemption of preferred  stock which is accounted for
as a negative preferred stock dividend in the amount of $4.1 million.

     In addition, Noel, formerly the holder of all of the issued and outstanding
shares of Series A Preferred Stock of the Company, exercised its right under the
Company's  charter to convert all of its Series A Preferred Stock into shares of
Series B Preferred  Stock on the basis of 100,000 Series B preferred  shares for
each share of Series A Preferred Stock surrendered for conversion.  After giving
effect to the Plan and the Series A Conversion,  there remain  20,805,060 shares
of Series B Preferred Stock issued and outstanding.

     On December  13, 1994,  the Company  amended its  Restated  Certificate  of
Incorporation  to increase the number of authorized  shares of Common Stock from
13,542,404  shares to  20,000,000  shares and to grant to all holders of capital
stock,  irrespective  of class or series,  one vote per share on all  matters on
which stockholders are entitled to vote. Formerly, only the holders of preferred
stock were entitled to vote.

17.  UNSTAPLING OF COMMON STOCK:

     On February 28, 1994, Noel  distributed  3,542,404  shares of the Company's
Series A Common  Stock to Noel  shareholders  at a ratio of  0.175434  shares of
Series A Common Stock for each share of common stock of Noel.  During the period
from February 28, 1994 to December 14, 1994, the shares of Series A Common Stock
of the Company  traded  stapled to the shares of common stock of Noel,  i.e., no
separate stock  certificates  representing  shares of Series A Common Stock were
issued and the  certificates  representing  shares of Noel's  common  stock were
deemed to evidence  ownership of the Series A Common  Stock of the Company.  The
Company  also sold shares of Series B Common Stock during that period of time to
certain management employees and their affiliates,  which shares are represented
by separate stock certificates.

     On December 15, 1994, shares of Series A Common Stock of the Company ceased
to be stapled to the shares of Noel (the "Unstapling  Date").  On the Unstapling
Date, all authorized shares of Series A and Series B Common Stock of the Company
were  automatically  reclassified  as shares of Common Stock  without  series to
create  a single  class  of  Common  Stock.  The  Company  has  delivered  stock
certificates  representing  shares of Common Stock of the  Company,  and cash in
lieu of fractional shares thereof, to the


                                       21

<PAGE>
<PAGE>


holders  of record of its Series A Common  Stock as of  December  5,  1994.  The
certificates  representing  shares  of  Series  B Common  Stock  are  deemed  to
represent  the same number of shares of Common Stock of the Company.  Holders of
Series B Common Stock have the right,  but are not required,  to exchange  their
certificates  for new  certificates  representing  shares of Common Stock of the
Company.

     The  Company's  Common  Stock  commenced   trading   independently  on  the
Unstapling  Date on the  NASDAQ  Small-Cap  Market  and on  February  15,  1995,
delisted from the NASDAQ and began trading on the New York Stock  Exchange under
the symbol BHY.

18. ACQUISITION RELATED RESTRUCTURING CHARGE:

     The accompanying Predecessor consolidated financial statements for the nine
months  ended  September  30,  1993,  include  a  restructuring  charge of $18.5
million.  This  restructuring  was  directly  related  to the  acquisition.  The
principal components of the charge were (dollars in thousands):

<TABLE>
<S>                                                         <C>    
            Severance                                       $ 7,283
            Write down of real estate investments             7,329
            Acquisition  related fees and expenses            1,841
            Other write  downs of assets to be disposed       1,382
            Other                                               713
                                                            -------
                                                            $18,548
                                                            =======
</TABLE>

     The write down of real estate investments represents the difference between
their estimated short term cash liquidation value and their estimated  long-term
realizable  value. The charges reflect new management's  intention to dispose of
these investments.

     The accompanying  financial  statements for the nine months ended September
30, 1993 also include a $4.6 million  provision  for  environmental  liabilities
which was included in selling, general and administrative expenses.

19.  INCOME TAXES:

     Effective  January 1, 1993, the Predecessor  adopted Statement of Financial
Accounting  Standards No. 109,  "Accounting  for Income  Taxes".  The cumulative
effect  of  adopting  the new  standard  was to  increase  deferred  income  tax
liabilities by $200 thousand as of January 1, 1993, which amount is reflected in
the tax provision for the nine months ended September 30, 1993.

     The income (loss)  before  income taxes are for the periods 1995,  1994 and
1993 are substantially all domestic in origin.


                                       22

<PAGE>
<PAGE>



     The  components  of the income tax  provision  or benefit  are  (dollars in
thousands):

<TABLE>
<CAPTION>
CONTINUING OPERATIONS                                        COMPANY                 PREDECESSOR
---------------------                          ----------------------------------    -------------
                                                   YEARS ENDED       THREE MONTHS    NINE MONTHS
                                                   DECEMBER 31,       DECEMBER 31,   SEPTEMBER 30,
                                                 1995         1994        1993           1993
                                               --------------------     -------        -------
<S>                                            <C>          <C>         <C>            <C>    
Cumulative effect of adopting SFAS No. 109     $  --        $  --       $  --          $   200
Current provision (benefit)                        360        1,288        (165)        (1,168)
Deferred provision (benefit)                      (674)         825         770         (6,949)
                                               -------      -------     -------        ------- 
                                               $  (314)     $ 2,113     $   605        $(7,917)
                                               =======      =======     =======        ======= 
</TABLE>

<TABLE>
<CAPTION>
DISCONTINUED OPERATIONS                          COMPANY               PREDECESSOR
-----------------------          -----------------------------------   -------------
                                      YEARS ENDED       THREE MONTHS   NINE MONTHS
                                      DECEMBER 31,      DECEMBER 31,   SEPTEMBER 30,
                                   1995         1994        1993            1993
                                 --------------------     -------         -------
<S>                              <C>          <C>         <C>             <C>    
Current provision                $     2      $   260     $   228         $   307
Deferred provision (benefit)      (6,642)         836         201           424
                                 -------      -------     -------         -------
                                 $(6,640)     $ 1,096     $   429         $   731
                                 =======      =======     =======         =======
                                                                  
</TABLE>

     The Company's tax provision or benefit  differed from that which would have
been provided at a 34% rate as follows (dollars in thousands):

<TABLE>
<CAPTION>
CONTINUING OPERATIONS                                    COMPANY                PREDECESSOR
---------------------                    ----------------------------------     -------------
                                             YEARS ENDED       THREE MONTHS     NINE MONTHS
                                             DECEMBER 31,       DECEMBER 31,    SEPTEMBER 30,
                                           1995         1994        1993            1993
                                         --------------------     -------         -------
<S>                                      <C>          <C>         <C>             <C>     
Federal provision at 34%                 $(7,435)     $ 1,416     $   503         $(9,196)
State and local provision, net               242          317         (16)            386
Non-deductible restructuring charges        --           --          --               668
Cumulative effect of SFAS No. 109           --           --          --               200
Amortization/write-off of goodwill         6,847          333          84            --
Other, net                                    32           47          34              25
                                         -------      -------     -------         ------- 
                                         $  (314)     $ 2,113     $   605         $(7,917)
                                         =======      =======     =======         ======= 
</TABLE>

<TABLE>
<CAPTION>
DISCONTINUED OPERATIONS                            COMPANY                PREDECESSOR
-----------------------            ----------------------------------    -------------
                                        YEARS ENDED      THREE MONTHS     NINE MONTHS
                                        DECEMBER 31,     DECEMBER 31,    SEPTEMBER 30,
                                     1995         1994        1993            1993
                                   --------------------     -------         -------
<S>                                <C>          <C>         <C>             <C>    
Federal provision at 34%           $(8,378)     $   873     $   401         $   482
Foreign loss (income)                   30            9         (47)            151
State and local provision, net        (755)         147          57              98
Amortization of goodwill             2,463           67          18            --
                                   -------      -------     -------         -------
                                   $(6,640)     $ 1,096     $   429         $   731
                                   =======      =======     =======         =======
</TABLE>

     The income tax benefit applicable to discontinued operations as of December
31, 1995 (in thousand of dollars)  consisted of $6,603 from loss on disposal and
$37 from loss from operations.

     At December 31, 1995 and 1994, the components of the net deferred tax asset
are (dollars in thousands):

                                       23

<PAGE>
<PAGE>


<TABLE>
<CAPTION>
                                                              1995         1994
                                                              ----         ----
<S>                                                         <C>          <C>  
Loss on discontinued operations                             $ 6,658      $  --
Book value of fixed assets over tax basis                    (6,893)      (8,966)
Pension liability                                             2,533        2,659
Other post-retirement benefit liability                       1,839        1,787
Environmental liabilities                                     2,192        2,164
Operating loss carryforwards                                  1,271          789
Estimated value of assets held for sales over tax basis        --            112
Other,  net                                                   2,228        4,104
                                                            -------      -------
                                                            $ 9,828      $ 2,649
                                                            =======      =======
</TABLE>

     The Company was a member of the Noel Group,  Inc.'s  consolidated tax group
for the period of October 30, 1993 through  June 30,  1994.  For the nine months
ended  September 30, 1993 and for all periods  subsequent to June 30, 1994,  the
Company filed its own consolidated tax return.

     Net operating losses (NOL) of $2.6 million and $500 thousand were generated
for the periods of July 1, 1994  through  December 31, 1994 and for the calendar
year 1995,  respectively.  The $2.6 million NOL is  available  to offset  future
taxable  income while the $500 thousand can offset both prior and future taxable
income.

     The  Federal  income  tax  receivable  of $787  thousand  consists  of $112
thousand which  represents a carryback of losses and $675 thousand  representing
payments to the Internal Revenue Service for future liabilities.

     Based on the Company's  business plan for the future,  management is of the
opinion  that it is more likely than not that the deferred tax asset at December
31, 1995 will be realized.

20.  EARNINGS PER COMMON SHARE:

     Earnings per common  share for the Company have been  presented as earnings
from continuing operations,  earnings from discontinued operations, and earnings
resulting from the exchange of Preferred Stock (See Note 16). Earnings per share
from  continuing  operations  have been calculated as net income from continuing
operations  after preferred  dividend  requirements  divided by weighted average
common  shares  outstanding  during the period.  Earnings  per common share from
discontinued  operations have been calculated as income (loss) from discontinued
operations  plus net loss on disposition of discontinued  operations  divided by
the weighted  average number of common shares  outstanding.  Earnings per common
share from the gain on preferred  redemption have been calculated as the gain on
preferred  redemption  divided by the weighted  average  number of common shares
outstanding during the period.

21.  INDUSTRY SEGMENT DATA:

     The Company  operates in two principal  segments,  Industrial  Products and
Consumer  Products.   Industrial   involves  the  production  and  marketing  of
industrial  threads  and yarns  used in  industrial  applications.  Consumer  is
involved  in the  distribution  of buttons,  notions,  braids and yarns to major
retail  chains and outlets  and  specialty  threads  marketed  primarily  to the
wholesale  bedding  and  embroidery  market and dental  floss.  Consumer  thread
operations,   other  than  dental  floss,  are  conducted   principally  through
operations  acquired in 1994 and 1995 (Danfield and Culver,  respectively).  The
1994 and 1993  segment  data has been  restated  to conform to the 1995  segment
classifications.

                                       24

<PAGE>
<PAGE>


     Button sales are made predominantly to retailers, general merchandisers and
specialty  hobby and craft stores.  Thread sales are made to  manufacturers  and
jobbers.  Almost all of the Company's Button and Thread customers are located in
the United  States.  The Company  grants  credit and  performs  periodic  credit
evaluations of its customers' financial conditions. (Dollars in thousands).


<TABLE>
<CAPTION>
                                                         COMPANY                    PREDECESSOR
                                       --------------------------------------      -------------
                                              YEARS ENDED        THREE MONTHS       NINE MONTHS
                                             DECEMBER 31,         DECEMBER 31,     SEPTEMBER 30,
                                          1995          1994          1993             1993
                                        ----------------------      --------         --------
<S>                                     <C>           <C>           <C>              <C>     
SALES:
Industrial                              $ 45,081      $ 46,600      $ 11,893         $ 35,136
Consumer Products                         43,573        30,167         6,085           22,630
                                        --------      --------      --------         --------
Net Sales                               $ 88,654      $ 76,767      $ 17,978         $ 57,766
                                        ========      ========      ========         ========
                                                                                   
                                                                                   
DEPRECIATION AND AMORTIZATION:                                                     
                                                                                   
Industrial                              $  2,302      $  1,837      $    890         $    765
Consumer Products                            849           290            40              177
Corporate                                    127           124             6              353
                                        --------      --------      --------         --------
Total depreciation and amortization     $  3,278      $  2,251      $    936         $  1,295
                                        ========      ========      ========         ========
OPERATING PROFIT:                                                                  
Industrial                              $(24,011)     $  5,296      $  1,619         $  5,234
Consumer Products                          9,126         7,122         1,937              779
General corporate expenses, net           (2,982)       (5,033)       (1,148)         (30,348)
Interest expense                          (4,000)       (3,245)         (864)          (2,136)
                                        --------      --------      --------         --------
Income before Federal income taxes      $(21,867)     $  4,140      $  1,544         $(26,471)
                                        ========      ========      ========         ======== 
CAPITAL EXPENDITURES:                                                              
Industrial                              $  3,254      $  2,364      $    629         $    538
Consumer Products                            527           465           135               49
Corporate                                     39           788          --                257
                                        --------      --------      --------         --------
                                        $  3,820      $  3,617      $    764         $    844
                                        ========      ========      ========         ========
</TABLE>


<TABLE>
<CAPTION>
                                         DECEMBER 31,      DECEMBER 31,
                                             1995              1994
                                         ------------      ------------
<S>                                        <C>               <C>     
          IDENTIFIABLE ASSETS:
          Industrial ............          $ 45,358          $ 61,337
          Consumer Products .....            36,059            30,994
          Corporate .............            12,707             7,072
          Discontinued Operations              --              29,049
                                           --------          --------
          Total Assets ..........          $ 94,124          $128,452
                                           ========          ========
</TABLE>




22.  COMMITMENT AND CONTINGENCIES:

     Although  there  can  be no  assurances,  based  on  information  currently
available,  the  Company  does not  believe  that the  outcome  of all  known or
threatened  litigation  and other claims will have a material  adverse effect on
the Company's financial condition, liquidity or operating results.



                                       25

<PAGE>
<PAGE>



23.  RELATED PARTY TRANSACTION:

     A director of the Company who is also a managing  director of the Company's
majority  stockholder  was engaged by the Company as a financial  consultant  in
February  1996 at an annual rate of $100,000.  The  agreement  also provided for
200,000  stock options  exercisable  over a  twelve-month  period at fair market
value as of the date of  grant.

24.  QUARTERLY RESULTS OF OPERATIONS: (UNAUDITED)

<TABLE>
<CAPTION>
QUARTER ENDED                                    DECEMBER 31,     SEPTEMBER 30,     JUNE 30,       MARCH 31,
                                                     1995             1995            1995             1995
                                                  --------         --------        --------         --------
<S>                                               <C>              <C>              <C>             <C>     
Net sales                                         $ 22,885         $ 20,612         $ 21,844        $ 23,313
Cost of sales                                       18,418           15,212           15,970          16,305
                                                  --------         --------        --------         --------
Gross margin                                      $  4,467         $  5,400         $  5,874        $  7,008
                                                  ========         ========         ========        ========
Income (loss) from continuing operations          $(23,749)        $    151         $    166        $    597
Income (loss) from discontinued operations         (18,377)             (49)             128             298
                                                  --------         --------        --------         --------
Income (loss) applicable to common stock          $(42,126)        $    102         $    294        $    895
                                                  ========         ========         ========        ========
Income (loss) per common share:
Continuing operations                             $  (3.21)        $    .02        $    .02         $    .08
Discontinued operations                              (2.48)            (.01)            .02              .04
                                                  --------         --------        --------         --------
    Total                                         $  (5.69)        $    .01        $    .04         $    .12
                                                  ========         ========        ========         ========
</TABLE>

<TABLE>
<CAPTION>
QUARTER ENDED                                    DECEMBER 31,     SEPTEMBER 30,     JUNE 30,       MARCH 31,
                                                     1994             1994            1994             1994
                                                  --------         --------        --------         --------
<S>                                               <C>              <C>              <C>             <C>     
Net sales                                         $ 21,287         $ 20,356         $ 17,622        $ 17,502
Cost of sales                                       16,704           14,337           11,337          11,665
                                                  --------         --------        --------         --------
Gross margin                                      $  4,583         $  6,019         $  6,285        $  5,837
                                                  ========         ========         ========        ========
Income (loss) from continuing operations          $   (581)        $    (17)        $    297        $    (14)
Income (loss) from discontinued operations             730              315              288             164
Gain on preferred stock redemption                   4,099             --               --              --
                                                  --------         --------        --------         --------
Income applicable to common stock                 $  4,248         $    298         $    585        $    150
                                                  ========         ========         ========        ========
Income (loss) per common share:
  Operating income                                $   (.10)        $   --           $    .06        $   --
  Gain on preferred stock redemption                   .71             --              --               --
                                                  --------         --------        ---------        --------
                                                       .61             --                .06            --
  Discontinued operations                              .12              .06              .05             .03
                                                  --------         --------        --------         --------
    Total                                         $    .73         $    .06         $    .11        $    .03
                                                  ========         ========        ========         ========
</TABLE>



          SEASONALITY
          -----------
               Although  there is no pronounced  seasonality  in demand for
          the  Company's  products,  typically  the  second  quarter is the
          Company's best in terms of  profitability.  In the third quarter,
          plants  are  closed  for  the  first  week  of  July  for  normal
          maintenance. All but one plant generally close for a week between
          Christmas and the New Year during the fourth quarter. Results can
          also be adversely  affected by regional weather,  as they were in
          1994 at Thread's Northeast facilities.



                                    26

<PAGE>
<PAGE>


          1995
          ----
               Results  for the  fourth  quarter  of 1995  were  negatively
          impacted by the $6.4 million impairment charge, the $17.4 million
          goodwill write off, the $1.2 million of other related charges and
          the $18.4 million loss from discontinued operations. In addition,
          during  each  quarter of 1995,  the Thread  division  experienced
          higher than historical levels of manufacturing inefficiencies due
          to higher raw material  costs,  the effects of the  consolidation
          and   relocation  of   facilities   that  occurred  in  1994  and
          implementation  issues related to the new management  information
          system.  Results of operations  for 1995 also include the effects
          of the acquisition of Culver Textile  Company,  Inc. as of August
          31, 1995.

          1994
          ----
               Results for each of the  quarters  in 1994 were  affected by
          unusual or  nonrecurring  events.  Poor  winter  weather  reduced
          production and shipments at the Company's Connecticut  facilities
          which reduced first quarter results.

               The  button  division  had  completed  the  closing  of  its
          Carlstadt  and  Kansas  City  facilities  by the end of the first
          quarter,  thereby reducing costs in the second,  third and fourth
          quarters.

               Danfield was acquired on June 30, 1994 and contributed sales
          of $4.5  million  in  each  of THE  third  and  fourth  quarters.
          Danfield contributed $.2 million and $.8 million to income before
          interest   and   taxes  in  the  third   and   fourth   quarters,
          respectively.

               A  number  of  changes  in  the  Thread  division  adversely
          affected results in the third AND fourth  quarters.  The division
          experienced delays in production and ability to ship to customers
          due to  implementation  of a new management  information  system;
          transfer of production from its Putnam, Connecticut facility (now
          closed)  to other  Company  facilities;  closing  of the  Atlanta
          warehouse;  and the relocation of the customer service department
          from Atlanta to Hendersonville.  The division  experienced higher
          raw material and freight  costs as well as greater  manufacturing
          inefficiencies   during  this   period.   These   expenses   were
          particularly pronounced in the fourth quarter.

               Earnings  per share for the year 1994 does not equal the sum
          of the 1994 quarterly earnings per share because of the preferred
          stock conversion on December 15, 1994 and the resultant effect on
          fourth quarter weighted average common shares outstanding.

25.  OTHER:


     The Company has approximately 1,192 employees, of whom approximately 31 are
sales and  marketing  personnel  and the balance  are  employed in its mills and
offices.  Approximately 142 employees are covered by three collective bargaining
agreements  with labor unions two of which expire within the next twelve months.
The Company believes relations with its employees are satisfactory.


                                       27

<PAGE>
<PAGE>




26.  PREDECESSOR CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY:

<TABLE>
<CAPTION>
                                          COMMON STOCK                              MINIMUM     PARENT      TREASURY STOCK
                                             ISSUED           CAPITAL     RETAINED  PENSION    COMPANY      --------------
                                       SHARES      AMOUNT     SURPLUS     EARNINGS  IABILITY     DEBT     SHARES        COST
                                       ------      ------     -------     --------  -------      ----     -----         ----
<S>                                  <C>         <C>         <C>         <C>                             <C>          <C>     
Balances as of December 31, 1992     3,605,113   $   3,605   $  14,470   $  57,153      --        --     1,683,531    $ 28,040

Net loss for the period
ended September 30, 1993                                                   (17,424)

Acquisition of Treasury Stock                                                                                              (52)

Issuance of stock in connection
with employer compensation plan                                      3                                       1,629          96

Issuance of stock in
connection with stock option plan                                  (11)                                    (52,550)       (868)

Recording of parent company debt                                                               $(6,461)

Recording of minimum pension
liability as required by FASB #87                                                    $(3,953)

Cash dividend $.32 per share                                                  (928)

                                     ---------   ---------   ---------   ---------   -------   -------   ---------    --------
Balances September 30, 1993          3,605,113   $   3,605   $  14,462   $  38,801   $(3,953)  $(6,461)  1,632,610    $ 27,216
                   === ====          =========   =========   =========   =========   =======   =======   =========    ========
</TABLE>


                                       28

<PAGE>
<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.

                                          BELDING HEMINWAY COMPANY, INC.


                                             By: /s/ Edward F. Cooke
                                             ___________________________________
                                              Edward F. Cooke, Vice President
                                                and Chief Accounting Officer



Date:  February 25, 1997

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