================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                 --------------
                                    FORM 10-K/A
(Mark One)
[  X  ]        ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                 THE SECURITIES AND EXCHANGE ACT OF 1934

                 For the fiscal year ended September 29, 1996
                                       OR
[     ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                 THE SECURITIES EXCHANGE ACT OF 1934
                         [NO FEE REQUIRED]
                     For the transition period from
                   ___________      to     __________

                    Commission   file  number  0-20686

                      UNIROYAL TECHNOLOGY CORPORATION
             (Exact name of registrant as specified in its charter)
           Delaware                                             65-0341868
 (State or other jurisdiction of                             (I.R.S. Employer
  incorporation or organization)                             Identification No.)

 Two North Tamiami Trail, Suite 900
         Sarasota, Florida                                   34236-5568
(Address of principal executive offices)                     (Zip Code)
   
                             (941) 361-2100
             (Registrant's telephone number, including area code)

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

 Title of each class                                  Name of each exchange on
                                                        which registered
       None                                              Not Applicable

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

                  Common Stock, par value $.01 per share
                               (Title of class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.
Yes     X       No _____

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation S-K (29,405 of this chapter) 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. [ ]

As of November 29, 1996, the aggregate  market value of the voting stock held by
non-affiliates  of the registrant  (assuming for this purpose that all directors
and officers of the registrant and all holders of 5% or more of the common stock
of the registrant are affiliates)  was  approximately  $19,390,000  based on the
closing price for the stock on November 29, 1996. The foregoing aggregate market
value is based on  issuance  of only 98% of the shares  authorized  for  initial
issuance;  the  registrant  believes that the foregoing  aggregate  market value
would be  approximately  $20,062,000  if all  10,000,000  shares  authorized for
initial issuance had been issued.

APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS:

As of November 29, 1996, 13,266,708 shares of the registrant's common stock were
outstanding.

Indicate  by check mark  whether  the  registrant  has filed all  documents  and
reports  required  to be  filed by  Section  12,  13 or 15(d) of the  Securities
Exchange Act of 1934 subsequent to the  distribution of securities  under a plan
confirmed by a court. Yes X No _____

                       DOCUMENTS INCORPORATED BY REFERENCE
Parts III - Portions of the registrant's definitive proxy statement to be issued
in connection with the registrant's annual meeting of stockholders to be held in
1997.

================================================================================


<PAGE>


================================================================================

================================================================================

                                  ii


                                                     TABLE OF CONTENTS

PART I                                                                   

ITEM 1 BUSINESS.................................................................

     GENERAL....................................................................

     CORPORATE   DEVELOPMENTS...................................................

          Ensolite Sale.........................................................
          Acquisition of South Bend Facility....................................
          Revolving Credit Agreement............................................
          SAP Business Information System ......................................
          Settlement of Uniroyal Retiree Benefits Litigation ...................
          Introduction of New Coated Fabrics Product ...........................
          Shareholders' Rights Plan.............................................
          Redemption of Series B Preferred Stock................................
          Disposition of Port Clinton, Ohio Automotive Operation................

     BUSINESS SEGMENTS..........................................................
          High Performance Plastics Segment.....................................
          Coated Fabrics Segment................................................
          Specialty Adhesives Segment..........................................

     EMPLOYEES..................................................................

     TRADEMARKS AND PATENTS.....................................................

     RESEARCH AND DEVELOPMENT...................................................

     BACKLOG....................................................................

     WORKING CAPITAL ITEMS......................................................

     ENVIRONMENTAL MATTERS......................................................

     HISTORY OF THE COMPANY.....................................................
          Predecessor Companies.................................................
          Reorganization........................................................

ITEM 2 PROPERTIES...............................................................



<PAGE>


                                                                       
ITEM 3   LEGAL PROCEEDINGS......................................................

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

PART II

ITEM 5   MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
         STOCKHOLDER MATTERS....................................................

ITEM 6   SELECTED FINANCIAL DATA................................................

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

               RESULTS OF OPERATIONS............................................

                    Comparison of Fiscal 1996 with Fiscal 1995 .................

                    Comparison of Fiscal 1995 with Fiscal 1994 .................

                    Liquidity and Capital Resources ............................

                    Effects of Inflation .......................................

ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA..............................

ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
       ACCOUNTING AND FINANCIAL DISCLOSURE......................................

PART III

ITEM 10 DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT......................

ITEM 11 EXECUTIVE COMPENSATION..................................................

ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
        MANAGEMENT..............................................................

ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..........................

PART IV

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

SIGNATURES......................................................................

INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE..................

EXHIBIT INDEX...................................................................






<PAGE>


================================================================================

================================================================================
                  
Item 1.  Business

         General

                  Uniroyal Technology Corporation (the "Company") is a leader in
         the  development,  manufacture  and sale of a broad range of  materials
         employing  plastics and specialty  chemicals  technologies  used in the
         production  of a wide  range of  consumer,  commercial  and  industrial
         products.  Its  products,  many  of  which  are  based  on  proprietary
         technology,  include  thermoplastic sheet for use in the manufacture of
         seating,    interior   paneling   and   other   applications   in   the
         transportation,  recreational,  agricultural and industrial vehicle and
         computer  manufacturing  industries;  acrylic  sheet  for  use  in  the
         manufacture of aircraft  canopies,  cabin windows and windshields,  sun
         tanning beds and bullet  resistant  enclosures;  acrylic rods and tubes
         used in the manufacture of orthopedic  devices and hard contact lenses;
         a wide  selection of plastic vinyl coated fabrics for use in automobile
         and furniture manufacturing;  and liquid adhesives and sealants for use
         in the commercial roofing industry and in the manufacture of furniture,
         truck trailers and recreational  vehicles.  The Company's  technologies
         allow  it to  incorporate  into  its  specialized  materials,  such  as
         thermoplastic and acrylic sheets,  performance  characteristics such as
         fire retardancy, static dissipation,  weatherability,  optical clarity,
         high strength to weight ratio,  light filtration  capability and others
         required in the specialty markets on which it focuses. The Company is a
         leading  supplier  in  such  markets  due to  its  ability  to  provide
         materials with such varying performance  characteristics,  to customize
         such  materials  and to  provide  technical  and  customer  support  in
         connection with the use of its products in manufacturing.

                  The  manufacturing  operations of the Company are conducted at
         nine sites  located in Indiana,  Connecticut,  New Jersey,  California,
         Georgia,  Ohio and  Wisconsin,  through three business  segments:  High
         Performance Plastics,  Coated Fabrics and Specialty Adhesives. The High
         Performance  Plastics Segment of the Company's business is comprised of
         two  divisions:  Royalite,  which  manufactures  specialty  and general
         purpose   thermoplastic   sheet,   injection   molding  resins,   color
         concentrates   and   extruded   profiles,   and   Polycast   Technology
         ("Polycast"),  which  manufactures  acrylic  sheet  for the  aerospace,
         specialty  and  general  purpose  markets as well as  acrylic  rods and
         tubes.  The Coated Fabrics Segment  manufactures  the Company's line of
         vinyl coated fabrics and vinyl laminated composites,  and the Specialty
         Adhesives  Segment   (formerly,   the  Specialty  Foams  and  Adhesives
         Segment), manufactures liquid adhesives and sealants.

                  The Company's Fiscal 1996 net sales were approximately  $209.3
         million. Approximate net sales for each of the Company's three business
         segments during such period were as follows:  High Performance Plastics
         -  $115.1  million,  Coated  Fabrics  - $58.7  million,  and  Specialty
         Adhesives - $35.5  million.  For  certain  financial  information  with
         respect to the Company's business  segments,  see "Note 16 to Financial
         Statements."  The Company is the  successor to an  affiliated  group of
         reorganized  entities  from  which  the  Company  acquired  all  of its
         businesses  in 1992  pursuant  to a plan of  reorganization  adopted on
         September 27, 1992. See "- History of the Company."

         Corporate Developments

                  The  following  are  certain  corporate   developments   which
         occurred in Fiscal 1996. The descriptions of such  developments  should
         be read in conjunction  with the other parts of this Form 10-K and with
         the Financial  Statements  and Notes to Financial  Statements and other
         financial information which form a part hereof.

                  Ensolite Sale

                  On June 10, 1996,  the Company sold  substantially  all of the
         assets used in the Specialty Foams Division of its Specialty  Adhesives
         Segment  to Rubatex  Corporation  ("Rubatex")  for a purchase  price of
         $25.0 million. Pursuant to its agreement with Rubatex, the Company will
         continue  manufacturing  specialty  foam products for Rubatex until not
         later  than  July  31,  1997.  See "-  Business  Segments  -  Specialty
         Adhesives" and "Note 3 to Financial Statements."

                  In connection with the Ensolite Sale, the Company has retained
         certain liabilities related to its Specialty Foams Division,  including
         liabilities for employee severance, facility clean-up and environmental
         remediation  costs.  See "-  Acquisition  of South Bend  Facility,"  "-
         Business Segments - Specialty Adhesives,"  "Environmental  Matters" and
         "Note 3 to Financial Statements."

                  Acquisition of South Bend Facility

                  The Company acquired on July 17, 1996 a manufacturing facility
         in South Bend, Indiana consisting of approximately  240,000 square feet
         for approximately  $1.8 million.  The  manufacturing  operations of the
         Specialty   Adhesives  Segment,   as  well  as  certain  other  Company
         operations,  will relocate to the South Bend,  Indiana  facility during
         the first half of Fiscal 1997.  During Fiscal 1996 and Fiscal 1995, the
         Company incurred approximately $900,000 and $1.3 million, respectively,
         in  excess  facility  costs   associated  with  the  operation  of  the
         Mishawaka,  Indiana  facility,  the current  site of the  manufacturing
         operations  of  the  Company's  Specialty  Adhesives  Segment.  See  "-
         Business Segments - Specialty Adhesives" and "- Environmental Matters."
         The Company  expects  significant  savings in facility  expenditures in
         future  periods  from the  elimination  of the  excess  facility  costs
         related to the operation of the Mishawaka, Indiana facility and reduced
         operating  expenses  resulting from operating  efficiencies  of the new
         plant,  including  reduced  energy costs,  property taxes and personnel
         requirements.  Approximately $1.0 million of the purchase price for the
         South  Bend,  Indiana  Facility  has been  placed in escrow and will be
         drawn upon to pay for the costs of  environmental  remediation  at such
         facility.  The Company expects to incur this approximately $1.0 million
         in environmental  remediation costs over a five to seven year period in
         connection  with such  facility.  The Company has reserved $4.3 million
         for severance,  environmental  remediation and other  relocation  costs
         associated with the closure of the Mishawaka,  Indiana facility. See "-
         Business Segments - Specialty Adhesives" and "- Environmental Matters."

                  Revolving Credit Agreement

                  On June 10, 1996,  the Company  entered  into a new  revolving
         credit agreement with The CIT Group/Business  Credit, Inc., pursuant to
         which the  Company  may,  subject to certain  conditions,  borrow up to
         $25.0  million,  but generally in no event more than an amount equal to
         the lesser of 85 percent  (85%) of its trade  accounts  receivable  and
         seventy-five   percent  (75%)  of  certain  accounts  of  the  Company,
         including, but not limited to, its trade accounts receivable.  Interest
         under the agreement is payable,  at the Company's  election,  either at
         the rate of a  specified  prime rate plus a margin of  one-half  of one
         percent (.5%) per annum, or the applicable  London Interbank Offer Rate
         plus a margin  of two and  three-quarters percent  (2.75%).  All of the
         Company's  trade  accounts  receivable  are  pledged  to the  lender as
         collateral for this agreement. The Company believes that this agreement
         provides it with borrowing  conditions  more  beneficial to it than the
         terms of the revolving credit agreement it previously had in place with
         Heller  Financial,   Inc.,  as  to  aggregate  borrowing  availability,
         interest rate and restrictions applicable to the Company's operations.

                  SAP Business Information System

                  In October 1996, the Company completed implementation of a new
         business   information  system  utilizing  software  developed  by  SAP
         America,  Inc. ("SAP").  The SAP system is expected to make the Company
         more   competitive   and  responsive  to  customer  needs  through  the
         integration of order entry, production, inventory control, shipping and
         billing information and financial systems generally. The new system had
         been  under  development  at  the  Company  since  1994  and  has  cost
         approximately $4.7 million as of September 29, 1996.

                  Settlement of Uniroyal Retiree Benefits Litigation

                  The  Company  has  reached  an  agreement  in  principle  with
         Uniroyal Retiree  Benefits,  Inc.  ("URBI"),  a non-profit  corporation
         unaffiliated with the Company which provides medical and life insurance
         benefits to certain retired employees of the Predecessor  Companies (as
         hereinafter  defined) and affiliates thereof and their dependents.  See
         "- History of the Company." Since 1994, URBI has contested the level of
         funding  to be  provided  to it by the  Company  under  the  terms of a
         funding  agreement that was part of the Plan of  Reorganization  of the
         Predecessor Companies.  See "Item 3. - Legal Proceedings." The proposed
         settlement provides,  among other things, for a compromise on the level
         of  funding  to reflect  URBI's  current  program  needs.  The  Company
         anticipates that the final documentation with respect to the settlement
         should be completed in the near future,  but no assurance  can be given
         to that effect.

                  Introduction of New Coated Fabrics Product

                  During  Fiscal  1996,  the  Company  commenced  production  of
         significant  amounts of a new line of coated fabric products,  sales of
         which  had  commenced  in  Fiscal  1995.  Such  products  had  been  in
         development  since 1992. The material has been qualified for use in the
         door panels for several General Motors  Corporation  ("GM")  automobile
         models. It accounted for approximately  $6.0 million in sales in Fiscal
         1996.  In 1995,  sales of this  product were  nominal.  It has been the
         Company's   experience  that  product   specifications   developed  for
         particular  automobile  models are generally  effective for a period of
         three to four years.  The Company  thus has  expectations  that its new
         product  series  will be usable in the door panels for the GM models in
         which  they are  presently  used for a like  period,  but no  assurance
         exists to such effect.  Moreover,  at the present time,  the Company is
         the only  manufacturer  that has satisfied the rigorous  specifications
         imposed by GM for  materials  for use in the  manufacture  of such door
         panels. These product  specifications  require a material characterized
         by light weight, deep grain patterns,  softness, cohesion upon exposure
         to heat and  processability,  among others.  There can be no assurance,
         however, that other suppliers will not in the future introduce products
         which satisfy such requirements.

                  Redemption of Series B Preferred Stock

                  On December  16, 1996,  the Company  redeemed 15 shares of the
         Company's Series B Preferred Stock held by the Pension Benefit Guaranty
         Corporation ("PBGC") for an aggregate redemption price of approximately
         $2.3 million.  On  January 3, 1997  the Company issued a notice that it
         would redeem the  remaining 20 shares of Series B Preferred  Stock held
         by the PBGC on February 3, 1997.  See "Note 10 to Financial Statements"
         for further description of redemption terms.

                   Shareholder Rights Plan

                  On December 18, 1996,  the Company's  Board of Directors  (the
         "Board")  declared  a dividend  distribution  of one  preferred  shared
         purchase  right (a  "Right")  for each  share of the  Company's  Common
         Stock,  par value $.01 per share  ("Common  Stock"),  outstanding as of
         December 30, 1996.  Each Right entitles the holder to purchase from the
         Company  1/100,000 of a share of  participating  preferred stock of the
         Company for $17.00,  subject to adjustment.  Initially,  the Rights are
         attached  to the  Common  Stock  and are not  represented  by  separate
         certificates or exercisable  until the earlier to occur of (i) ten days
         after  the  public   announcement   (the  date  of  such  first  public
         announcement being the "Stock Acquisition Date") that a person or group
         has  acquired  15% or more of the Common Stock (other than the existing
         15% owners who do not increase their  ownership),  or (ii) ten business
         days (or such later date as may be  determined  by the Board) after the
         commencement  of a tender or  exchange  offer that  would  result in an
         Acquiring Person owning 15% or more of the Common Stock, the earlier of
         such dates being the  "Distribution  Date".  If after the  Distribution
         Date a person shall become an Acquiring  Person (other than pursuant to
         certain  offers  approved by the Board)  each holder of a Right  (other
         than  the  Acquiring   Person  and,  in  certain   circumstances,   his
         transferees)  will have the right to  receive,  upon  exercise,  Common
         Stock (or, in certain circumstances, cash, property or other securities
         of the Company) having a value equal to two times the purchase price of
         the Right. In addition,  if after a Stock  Acquisition Date the Company
         enters  into  certain  business  combinations,  or 50% or  more  of the
         Company's  assets or earning power is sold or transferred,  each holder
         of a Right shall have the right to receive, upon exercise, Common Stock
         of the acquiring company having a value equal to two times the purchase
         price of the  Right.  The Board may,  subject  to certain  limitations,
         amend the Rights and may redeem all but not less than all of the Rights
         for $0.001 per Right.  The Rights have certain  anti-take-over-effects.
         The Rights will expire on December 18, 2006 unless earlier redeemed.

                  The Rights may cause  substantial  dilution  to a person  that
         attempts  to acquire  the  Company  without  the  approval of the Board
         unless the offer is conditioned on a substantial number of Rights being
         acquired or on redemption of the Rights.  The Rights,  however,  should
         not affect offers for all outstanding  shares of Common Stock at a fair
         price  and  otherwise  in the best  interests  of the  Company  and its
         stockholders as determined by the Board.
 
                   Dispostion of Port Clinton, Ohio Automotive Operation

                   Due to the operating losses  experienced by the Port Clinton,
         Ohio  operation  of the Coated  Fabrics  Segment  during the past three
         fiscal  years,  management of the Company has proposed to sell or close
         that operation during Fiscal 1997.

         Business Segments

                  High Performance Plastics Segment

                  The  High  Performance   Plastics  Segment  of  the  Company's
         business accounted for approximately  $115.1 million  (approximately 55
         percent  (55%)) of the  Company's net sales in Fiscal 1996. It consists
         of  two   divisions:   the  Royalite   Division,   which   manufactures
         thermoplastics  products, and the Polycast Division, which manufactures
         acrylic products.

         The Royalite Division - Thermoplastic Products

                  General

                  The Company's  Royalite Division is a leading  manufacturer of
         thermoplastic   products.   Thermoplastics   are   polymers,   such  as
         acrylonitrile  butadiene styrene and  polyvinylchloride,  made from the
         polymerization of monomers,  which can be reshaped after they have been
         formed by the  application of heat and are used in the manufacture of a
         wide  assortment of commercial  and consumer  products.  The Division's
         products include  thermoplastic sheet,  injection molding resins, color
         concentrates and extruded profiles.

                  Thermoplastic  sheet is  manufactured  by the  Company  from a
         variety of polymers and chemical additives and is constructed either of
         solid plastic, a core of inexpensive  plastic covered with a thin layer
         of  high-quality  thermoplastic  or a base or substrate of plastic foam
         surrounded   by   solid   thermoplastic.   It  is  sold  to   equipment
         manufacturers,  who  incorporate  the sheet into their product,  custom
         fabricators,  who cut and form the sheet for specific  applications and
         supply   finished   components   to   equipment   manufacturers,    and
         distributors, who resell raw sheet to equipment manufacturers or custom
         fabricators.   The  Company  manufactures  two  types  of  this  sheet,
         specialized  sheet,  which is made by varying the polymer and  chemical
         components  of the  sheet in order to  achieve  particular  performance
         characteristics,   and  general   purpose  sheet,   which  is  used  by
         manufacturers  for a  variety  of  products  not  requiring  particular
         performance characteristics.

                  Specialty thermoplastic sheet is sold by the Royalite Division
         in  a  number  of  niche  markets,   depending  upon  the   performance
         characteristics  of the sheet.  The  following is a chart setting forth
         the  application  of  specialized  sheet  with  particular  performance
         characteristics:

        Performance Characteristics                     Principal Uses
        ---------------------------                   --------------------
         flame and smoke retardancy             mass  transportation  vehicle 
                                                 seating and interior panels,
                                                 aircraft interior trim and
                                                 computer and other electronic
                                                 equipment component housings
 
         static dissipation and
           conductivity                         computer chip and hard drive
                                                 carriers

         weatherability/temperature
           resistance                           recreational camper tops, 
                                                 interior trim for agricultural
                                                 and other off road vehicles and
                                                 exterior boat trim

         buoyant, hydrodynamic and/or
           high strength-to-weight ratio        canoes, kayaks, other watersport
                                                 craft and amusement park 
                                                 vehicles

                  The Company believes it has a substantial share of the markets
         for  specialty  thermoplastic  sheet due to its ability to  manufacture
         sheet with the wide variety of  performance  characteristics  set forth
         above, and which are, in many cases,  customized to meet its customers'
         exact  specifications.  Net  sales  of  specialty  thermoplastic  sheet
         accounted  for  approximately  65  percent  (65%) of total net sales of
         thermoplastic sheet by the Royalite Division during Fiscal 1996.

                  The Company maintains a scientific and technical staff and the
         necessary  production  capabilities to design  specialty  thermoplastic
         sheet  with   performance   characteristics   to  suit  its  customers'
         specifications.  See "- Research and  Development."  In  addition,  the
         Company has advanced coloring technology, including a database of up to
         2,500 color formulas developed by the Royalite Division,  which enables
         it to color its  thermoplastic  sheet to match customer  specifications
         precisely  and  consistently.  The  Company  also  has the  ability  to
         texturize  its  sheet  with  what  it  believes  to be one of the  most
         extensive selections of embossing grains available in the market.

                  By contrast to specialty  thermoplastic sheet, general purpose
         thermoplastic sheet is used in the manufacture of numerous consumer and
         industrial products, such as luggage,  musical instrument and equipment
         cases, tote boxes and vehicle  mudflaps,  which do not require that the
         thermoplastic  material  used in their  manufacture  possess any of the
         performance characteristics which distinguish specialty sheet and which
         are  referred to above.  The market for general  purpose  thermoplastic
         sheet  is   significantly   broader  than  the  market  for   specialty
         thermoplastic  sheet due to the  almost  limitless  uses to which  such
         sheet  may be put  in the  manufacture  of  products.  Such  market  is
         generally  characterized  by intense  competition,  high volume and low
         margins.  The Company does not have a significant share of this market.
         Sales of  general  purpose  sheet  during  Fiscal  1996  accounted  for
         approximately  35  percent  (35%) of total  net  sales of the  Royalite
         Division.

                  In Fiscal  1995,  the  Royalite  Division  introduced  two new
         product  lines:  injection  molding  resins,  which  are  used  in  the
         manufacture of thermoplastic  products through injection  molding,  and
         color  concentrates,  which  are  used  to  color  thermoplastic  sheet
         materials  and  injection  molding  products  during the  manufacturing
         process.

                  The  Company  introduced  these  product  lines as part of its
         "life cycle sourcing" strategy implemented in 1995, aimed at satisfying
         a  customer's  needs  for  thermoplastic  material  with  respect  to a
         particular  product  from  the  product's   development  stage  through
         maturity,  including  matching  products to production  methods used at
         different  production volume levels.  When a customer is in the initial
         stages of developing a product requiring a thermoplastic component, the
         Company employs its technological capabilities and scientific expertise
         to  design  and  produce  customized  thermoplastic  sheet,  which  the
         customer then generally  "thermoforms"  through the application of heat
         into particular applications to be incorporated into its final product.
         Due to its low cost,  "thermoforming"  is used in  connection  with the
         manufacture  of  thermoplastic  components not required in large volume
         manufacturing  runs. When a customer's unit volume of a product attains
         those  levels  at which  it  becomes  economical  for the  customer  to
         manufacture the thermoplastic  application by injection molding, a more
         capital intensive but efficient process when compared to thermoforming,
         the  Company,   which  does  not  compete  in  the  injection   molding
         manufacturing  industry,  can continue to supply the customer  with the
         polymer  resins and color  concentrates  used in the injection  molding
         process,  which will achieve the same  properties and color as when the
         application was produced through thermoforming.  By using the Company's
         injection  molding  resins  and  color  concentrates,  which  have been
         customized  to  meet  the  customer's  particular  specifications,  the
         customer  avoids any disruption in its production  that may result from
         having to qualify a thermoplastic material from a new manufacturer.


                  Although  injection  molding  resins  and  color  concentrates
         constitute  less than five  percent  (5%) of net sales of the  Royalite
         Division  for  Fiscal  1996,  the  Company  believes  that  significant
         opportunities  for growth  exist in this  market and that such  product
         lines will  enhance the  division's  specialty  sheet lines by assuring
         customers  that  the  Company  will be able to meet  their  specialized
         thermoplastics needs throughout every stage of a product's life cycle.

                  In  Fiscal   1995,   the   Royalite   Division   combined  its
         technological  capabilities with the Polycast  Division's  expertise in
         extrusion production methods (see " - High Performance Plastics Segment
         - Polycast  Division") to commence  manufacturing  an extruded  profile
         line of products which are used for applications  requiring flexibility
         and resilience, such as dock/boat bumpers and gaskets which are sold to
         the Polycast Division for use in the manufacture of acrylic sheet. This
         product line was  implemented  primarily  to make use of the  Company's
         available  production  capacity  at  the  division's  Warsaw,   Indiana
         facility.  Even though  sales of extruded  profiles do not  represent a
         significant  part of the  Royalite  Division's  business,  the  Company
         believes  that  significant  opportunities  for  growth  exist  in this
         market.

                  Competition

                  The market  for  thermoplastic  sheet in the United  States is
         highly competitive,  with companies competing primarily on the basis of
         product specifications,  price, customer service and technical support.
         The Company  competes  in this market  principally  by  maintaining  or
         increasing  its  market  share  in the  specialty  thermoplastic  niche
         markets  described  above.  See "- Royalite  Division -  General."  The
         Company  believes that it competes  effectively with other producers in
         such markets by providing  strong customer  service  through  technical
         support, state-of-the-art color technology and new product development.
         The Division maintains highly knowledgeable  technical  representatives
         who  work  directly  with  customers  to  ensure  that  the  Division's
         materials used in the  manufacture of a customer's  product  conform to
         the customer's  specifications and work efficiently with the customers'
         manufacturing processes. In addition, the Company has polymer expertise
         and  custom  compounding  capabilities  to  customize  the  performance
         characteristics and color of its thermoplastic  products,  whereas many
         of its  competitors  do not have  such  capability.  Its  technological
         capabilities have also permitted the Company to develop  successful new
         products  which  enhance  its  competitiveness  in  this  segment.  For
         example, recently, the Royalite Division introduced  graffiti-resistant
         seating material,  developed for the mass  transportation  market.  The
         addition  of  injection  molding  resins  and  color  concentrates  and
         implementation  of life  cycle  sourcing  have  enhanced  the  Royalite
         Division's  competitiveness by assuring customers that the Company will
         be able to meet their  thermoplastics needs throughout every stage of a
         product's life.

                  The Company is also able to compete  effectively  with respect
         to price due in part to its low production costs and savings  resulting
         from its use of recycled  material in the manufacture of  thermoplastic
         sheet. See "Royalite  Division - Raw Materials." The Company's  ability
         to internally produce and laminate a thin layer of high quality colored
         thermoplastic  film over a less costly  substrate  allows it to compete
         favorably with most other specialty  thermoplastic sheet manufacturers,
         which use a single layer of relatively  expensive colored plastic sheet
         to produce the desired end product.

                  The  Company's  principal  competitors  in the flame and smoke
         retardant  thermoplastic  product market are Kleerdex Company,  GenCorp
         Inc. and Spartech Corporation.  Mitech Corp. is the Company's principal
         competitor in the static  control  thermoplastic  product  market,  and
         Spartech  Corporation  and  Primex  Plastics  Corp.  are the  Company's
         principal  competitors  in  the  general  purpose  thermoplastic  sheet
         market.  The Company's  competitors  have in the past  increased  their
         market shares in the thermoplastic industry generally through
         acquisitions.

                  Marketing

                  The  Royalite  Division's  thermoplastic  sheet  products  are
         marketed   under  the   ROYALITE(R)   and   SPECTRUM(R)   brand  names.
         Thermoplastic  sheet with specialized  characteristics is also marketed
         under individual brand names, such as ROYALSTAT(R) (thermoplastic sheet
         designed to dissipate or conduct static electric  charges),  ROYALEX(R)
         (multilayer   thermoplastic   sheet   with  a  foam  core  and   highly
         weather-resistant  layer  on one or  both  sides,  resulting  in a high
         strength-to-weight   ratio,  designed  for  recreational,   marine  and
         sporting applications), ROYALTHOTIC(R) (thermoplastic sheet designed to
         be  thermoformed  at low  temperatures  to  permit  orthopedic  medical
         practitioners to form individual  patient  orthopedic  devices in their
         offices).

                  The  Royalite  Division  markets  its  thermoplastic  products
         primarily  through a national  sales  force of  approximately  14 sales
         representatives,   who  are  employees  of  the  Company,  and  through
         wholesale  distributors  to whom it supplies its products for resale to
         fabricators and manufacturers. Representative customers of the Royalite
         Division and representative end users of its products include: American
         Seating   Company,   National   Railroad   Passenger  Corp.   (Amtrak),
         Bombardier,  Inc.,  Caterpillar,  Inc., Curbell Plastics, a division of
         Curbell,  Inc.,  Commercial Plastics and Supplies Corp., General Motors
         Corporation,  Hewlett-Packard  Company, Laird Plastics, Inc., McDonnell
         Douglas  Corporation,   Sensormatic  Electronics  Corporation,  Seagate
         Technology,  Inc. and the U.S.  Navy.  The Company has a broad customer
         base for its thermoplastic  products and it does not believe that it is
         dependent  upon any single  customer or group of customers  for sale of
         its thermoplastic products.  Pricing and terms offered to customers are
         generally consistent with those found in the industry.

                  Manufacturing Facilities

                  The Company  manufactures its thermoplastic  products at three
         wholly-owned  facilities,  the  largest  of which is located in Warsaw,
         Indiana.   The  Company's  other   thermoplastic   sheet  manufacturing
         facilities are located in Rome, Georgia and Redlands,  California.  See
         "Item 2. Properties."

                  Raw Materials

                  The  principal  raw  materials  used  by  the  Company  in the
         manufacture of thermoplastic  sheet,  injection  molding resins,  color
         concentrates and extruded profiles are acrylonitrile  butadiene styrene
         ("ABS") resins and polyethylene,  polypropylene  and  polyvinylchloride
         ("PVC") resins and alloys of such resins.  The Company has no long-term
         purchasing agreements with any suppliers for such raw materials,  other
         than GE Plastics (a division of General  Electric  Company)  from which
         the  Company  acquires a  substantial  portion of its ABS  resins.  The
         Company  purchases PVC resins and other raw materials from a variety of
         domestic and international suppliers.  These products are all currently
         readily available from a variety of suppliers.

                  The Company  recycles  scraps of  thermoplastic  material that
         result from  customers'  forming sheet for their specific  applications
         for use in the manufacture of new sheet. Recycled material is generally
         used by the Company to replace the raw materials  that would  otherwise
         be   required  to   manufacture   specialized   and   general   purpose
         thermoplastic sheet.  Recycled material is purchased from customers and
         brokers and is significantly less expensive than new raw materials.

         The Polycast Division - Acrylic Products

                  General

                  The Polycast Division  manufactures  high performance  acrylic
         sheet, rods and tubes which are sold principally to custom  fabricators
         and original  equipment  manufacturers,  who heat and form the Polycast
         product into shapes for specific applications,  such as aircraft window
         units,  furniture  components  and  orthopedic  braces.  The Division's
         acrylic products have a unique  combination of physical  properties and
         performance characteristics which are required by the manufacturers who
         use them as a component  of their  products.  For  example,  they weigh
         considerably  less  than,  but  are  superior  in  clarity  and  impact
         resistance  to,  glass.  They are thermoformable, remain  stable  under
         sustained  exposure to the elements and can be processed to transmit or
         filter ultraviolet light, depending on customer requirements.

                  The Company manufactures acrylic sheet for three markets - the
         aerospace market,  which includes the commercial and military aerospace
         industries,  in  which  the  Division's  products  are  used  for  such
         applications  as  aircraft  cockpit  canopies  and  cabin  windows  and
         helicopter  windshields;  the specialty  acrylic  sheet  market,  which
         includes a variety of niche  markets in which the  Division's  products
         are  used  in the  manufacture  of boat  windshields,  bullet-resistant
         security enclosures for banks, convenience stores and other businesses,
         basketball backboards,  hockey rink protective barriers, furniture, sun
         tanning beds, aquariums and atriums; and the general purpose market for
         acrylic sheet,  in which general purpose acrylic sheet is used for such
         applications as store displays and signage,  where specific performance
         characteristics are not required. The Division's acrylic rods and tubes
         are used for a variety of  applications,  including the  manufacture of
         lighting fixtures, furniture, medical instruments,  orthopedic devices,
         such as orthopedic braces, and lens materials used to replace defective
         lenses of the eye in cataract surgery and certain types of hard contact
         lenses.

                  The  Polycast  Division   manufactures  its  acrylic  products
         through  cell  cast  manufacturing,  a  process  which  enables  it  to
         customize  the  performance  characteristics  of its acrylic  aerospace
         sheet,  specialized  sheet  and  rods  and  tubes,  to meet  the  exact
         specifications  of its  customers  and to  offer  its  products  with a
         broader  range  of  physical  characteristics  than  generally  can  be
         achieved  through  other  manufacturing  processes,  such as continuous
         cast,  extrusion  and calender  processes.  For  example,  the Polycast
         Division's  scientific staff have used the cell cast process to develop
         a specialized  sheet which  transmits  rather than filters  ultraviolet
         rays  for  use  in  sun  tanning  beds  and  an  aerospace  sheet  with
         consistently  high optical  quality and exact color  shading for use in
         constructing  aerospace  transparencies such as aircraft and helicopter
         window products.  The Division can manufacture acrylic products in more
         than 60 colors and acrylic  sheet in widths  ranging from 0.030 to 6.00
         inches.  Acrylic sheet manufactured by the cell cast process,  which is
         more labor  intensive  than  continuous  cast,  extrusion  or  calender
         processes,  generally yields higher margins than acrylic sheet produced
         by such other processes.

                  The  Division  markets  its  aerospace  acrylic  sheet  in the
         military and commercial  aerospace  industries,  which require products
         meeting  precise  specifications.  The Division is one of a few acrylic
         manufacturers  in the United States  qualified to produce acrylic sheet
         meeting    military    manufacturing   standards, specifications    and
         requirements  ("MILSPEC"),  a designation made by the U.S. Navy's Naval
         Air  Development  Center  which is a  prerequisite  for  supplying  the
         military aerospace industry. The Division and the Predecessor Companies
         have maintained this qualification since 1976. The Division's aerospace
         acrylic  sheet  is  also  qualified  by  several  commercial  aerospace
         manufacturers, including McDonnell-Douglas Corporation, Boeing Company,
         Sikorsky Aircraft Corporation and Bell-Helicopter,Textron, Inc., which
         include a supplier's  products on their "qualified  product lists" only
         after  such  products  have met  MILSPEC  requirements  and  passed the
         manufacturer's  additional  and more  stringent  testing  and  approval
         procedures. Any failure of the Division's aerospace acrylic products to
         continue to meet required  specifications under which they are provided
         to an aerospace  manufacturer  could have a material  adverse effect on
         the Division.

                  The  Division  sells  its  specialty  acrylic  sheet in a wide
         variety  of  niche  markets,   including  to   manufacturers   of  boat
         windshields,  bullet resistant  enclosures and protective  barriers for
         athletic  facilities,  furniture and sun tanning beds and aquariums and
         atriums.  The Division  markets its acrylic products to such industries
         through  customization of the performance and physical  characteristics
         of its specialty sheet to meet customer specifications.

                  Competition

                  The Division faces continuing  competition from North American
         producers and from certain foreign  producers,  particularly from Asian
         and South  American  countries.  Many of these competitors have greater
         resources  than  the  Company.   These  competitors  primarily  produce
         standard  sizes of general  purpose  acrylic sheet by continuous  cast,
         extrusion  or calender  processes.  The  Division  concentrates  on the
         production of aerospace and specialty  acrylic sheet,  which in certain
         cases has unique  characteristics that cannot be obtained by such other
         manufacturing  processes.  Net sales of aerospace and specialty acrylic
         sheet accounted for  approximately  63 percent (63%) of total net sales
         by the Polycast Division.

                  The Company believes that the Division has a significant share
         of the niche  markets  in which it sells its  aerospace  and  specialty
         acrylic  sheet.  See "- Polycast  Division - General."  The  Division's
         principal  competitors  in the  specialty  acrylic sheet market are ICI
         Acrylics,  Inc.,  a subsidiary  of Imperial  Chemicals  Industries  plc
         ("ICI"), AtoHaas Americas Inc. ("AtoHaas"), Cyro Industries, a division
         of Cytec Industries,  Inc. ("Cyro"),  and Nordam, Inc. ("Nordam").  The
         Division's principal  competitors in the acrylic aerospace sheet market
         are Swedlow, Inc., a subsidiary of Pilkington plc ("Pilkington"),  Rohm
         Darmstadt GmbH, and Cyro.

                  In order to compete with  vertically  integrated  companies in
         the  aerospace  acrylic sheet  market,  such as Pilkington  and Nordam,
         which  manufacture such sheet as well as form it into finished aircraft
         window  products for sale to  commercial  aircraft  manufacturers,  the
         Division  entered into an agreement in 1995 with PPG  Industries,  Inc.
         ("PPG"),  pursuant to which an  affiliate  of PPG in Italy uses acrylic
         window blanks  constructed  of Polycast(R)  aerospace  acrylic sheet to
         manufacture finished aircraft window systems for sale to the commercial
         aerospace  market.  The Polycast(R)  acrylic sheet is stretched to form
         window blanks by Aerospace  Composite  Technologies  Limited ("ACT") in
         England pursuant to an agreement with the Company and then sold to PPG.
         The  purchase  price paid by PPG for the  acrylic  blanks is based,  in
         part,  on PPG's  profits from sales of aircraft  windows  incorporating
         such blanks.  Both the agreement  with PPG and the  agreement  with ACT
         expire in 1998 but may be renewed for successive 12-month periods.

                  In the acrylic rod and tube market, the Division's competitors
         are various small companies that typically produce only these products.

                  ICI, Cyro, and AtoHaas,  which are North American producers of
         acrylic sheet, also produce methyl  methacrylate  monomer ("MMA"),  the
         principal raw material used in the  manufacture of acrylic sheet,  rods
         and tubes, or certain of the components thereof, making it possible for
         them  to  absorb  increases  in the  cost  of  MMA,  and  buy in  large
         quantities,   thereby  availing  themselves  of  volume  discounts  not
         available to the  Division.  Since the Company does not itself  produce
         MMA,  the  Polycast  Division is unable to compete  with the low prices
         charged by these companies for general  purpose  acrylic sheet.  See "-
         Polycast Division - Raw Materials."

                  Marketing

                  The Polycast  Division's  acrylic  products are marketed under
         the POLYCAST(R) brand name.  Acrylic products with special  performance
         characteristics are also marketed under individual brand names, such as
         PILOTS'  CHOICE(TM)  (aerospace  sheet with high  optical  quality) for
         helicopter  windshields,  SOLACRYL(R)  (specialty sheet which transmits
         ultraviolet  rays) for sun tanning beds and POLYDOR(R)  (thermoformable
         sheet) used for  orthopedic  products.  The Company's  acrylic rods and
         tubes are also marketed under the GLASFLEX(TM) brand name.

                  The  Division  markets  its  acrylic  sheets,  rods and  tubes
         primarily through five sales  representatives, who are employees of the
         Division, and through wholesale distributors.

                  Representative domestic customers of the Polycast Division and
         representative end users of its acrylic products include Beech Aircraft
         Corp.,  Bell-Helicopter Textron, Inc., Boeing Company, Cadillac Plastic
         & Chemical Co., The Cessna Aircraft  Company,  Chris-Craft  Industries,
         Inc., Llamas Plastics, Inc, Commercial Plastics and Supply Corp., Laird
         Plastics, Inc., Sensormatic Electronics  Corporation,  Sierracin/Sylmar
         Corporation,  Sikorsky Aircraft Corporation, Texstar Inc.,  Thunderbird
         Products Corp. and Wellcraft Marine.  Representative  foreign customers
         and end users include Augusta  Helicopters and Embraer.  The Company is
         not dependent upon a single customer or group of customers for sales of
         its acrylic products.

                  Manufacturing Facilities

                  The  Division  manufactures  acrylic  sheet at its facility in
         Stamford,  Connecticut and finishes and further processes acrylic sheet
         for certain  applications  at its facility in  Hackensack,  New Jersey,
         which  also  serves  as  the  principal  warehouse  for  acrylic  sheet
         products.  Acrylic sheet is also manufactured,  along with acrylic rods
         and tubes,  at the  Division's  facility in Stirling,  New Jersey.  The
         Company owns all three of these facilities.  The Division leases office
         space used for its  division  headquarters  adjacent  to its  Stamford,
         Connecticut manufacturing facility. See "Item 2. Properties."


                  Raw Materials

                  Since October 1, 1991, all of the Division's  requirements  of
         MMA  have  been  purchased  from  ICI or its  predecessor  owner of the
         monomer  business,  E.I. duPont de Nemours & Co.,  pursuant to a supply
         agreement  which obligates the Division to purchase from ICI and ICI to
         supply the Division  with its  requirements  for MMA on a  year-to-year
         basis,  subject to  termination by either party upon one year's advance
         notice.  Under the  supply  agreement,  the  Division  is  entitled  to
         purchase MMA from other suppliers who offer the product at prices lower
         than those ICI is willing to match. In addition,  the supply  agreement
         requires that any party that acquires all or substantially all of ICI's
         assets used to manufacture  MMA assume the obligations of ICI under the
         agreement  and further  requires  that any party that  acquires  all or
         substantially  all of the  Company's  assets  used to  manufacture  its
         acrylic  sheet,  rods and tubes assume the  obligations of the Division
         under the agreement.

                  In  the  event  that  ICI  elects  to  terminate   the  supply
         agreement, the Company believes that the Division could obtain MMA from
         one or more alternate sources. However, each of the two major alternate
         domestic  manufacturers  and  certain  other  major  alternate  foreign
         manufacturers  of MMA  compete  (as does ICI) with the  Division in the
         manufacture and sale of acrylic sheet.  Thus, there can be no assurance
         that the  Division  would be able to obtain  MMA from  these  alternate
         sources  at  satisfactory  prices,  on a  reliable  basis  or on  terms
         otherwise satisfactory to the Division.

         Coated Fabrics Segment

                  The Company's  Coated  Fabrics  Segment,  which  accounted for
         approximately  $58.7  million (28 percent  (28%)) of the  Company's net
         sales for  Fiscal  1996,  is a  leading  manufacturer  of vinyl  coated
         fabrics and vinyl  laminated  composites.  The segment's  product lines
         consist of products for the  automobile  manufacturing  industry, which
         accounted  for 56 percent (56%) of total net sales for Fiscal 1996, and
         the well known  Naugahyde(R) brand name vinyl coated  fabric  products,
         which accounted for 44 percent (44%) of total net sales for such fiscal
         year.

                  General

                   The  segment's  automotive  product line  consists of plastic
         vinyl  coated   fabrics  and  vinyl   laminated   composites   used  by
         manufacturers and custom  fabricators in the production of vehicle seat
         coverings,  door panels, arm rests, consoles and instrument panels. Its
         coated   fabrics   are   durable,   stain   resistant,   cost-effective
         alternatives  to  leather  and cloth  coverings.  The  segment's  vinyl
         laminated   composites   are   durable,   easily   formed,   economical
         alternatives  to  fabric  coverings  used  for  applications   such  as
         automobile  instrument and door panels.  The materials  manufactured by
         the  segment  can be hand or  machine  sewn or glued  to an  underlying
         structure,   such  as  a  seat  frame  or  automobile  door  panel,  or
         thermoformed   to  cover   various   underlying   structures   or  into
         freestanding  shapes for a variety of applications,  and come in a wide
         range of colors and  textures.  The Company has  determined to exit the
         Port Clinton, Ohio operation of this Segment. The operation consists of
         the vinyl  laminated  composite  line. See "- Corporate  Developments -
         Disposition of Port Clinton, Ohio Automotive Operation" and "Note 15 to
         Financial Statements."

                  The segment's  Naugahyde(R) vinyl coated fabrics products have
         varying  performance  characteristics and are sold in markets depending
         upon  the  performance  characteristics  required  by  end  users.  For
         example,  for  recreational  products which are used outdoors,  such as
         boats,  personal  watercraft,  golf carts and snowmobiles,  the segment
         sells  a   Naugahyde(R)   product  that  is  designed   primarily   for
         weatherability.  It also  manufactures  Naugahyde(R)  products that can
         withstand powerful cleaning agents,  which are widely used in hospitals
         and in other medical facilities. Flame and smoke retardant Naugahyde(R)
         vinyl  coated  fabrics  are  used  for  a  variety  of  commercial  and
         institutional furniture applications,  including hospital furniture and
         school bus seats.  In Fiscal 1996,  the segment  employed a designer to
         commence   development  of  additional  styles  and  patterns  for  its
         Naugahyde(R)  products  in order to  respond to  changing  needs of its
         customers.  See  "Item  7.  Management's  Discussion  and  Analysis  of
         Financial  Conditions  and Results of Operations - Comparison of Fiscal
         1996 with Fiscal 1995."

                  The segment is one of the few  manufacturers  that can produce
         coated  fabrics  through   composite,   continuous  cast  and  calender
         manufacturing  processes.  These  processes  allow it to produce coated
         fabrics  and  laminated  composites  with  different   characteristics:
         composite  manufacturing  produces a material  which is light in weight
         with sharply  defined  borders;  the continuous  cast method produces a
         material with a soft finish,  deep grain pattern and a wide temperature
         range and high  malleability  factors for  thermoforming;  and calender
         manufacturing  produces a material with less of a soft finish but which
         can be manufactured economically in high volume.

                  The segment has three state-of-the-art  production lines which
         produce coated fabrics and laminated composites in more than 450 colors
         and 25 textures and patterns.  However, one of such lines was installed
         to  penetrate  the  market  for the  application  of  coatings  for the
         automobile air bag market,  which the segment  subsequently  decided to
         exit in Fiscal 1996. Such line continues idle at this time.  Management
         is currently evaluating alternate uses for such line.

                  The  segment's  automotive  products  are marketed to domestic
         automobile manufacturers as well as to foreign automobile manufacturers
         producing vehicles in the United States  ("transplant  manufacturers").
         The coated  fabrics and laminated  composites  which comprise this line
         are designed to meet the performance  specifications  set by automobile
         manufacturers  such  as  crisp  lines  or  soft  finishes  of  interior
         components  or the ability to  thermoform  the products  into  specific
         applications.  In Fiscal 1995,  the segment  introduced a new series of
         coated fabrics  products in response to performance  specifications  of
         General  Motors  Corporation  ("GM") for a coated  fabric with  limited
         propensity  to lose  cohesion upon exposure to heat and that would meet
         processability  requirements  but would  also be  lighter in weight and
         softer to the touch.  Such products had been in development  since 1992
         and in Fiscal 1995 represented a nominal amount of the segment's sales.
         In  Fiscal  1996,   sales  of  such   products  to  GM  accounted   for
         approximately  $6.0 million in net sales.  The  products are  currently
         being provided to GM for use in several of its automobile  models.  See
         "-Corporate Developments- Introduction of New Coated Fabrics Product."

                  In order to supply coated fabrics and laminated  composites to
         the domestic automotive market, a supplier must first satisfy extensive
         product standards and  specifications  established by the manufacturer.
         The  segment  and the  Predecessor  Companies  have had  products  that
         satisfied the standards of domestic  automobile  manufacturers for many
         years. In fact, the Company and its  predecessors  have supplied coated
         fabrics to GM for more than 30 years.  As a result of the  introduction
         of its new series of coated  fabrics  products,  sales to GM  increased
         substantially  in  Fiscal  1996.  Although  this  segment  has  not had
         significant sales to other domestic automobile  manufacturers in Fiscal
         1996,  the  Company   believes  that  an  opportunity  for  significant
         expansion  exists in the  domestic  automotive  market for such product
         line for use in seat  upholstery  trim,  door panels and other interior
         vinyl covered components for trucks and automobiles.

                  Similar to the domestic  automotive  market,  a supplier  must
         first satisfy  extensive  quality and  manufacturing  specifications in
         order to supply coated  fabrics and laminated  composites to transplant
         manufacturers.  The  segment has  satisfied  these  standards  of Honda
         America  Manufacturing,  Inc. ("Honda") with respect to seat covers and
         laminated  composite  door and  instrument  panels and for Mazda  Motor
         Corporation  with respect to seat covers and door  panels.  The Company
         believes that transplant  manufacturers  represent a growing market for
         its coated fabrics and laminated composites.

                  Pursuant to a technical  collaboration  agreement entered into
         with Okamoto Industries,  Inc. ("Okamoto"),  a Japanese manufacturer of
         coated fabrics products,  the segment holds an exclusive license to use
         Okamoto's  advanced  technology  for the  manufacture of certain coated
         fabrics in the United  States and Canada until 2003.  This  arrangement
         has provided the segment with the capability to  manufacture  materials
         using the composite  production  process,  and has allowed it to supply
         product  to  transplant manufacturers  such as Honda.  The  Company  is
         required to pay  Okamoto a royalty on net sales of  products  under the
         agreement.

                  The coated  fabrics and  laminated  composites  market for the
         automobile  manufacturing  industry is characterized by long lead times
         for new products requiring  significant  working capital investment and
         extensive   testing,   qualification   and   approval   by   automobile
         manufacturers.  The segment  faces a significant  risk that  automobile
         manufacturers  might not select its new products  after it has incurred
         significant  cost for,  among other things,  research and  development,
         manufacturing   equipment,   training  and  facility-related   overhead
         expenses to develop  such  products.  Moreover,  even if the  segment's
         products  are   eventually   approved  and   purchased  by   automobile
         manufacturers,  its working capital  investment  might fail to generate
         revenues for several years while the segment develops such products and
         automobile  manufacturers  conduct  their  testing,  qualification  and
         approval procedures for such products. For example, in 1992 the segment
         incurred significant costs for research and development,  equipment and
         facility  costs to develop a new series of coated  fabric  products but
         sales of such  products were nominal or  nonexistent  until Fiscal 1996
         when GM began purchasing  significant quantities of the product for use
         in several automobile models,  resulting in sales of approximately $6.0
         million in such fiscal year. See "Item 7.  Management's  Discussion and
         Analysis of Financial  Condition and Results of Operations-  Comparison
         of Fiscal 1996 with Fiscal 1995."

                  Competition

                  The  Coated  Fabrics  Segment  competes  in the  domestic  and
         transplant   automotive   markets  for  coated  fabrics  and  laminated
         composites  primarily  on the  basis of  price.  In the case of  unique
         product lines developed by the segment,  such as the new product series
         discussed  above,  the segment competes on the basis of the performance
         characteristics  of  its  products.  In  the  domestic  and  transplant
         automotive markets,  the segment generally sells its coated fabrics and
         laminated composites directly to automobile manufacturers and to custom
         fabricators,  who  use  the  segment's  coated  fabrics  and  laminated
         composites  to make finished  products,  such as seats and door panels,
         which are then sold to automobile manufacturers.

                  The segment competes with respect to its Naugahyde(R) products
         primarily on the basis of style,  color and  quality,  as well as price
         and  customer  service  through   technical   support  and  performance
         characteristics  which meet customer needs. In Fiscal 1996, it employed
         a designer to commence development of additional styles and patterns in
         order to  respond  to  changing  needs  of  end-users  of  Naugahyde(R)
         products.  See  "Item  7.  Management's   Discussion  and  Analysis  of
         Financial  Condition  and Results of  Operations - Comparison of Fiscal
         1996 with Fiscal 1995."

                  The segment's principal competitors in the domestic automotive
         markets are Canadian  General  Tower,  Ltd. and Sandusky Vinyl Products
         Corporation, and its principal competitors in the transplant automotive
         markets are  O'Sullivan  Industries  Corp. and foreign  importers.  Its
         principal  competitors  with respect to its  Naugahyde(R)  products are
         C.G. Spradling & Company, GenCorp Inc. and Morbern Inc.

                  Marketing

                  The segment's  coated fabrics  products were introduced by one
         of its predecessors more than 45 years ago and today are marketed under
         several  nationally  recognized  brand names,  including  NAUGAHYDE(R),
         NAUGAFORM(R)  and DURAN(R).  BEAUTYGARD(R)  is the name under which the
         segment markets its cleaning  agent-resistant  coated fabrics,  and its
         flame and smoke  retardant  coated fabrics are marketed under the brand
         name FLAME BLOCKER(TM).

                  The segment markets and sells its coated fabrics and laminated
         composites primarily through 12 national sales representatives, who are
         employees of the Company, and independent sales representatives. In the
         furniture  manufacturing  market, it generally sells its coated fabrics
         through  its  sales  representatives  and to  distributors  who sell to
         furniture  manufacturers,  upholsterers and fabric distributors,  which
         supply furniture  manufacturers.  Approximately 50 percent (50%) of the
         segment's   non-automotive   market   sales  in  Fiscal  1996  were  to
         distributors.

                  Representative customers and end users of the segment's coated
         fabrics  and  laminated   composites   include   Becker  Group,   Inc.,
         Bombardier, Inc., Club Car, Inc., GM, Honda, Kawasaki Heavy Industries,
         Inc.,  Harley-Davidson,  Inc., Mazda Motors of America,  Inc., Michigan
         Seat Co., Okamoto USA, Inc., Polaris Industries,  Inc., Shelby Williams
         Industries,  Inc.,  TS Trim,  Inc. and United  Technologies  Automotive
         Division.

                  Manufacturing Facilities

                  The  segment  manufactures  its coated  fabrics at  facilities
         located in Stoughton,  Wisconsin and Port Clinton,  Ohio. Both of these
         facilities are owned by the Company. The segment also leases offices in
         Troy,  Michigan for its sales  representatives  serving the  automotive
         industry and in Sarasota,  Florida for customer service representatives
         of its Naugahyde(R) product line. See "Item 2. Properties."

                  Raw Materials

                  The principal raw materials for the segment's  coated  fabrics
         are casting paper, knit fabric, polyolefin foam, PVC plastic resins and
         plasticizers.  The segment  generally has multiple  sources for casting
         paper,  knit fabric and  plasticizers.  Although it obtains PVC plastic
         resins from  several  domestic  and foreign  suppliers,  a  substantial
         portion of its  requirements  of PVC plastic  resins are purchased from
         The Goodyear Tire and Rubber Company  ("Goodyear").  In 1996,  Goodyear
         announced that  commencing in early 1997 it would cease the manufacture
         and sale of PVC plastic resins. The segment has identified  alternative
         sources of such materials and incurred costs of approximately  $300,000
         in Fiscal  1996 in  connection  with the  reformulation  of its current
         products to use such substitute  resins in order to meet its customers'
         specifications.  Although  several  of  the  Coated  Fabrics  Segment's
         customers have approved,  for certain applications,  such reformulation
         of the PVC plastic  resins  which the segment uses to  manufacture  its
         coated fabrics products, many of its customers,  including GM, have not
         approved such  reformulation as to all  applications.  The Company does
         not believe it will be adversely  impacted in the future by  Goodyear's
         decision to cease selling PVC plastic resins, since it expects that all
         PVC resin  reformulations  will be approved  prior to such cessation or
         shortly thereafter.

                  The segment  purchases  polyolefin foam from Toray Industries,
         Inc. which  currently is the only supplier of polyolefin  foam approved
         by end users of the segment's foam-based products. Although the Company
         believes  that  polyolefin  foam would be  available  from  alternative
         suppliers,  if  polyolefin  foam from Toray  Industries,  Inc.  were to
         become  unavailable,  production  of the segment's  coated  fabrics and
         laminated composites could be affected,  because the segment would have
         to obtain approval from its customers of product using  polyolefin foam
         purchased from alternative  suppliers.  The segment is currently in the
         process of seeking such approvals from its most  significant  customers
         with respect to alternative  suppliers of polyolefin  foam. The Company
         does not expect that the segment will have to incur  significant  costs
         to obtain such approval.

         Specialty Adhesives Segment

                  The  Company's   Specialty  Adhesives  Segment  accounted  for
         approximately  $35.5 million (17 percent (17%)) of the Company's  total
         net sales for Fiscal 1996.  Approximately  $17.2 million of this amount
         was  attributable  to net sales of  Ensolite  products.  See "Note 3 to
         Financial Statements" and "Corporate Developments - Ensolite Sale."

                  General

                  The Specialty Adhesives Segment (formerly,  the Specialty Foam
         and  Adhesives  Segment)  is composed  of two  general  product  lines:
         roofing  adhesives and sealants and industrial  adhesives and sealants.
         The segment is one of the leading manufacturers of liquid adhesives and
         sealants for the commercial EPDM rubber roofing  market.  The segment's
         adhesives  for this market,  known as "splice  adhesives"  and "bonding
         adhesives,"  are used to splice rubber  roofing sheets and to bond them
         to the  underlying  structure.  They have the ability to withstand  the
         stress of extensive  thermal  expansion  and  contraction.  The Company
         believes that its patented  splice  adhesive is the best selling splice
         adhesive in the EPDM rubber roofing  market.  In Fiscal 1996,  sales of
         splice adhesives represented 27 percent (27%) of the total net sales of
         the  segment's  adhesives  and  sealants.  In  addition,   the  segment
         manufactures more than 200 industrial  adhesives and sealants in brush,
         roll  and  spray-on  form  which  are  used in a  number  of  different
         industries   such  as  furniture   manufacturing,   truck  trailer  and
         recreational vehicle manufacturing, and foam and plastic fabrication.

                  The Company's  strategy for the development of this segment is
         to add to its  existing  product  lines  of  industrial  adhesives  and
         sealants through  acquisition  and/or development of new products which
         satisfy  unfulfilled  market  needs.  For  example,  in Fiscal 1996 the
         segment commenced sales of water-based  adhesives which it expects will
         become  an  increasingly  more  significant  part  of its  business  as
         environmental  and worker  health and safety  requirements  become more
         stringent. See "- Research and Development."

                  The segment  sells splice and bonding  adhesives  for the EPDM
         rubber  roofing  market  exclusively  to  Firestone  Building  Products
         Company,  a  division  of  Bridgestone/Firestone,  Inc.  ("Firestone"),
         pursuant to a five-year  contract which was entered into in Fiscal 1995
         and expires on February 20, 2000 (the "Firestone Agreement"). Under the
         terms of the  Firestone  Agreement,  Firestone is obligated to purchase
         from the  segment a minimum  of 80 percent  (80%) of its annual  volume
         requirements  of the splice and bonding  adhesives  for the EPDM rubber
         roofing market. In Fiscal 1996, 1995 and 1994,  Firestone  purchased 83
         percent (83%), 69 percent (69%) and 63 percent (63%), respectively,  of
         the  Company's  total  net sales of  adhesives  and  sealants  for such
         periods.  Sales to  Firestone  during the fiscal  year ended  September
         29,1996  represented  seven percent (7%) of the Company's net sales for
         such fiscal year.  The loss of  Firestone  as a customer  would have an
         adverse effect on the Company's Specialty Adhesives Segment.  Firestone
         will acquire the Company's  patent for splice  adhesive upon expiration
         of the Firestone Agreement. See "-Trademarks and Patents."

                  This  segment  also  manufactured  and sold  closed  cell foam
         products until June 10, 1996, when the Company sold  substantially  all
         of the segment's assets relating to the manufacture of foam products to
         Rubatex for $25.0  million  (the  "Ensolite  Sale").  See "-  Corporate
         Developments  - The  Ensolite  Sale." The  segment's  closed  cell foam
         products were marketed under the brand name  ENSOLITE(R),  a registered
         trademark which was transferred to Rubatex.

                  Competition

                  Pursuant to the exclusivity terms of the Firestone  Agreement,
         the Company does not compete with respect to its roofing  adhesives and
         sealants.  As to its  industrial  adhesives and  sealants,  the Company
         competes  principally  on  the  basis  of  price  and  the  performance
         characteristics of its products.

                  The  segment's  principal  competitors  in the  adhesives  and
         sealants  market  for EPDM  rubber  roofing  applications  are  Ashland
         Chemical Company, Adco Technologies,  Inc. and TACC International Corp.
         In  addition,   Carlisle  Syntec  Systems,   supplies  these  adhesives
         primarily  for its  own  single-ply  roofing  system  and  consequently
         competes indirectly with the segment.  In the industrial  adhesives and
         sealants markets, the segment's primary competitors include Sika Corp.,
         Imperial  Adhesives,   Inc.  and  Minnesota  Mining  and  Manufacturing
         Company.

                  Marketing

                  The segment's  industrial  adhesives and sealants are marketed
         under the brand name SILAPRENE(R).  Its water-based  adhesives are also
         marketed  under  the  brand  name  Hydra  Fast-En(TM).   The  segment's
         SILAPRENE(R)  products have established name recognition in, and hold a
         significant  share  of  the  recreational  vehicle  and  truck  trailer
         manufacturing  markets.  Hydra  Fast-En(TM)  adhesives,  sales of which
         commenced in Fiscal 1996,  are  beginning to establish  market share in
         the foam and plastic fabrication markets.

                  The  segment's  roofing  adhesives  and  sealants are marketed
         under Firestone's  private brand names. The Company indirectly controls
         a significant  share of the splice  adhesives and bond adhesives market
         through Firestone,  which continues to control significant market share
         in the EPDM rubber roofing market.

                  The segment  markets its  industrial  adhesives  and  sealants
         primarily  to   manufacturers   through  a  network  of  50  authorized
         distributors  and ten sales  representatives  who are  employees of the
         segment,  located throughout the United States and Canada.  Pursuant to
         its  obligation  under the  Firestone  Agreement,  the segment does not
         market its splice and bonding  adhesives  for the EPDM  rubber  roofing
         market.

                  The  segment's   roofing   adhesives   business  is  seasonal,
         increasing  in the  warmer  months  of the year due to an  increase  in
         roofing  and  other  construction  activities  in such  months,  and is
         sensitive  to adverse  weather  conditions.  See Item 7.  "Management's
         Discussion   and  Analysis  of  Financial   Condition  and  Results  of
         Operations Comparison of Fiscal 1996 with Fiscal 1995."

         Manufacturing Facilities

                  The segment manufactures specialty foam products and adhesives
         and sealants at its manufacturing facility in Mishawaka, Indiana, which
         is leased from Uniroyal  Plastics  Company,  Inc., a company related to
         the Predecessor Companies.  See "- History of Company." The term of the
         current  lease  expires on January 31, 1997 with  options to extend the
         lease  for two  six-month  periods.  See  "Item 2.  Properties"  and "-
         Business Corporate Developments - Acquisition of South Bend Facility."

                  On  July  17,  1996,  the  Company  acquired  a  manufacturing
         facility in South Bend,  Indiana,  consisting of approximately  240,000
         square feet for $1.8 million. The new facility will house the Company's
         adhesives  and sealants  product lines as well as certain other Company
         operations,  including the  headquarters of the Royalite  segment.  The
         Company  expects to move these  operations  to the South Bend,  Indiana
         facility from the existing leased facility in Mishawaka, Indiana during
         the first six months of Fiscal 1997.  See "- Corporate  Developments  -
         Acquisition of South Bend Facility."

         Raw Materials

                  The  Division's  adhesives  and  sealants use a variety of raw
         materials  such as rubber,  resins and  solvents,  which are  generally
         available from multiple sources.  The Division's principal suppliers of
         such raw materials and containers include E.I. duPont de Nemours & Co.,
         Unocal  Chemicals,  a division  of Unocal  Corp., and  Cleveland  Steel
         Container  Corp.  The Company  believes that  adequate  supplies of raw
         materials  for its  adhesives  and  sealants  will be  available to the
         Division from alternate suppliers. However, if the Division is required
         to use alternate suppliers,  production could be affected while the raw
         materials  produced by such  alternate  suppliers  are qualified by the
         Division to meet the product specifications of its customers.

         Employees

                  The  Company  has  approximately  1,220  employees,  including
         approximately 787 hourly wage employees and 433 salaried employees. The
         Company  believes that at the present time its workforce is adequate to
         conduct  its  business  and  that  its  relations  with  employees  are
         generally satisfactory.

                  The  Company is a party to a number of  collective  bargaining
         agreements.  Approximately  130 hourly wage  employees of the Company's
         acrylic sheet manufacturing  facility located in Stamford,  Connecticut
         are covered by an agreement  expiring on March 31, 2000 with  Teamsters
         Local 191, which is affiliated  with the  International  Brotherhood of
         Teamsters,  Chauffeurs,   Warehousemen  and  Helpers  of  America  (the
         "Teamsters").  Approximately 33 employees at the Company's  Hackensack,
         New Jersey  acrylic  sheet  manufacturing  and  warehouse  facility are
         covered  by  an  agreement  expiring  on  February  3,  2002  with  the
         Amalgamated  Clothing & Textile Workers Union of America (AFL-CIO).  At
         the  Company's  coated  fabrics   manufacturing   facility  located  in
         Stoughton,  Wisconsin,  another 160 hourly employees of the Company are
         covered by an agreement  expiring on September 17, 2001 with Local 1207
         of the United Paperworkers  International  Union.  Separate  agreements
         expiring  on April 20, 1999 with the United  Steel  Workers of America,
         United Rubber  Workers  Division (the "USWA") cover  approximately  140
         hourly  wage   employees  at  the  Company's   adhesives  and  sealants
         manufacturing facility located in Mishawaka, Indiana, and approximately
         120  employees  at  the  coated   fabrics  and   laminated   composites
         manufacturing facility located in Port Clinton, Ohio.

                  On July 20, 1995 the National Labor  Relations Board certified
         the United Paperworkers International Union as the exclusive collective
         bargaining   representative  for  the  hourly  wage  employees  at  the
         Company's  thermoplastic products plant in Warsaw, Indiana. The Company
         challenged   the  election  which  led  to  such   certification   and,
         accordingly,  did not  recognize  the union.  On October 24, 1996,  the
         United  States  Court of Appeals  for the  Seventh  Circuit  denied the
         Company's  appeal.  The  Company  has  since  recognized  the union and
         intends to negotiate a collective bargaining agreement with it.

                  Richard  D.  Kimbel,  the  former  President  of USWA Local 65
         (Mishawaka), is a member of the Company's Board of Directors. See "Item
         10. Directors and Executive Officers of the Registrant."

         Trademarks and Patents

                  The  Company  owns  and  controls   patents,   trade  secrets,
         trademarks, trade names, copyrights and confidential information, which
         in the  aggregate  are  material  to its  business.  The Company is not
         materially dependent, however, upon any single patent or trademark. The
         Company  has  several  trademarks  that have wide  recognition  and are
         valuable to its  business.  Among the  trademarks  that are of material
         importance  to the Company are  NAUGAHYDE(R),  NAUGAFORM(R),  DURAN(R),
         ROYALITE(R),  PILOTS'  CHOICE(TM),  POLYCAST(R) and  SILAPRENE(R).  The
         Company's  trademarks  are  registered  in the  United  States and in a
         number of foreign  jurisdictions  with terms of  registration  expiring
         generally between 1996 and 2004. No trademark  registration of material
         importance  to the Company  expired  during  Fiscal  1996.  The Company
         intends  to renew in a timely  manner  all  those  trademarks  that are
         required for the conduct of its business.

                  The  Company  also  holds  more than 40  patents  and  pending
         patents worldwide.  While in the past the Company considered the patent
         on its splice  adhesives  technology  to be the most  important  patent
         owned by it, its value has since been  determined by management to have
         eroded  significantly due to the relatively short remaining life of the
         patent,  the  consolidation  of the EPDM rubber  roofing market and the
         development of competitive products. Consequently, in 1995, the Company
         entered into the Firestone Agreement pursuant to which the Company will
         transfer  ownership  of this patent to  Firestone on February 20, 2000.
         The Company's splice adhesive patent expires on July 28, 2003. The loss
         of  such  patent  would  not  have a  material  adverse  effect  on the
         Company's Adhesives Segment unless such loss were to affect the ability
         of the  Company  to  perform  under  the  Firestone  Agreement.  See "-
         Business Segments - Specialty Adhesives."

                  The Company  uses  the  trade  name  and  trademark "Uniroyal"
         pursuant to a license from Uniroyal Goodrich Licensing Services, Inc.

         Research and Development

                  The Company is actively  engaged in research  and  development
         programs  designed to develop new  products,  manufacturing  processes,
         systems and  technologies  and to enhance  its  existing  products  and
         processes.  Research and development is conducted  within each business
         segment of the Company. Investment in research and development has been
         an important  factor in  establishing  and  maintaining  the  Company's
         competitive  position in many of the specialized niche markets in which
         its products are  marketed.  For example,  the  Company's  research and
         development   efforts  have  led  to  the  development  of  water-based
         adhesives  (see  "-Business  Segments - Specialty  Adhesives"),  bullet
         resistant acrylic sheet,  acrylic sheet for use in commercial aquariums
         (see "-  Business  Segments  - High  Performance  Plastics  -  Polycast
         Division")  and the new  coated  fabrics  product  line (see  "Business
         Segments - Coated  Fabrics").  The  Company  spent  approximately  $4.9
         million for research and  development  during  Fiscal 1996  compared to
         approximately $4.7 million during Fiscal 1995.

                  The  Company  currently  employs a staff of  approximately  30
         individuals in connection  with its research and  development  efforts.
         The individuals  include chemists,  process  development  engineers and
         laboratory  technicians and are responsible for new product development
         and improvement of production processes. The allocation of research and
         development staff among the Company's  business segments is as follows:
         seven at High  Performance  Plastics,  14 at Coated Fabrics and nine at
         Specialty Adhesives.

         Backlog

                  At  September  29,  1996,   the  Company  had  backlog  orders
         aggregating  approximately  $22.7 million, as compared to approximately
         $25.6 million as of October 1, 1995.  Management presently  anticipates
         that all  backlog  orders  will be filled  within  the next 12  months.
         Backlog  orders for each of the  Company's  business  segments  were as
         follows as of the indicated dates:

                                     September 29, 1996        October 1, 1995
                                     ------------------       ----------------- 
                                                    (in thousands)

          High Performance Plastics      $ 13,727                 $  15,059
          Coated Fabrics                    4,784                     4,360
          Specialty Adhesives               4,222                     6,144(1)
                                         --------                 ---------
               Total                     $ 22,733                 $  25,563
                                         ========                 =========

         (1)  This amount includes $2.8 million in backlog orders for Ensolite
              products.

         Working Capital Items

                  Many of the markets in which the Company  competes,  including
         the aerospace  acrylic sheet market and the coated fabric and laminated
         composite  markets  for  the  automobile  manufacturing  industry,  are
         characterized by long lead times for new products requiring significant
         working  capital  investment  by the  Company  and  extensive  testing,
         qualification and approval by the Company's  customers and end users of
         its products.  The Company faces a significant  risk that customers and
         end users in such  markets may not select the  Company's  new  products
         after it has  incurred  significant  costs  for,  among  other  things,
         research  and  development,   manufacturing  equipment,   training  and
         facility-related overhead expenses to develop such products.

                  Moreover,  even  if  the  Company's  products  are  eventually
         approved and purchased by customers and end users in such markets,  the
         working  capital  investment made by the Company could fail to generate
         revenues for several years while the Company develops such products and
         its customers and end users conduct their  testing,  qualification  and
         approval  procedures  for such products.  For example,  in 1992 through
         Fiscal 1995 the Company's Coated Fabrics Segment  incurred  significant
         costs for research and  development,  equipment  and facility  costs to
         develop a new series of coated  fabrics  products  in  response to GM's
         performance  specifications  for a coated fabrics product that would be
         lighter  in  weight  and with a softer  finish  but that  would  not be
         affected  by  exposure  to  heat.  See "-  Business  Segments  - Coated
         Fabrics."  Sales of such  products  were nominal or  nonexistent  until
         Fiscal  1996,  when  GM  approved  the  products  for  use  in  several
         automobile models,  resulting in sales of approximately $6.0 million in
         such fiscal year. See "Item 7. Management's  Discussion and Analysis of
         Financial  Condition  and Results of  Operations - Comparison of Fiscal
         1996 with Fiscal  1995."  Although the Company  believes that cash from
         its  operations  and its ability to borrow under its  revolving  credit
         agreement (see " - Corporate Developments - Revolving Credit Agreement"
         and  "Item  7.  Management's   Discussion  and  Analysis  of  Financial
         Condition and Results of Operations - Liquidity and Capital Resources")
         will provide it sufficient  liquidity to finance its efforts to develop
         new products,  there can be no assurance that the Company's  operations
         together with amounts  available under its revolving  credit  agreement
         will be sufficient to finance such development  efforts and to meet the
         Company's other obligations.

         Environmental Matters

                  The  Company is subject to  federal,  state and local laws and
         regulations  designed to protect the  environment and worker health and
         safety. The Company's management  emphasizes  compliance with such laws
         and regulations and has instituted  programs  throughout the Company to
         provide  education  and training in  compliance  at and auditing of all
         Company facilities. Whenever required under applicable law, the Company
         has  implemented  product or process  changes or invested in  pollution
         control systems to ensure  compliance  with such laws and  regulations.
         Such  investments  may in the future provide  financial  returns to the
         Company as a result of increased efficiencies or product improvements.

                  In  Fiscal  1996,   1995  and  1994,  the  amount  of  capital
         expenditures  related to  environmental  matters was immaterial and the
         amount of such  expenditures  is  expected to be  immaterial  in Fiscal
         1997. In the future,  as the requirements of applicable law impose more
         stringent  controls  at  Company  facilities,  expenditures  related to
         environmental  and worker  health and safety are  expected to increase.
         While the  Company  does not  currently  anticipate  having to make any
         material  capital  expenditures  in order to comply with these laws and
         regulations,  if the Company is  required  to do so, such  expenditures
         could have a material impact on its earnings or competitive position in
         the future.

         In connection with its acquisition of a manufacturing facility in South
         Bend,  Indiana  on July 17,  1996,  the  Company  assumed  the costs of
         remediation of soil and  groundwater  contamination  resulting from the
         leaking of solvents  used in the  operation  of the plant by its former
         owner. The Company is conducting the remediation  voluntarily  pursuant
         to  an  agreement   with  the  Indiana   Department  of   Environmental
         Management.  The  Company  estimates  that such  remediation  will cost
         approximately  $1.0  million  over  a  five-to-seven-year   period.  In
         connection with its acquisition of the facility,  the Company placed in
         escrow in  accordance  with the terms of the  purchase  agreement  $1.0
         million  of the  $1.8  million  purchase  price to be  applied  to such
         remediation costs. See "-Corporate  Developments - Acquisition of South
         Bend Facility."

                  The Company  established a $610,000 reserve for  environmental
         remediation  costs  related to its  Mishawaka,  Indiana  facility.  The
         Company  intends to exit from the  Mishawaka,  Indiana  facility to its
         South  Bend,  Indiana  facility  during  the first six months of Fiscal
         1997.  While  the  Company  estimates  the  cost of such  environmental
         remediation  will be  approximately  $610,000,  the ultimate  cost will
         depend  on  the  extent  of  contamination   discovered  following  the
         relocation process.  The Company expects the environmental  remediation
         to be substantially  completed within one year. The Indiana  Department
         of  Environmental  Management  ("IDEM") has conducted tests of the soil
         and water at the facility in response to requests from local government
         officials.  According to press  accounts,  IDEM has found low levels of
         polychlorinated  biphenyls  (PCBs) in soil  samples  and  ground  water
         contamination.  The Company  believes  that  further  testing  might be
         necessary to determine the extent of contamination and that there might
         then need to be an allocation of any liability  between the Company and
         UPC (see "- History of the Company ` Predecessor Companies"), since the
         Company's  operations at the Mishawaka,  Indiana facility do not employ
         PCBs.

                  Pursuant to a 1992 settlement agreement with the United States
         Environmental   Protection  Agency  (the  "EPA"),   the  United  States
         Department of the Interior and the States of Wisconsin and Indiana (the
         "EPA Settlement Agreement") entered into in connection with the Plan of
         Reorganization of the Predecessor  Companies (see "History of Company -
         Predecessor  Companies"),  the  Predecessor  Companies  compromised and
         settled (in exchange for Common Stock of the Company) substantially all
         of their prepetition  liabilities relating to disposal activities under
         Sections  106  and  107 of the  Comprehensive  Environmental  Response,
         Compensation & Liability Act  ("CERCLA"),  Section 3008 of the Resource
         Conservation  & Recovery Act  ("RCRA")  and similar  state laws for the
         cleanup  of 20  designated  sites not  owned by any of the  Predecessor
         Companies (the "Known Sites") and for natural resource damages at 15 of
         the 20 Known  Sites.  Pursuant  to the EPA  Settlement  Agreement,  the
         United States and the States of Indiana and Wisconsin agreed not to sue
         for response costs and, with the exception of five Known Sites, natural
         resource  damages at each of the Known Sites. In addition,  pursuant to
         Section  113(f)(2)  of CERCLA,  and as  provided  under the  Settlement
         Agreement,  the Predecessor Companies and the Company will be protected
         against contribution claims filed by private parties for any Known Site
         for matters covered by the EPA Settlement Agreement. The EPA Settlement
         Agreement  established  a  mechanism  for the  Company to  resolve  its
         liability for any other sites (the  "Additional  Sites"),  except those
         owned by the Company,  arising from prepetition disposal activity.  The
         Company  also  agreed  to share  with  such  governmental  parties  the
         proceeds of claims  relating to the Known  Sites made  against  certain
         insurers of the Predecessor Companies and their affiliates.

                  In the event  that the  United  States,  Wisconsin  or Indiana
         asserts a claim  against the  Predecessor  Companies or the Company for
         response costs associated with prepetition  disposal  activities at any
         Additional Site, the governmental  party will be entitled to pursue its
         claim in the  ordinary  course,  and the  Company  and the  Predecessor
         Companies will be entitled to assert all of their defenses. However, if
         and  when  the  Company  or any of the  Predecessor  Companies  is held
         liable,  and if the liability is  determined to arise from  prepetition
         disposal  activities,  the Company or such Predecessor  Company may pay
         the  liability in discounted  "plan  dollars"  (i.e.,  the value of the
         consideration  that the party  asserting such claim would have received
         if the liability  were treated as a general  unsecured  claim under the
         Plan of  Reorganization).  Such  payment  may be made in cash or in the
         Company's  stock,  or a combination  thereof,  at the Company's or such
         Predecessor  Company's option.  Claims arising from real property owned
         by the Company are not affected by the EPA Settlement Agreement.

                  In October 1996, the EPA sent the Company a General Notice and
         Special  Notice of Liability  concerning the Refuse  Hideaway  Landfill
         Superfund Site at Middleton,  Wisconsin. While a unit of Uniroyal, Inc.
         is believed to have sent  non-hazardous  waste to the site between 1978
         and 1984,  the  Company is not aware  that the unit sent any  hazardous
         materials to the site.  The Company does not presently  anticipate  any
         material  liability in connection  with the site, and in any event,  if
         the Company is found to have  liability  in  connection  with the site,
         such  liability  will be  subject  to the  terms of the EPA  Settlement
         Agreement. See "- History of Company- Predecessor Companies."

                  Based upon information available as of September 29, 1996, the
         Company believes that the costs of environmental  remediation for which
         it may be  liable  have  either  been  adequately  reserved  for or are
         otherwise  unlikely to have a material  adverse effect on the Company's
         operations, cash flows or financial position.

         History of Company

                  Predecessor Companies

                  The  Company's  businesses  trace their origins to a number of
         predecessor companies which eventually were reorganized pursuant to the
         Third  Amended Plan of  Reorganization  under the  Bankruptcy  Code for
         Polycast   Technology   Corporation  and  Its  Affiliated  Debtors  (as
         subsequently modified, the "Plan of Reorganization"). See "- History of
         the Company - Reorganization."

                  The Company's acrylic sheet business  originated in the 1960's
         in a  company  known  as  Polycast  Technology  Corporation  ("Polycast
         Technology"),  which subsequently  changed its name to The Jesup Group,
         Inc.  ("Jesup").  In 1984,  Jesup  acquired the business of  Shenandoah
         Plastics   ("Shenandoah"),   a  company   engaged  since  1967  in  the
         manufacture   of   thermoplastic   sheet,   and  Glasflex   Corporation
         ("Glasflex"),  a  manufacturer  since 1954 of acrylic  sheet,  rods and
         tubes.  These businesses  eventually became part of what is known today
         as the Company's High Performance Plastics Segment.

                  A substantial  portion of the thermoplastic  sheet business of
         the High  Performance  Plastics  Segment (other than that acquired from
         Shenandoah ), as well as the businesses of the Coated  Fabrics  Segment
         and the Specialty  Adhesives  Segment (formerly the Specialty Foams and
         Adhesives Segment),  originated in the chemical and plastics operations
         of  the  U.S.   Rubber   Company   (later  known  as   Uniroyal,   Inc.
         ("Uniroyal")),  which date from the mid-1940's.  These  operations were
         conducted by segments of Uniroyal  until 1985,  when Uniroyal  Plastics
         Company,  Inc.  ("UPC")  was  formed  by  Uniroyal  as  a  wholly-owned
         subsidiary  to  hold  these   operations.   In  October  1986,   Jesup,
         indirectly,  through its  wholly-owned  subsidiary,  Uniroyal  Plastics
         Acquisition Corp. ("UPAC"),  acquired UPC from Uniroyal.  Following its
         acquisition of UPC, Jesup combined the  thermoplastic  sheet operations
         acquired  from UPC with its  existing  thermoplastic  sheet and acrylic
         sheet,  rod and tube  businesses  in a  subsidiary  known  as  Polycast
         Technology Corporation ("Old Polycast"). Jesup also transferred what is
         now the Coated Fabrics Segment of the Company's  business into Uniroyal
         Engineered  Products,  Inc.  ("Old UEP") and the adhesives and sealants
         business of what is now its Specialty  Adhesives  Segment into Uniroyal
         Adhesives and Sealants  Company,  Inc.  ("Old UAS").  The assets of the
         specialty  foam business were  transferred  from UPC to Ensolite,  Inc.
         ("Old Ensolite").  Old Polycast,  Old UEP, Old Ensolite and Old UAS are
         referred to herein as the "Predecessor  Companies." UPC is currently in
         bankruptcy   liquidation   and  is  an  affiliate  of  the  Predecessor
         Companies.  UPAC's plan of reorganization was substantially implemented
         in November 1993.

                  In October and November  1991, the  Predecessor  Companies and
         one other subsidiary of Jesup filed voluntary bankruptcy petitions with
         the  United  States  Bankruptcy  Court  for the  Northern  District  of
         Indiana,  South Bend Division (the "Bankruptcy Court") for relief under
         Chapter  11 of Title 11 of the United  States  Code,  as  amended  (the
         "Bankruptcy Code").

                  Reorganization

                  The  Predecessor   Companies   sought   protection  under  the
         Bankruptcy  Code  primarily  as a  result  of their  inability  to meet
         significant obligations for retiree medical expenses,  unfunded pension
         obligations  and interest on  indebtedness  incurred in connection with
         the  acquisition of UPC. Prior to the  commencement  of the Predecessor
         Companies'  bankruptcy  proceedings (the  "Bankruptcy  Proceedings") in
         Fiscal 1991, these  non-operating  expenses,  combined with the loss of
         sales in  certain  economically  depressed  markets  (particularly  the
         automobile  markets),  caused a significant and increasing drain on the
         Predecessor  Companies'  working capital and resulted in certain of the
         Predecessor   Companies'   significantly   reducing  their   operations
         (including profitable, but working  capital-intensive,  operations such
         as the  Company's  application  of  coatings  to fabric for  automotive
         airbags) and certain capital  expenditure  programs.  The segments most
         adversely  affected by the decreased working capital condition were the
         Coated Fabrics and Specialty Adhesives Segments.

                  The plan of  reorganization  of the  Predecessor  Companieswas
         substantially  consummated on September 27, 1992.  Pursuant to the Plan
         of  Reorganization,  each  of  the  Predecessor  Companies  transferred
         substantially all of its assets to a newly organized  subsidiary of the
         Company with a name that was substantially identical to the name of its
         corresponding  Predecessor  Company.  In  exchange,  each of these  new
         subsidiaries,  including Polycast Technology Corporation  ("Polycast"),
         Uniroyal  Engineered  Products,  Inc. ("UEP"),  Uniroyal  Adhesives and
         Sealants Company, Inc. ("UAS") and Ensolite, Inc. ("Ensolite"),  agreed
         to assume certain of the liabilities of its  corresponding  Predecessor
         Company.  In addition,  the Company issued, or authorized for issuance,
         9,575,000  shares of its Common  Stock to holders of allowed  unsecured
         claims  against  the  Predecessor  Companies  and 50 shares of Series A
         Preferred  Stock  and 50  shares  of  Series B  Preferred  Stock to the
         Pension  Benefit  Guaranty  Corporation  (the  "PBGC").  (See "Item 13.
         Certain  Relationships and Related  Transactions.") On June 7, 1993, in
         conjunction  with the public  offering of the  Company's  11.75% Senior
         Secured Notes,  the Company  merged each of its operating  subsidiaries
         into the Company.  In May 1993 the Company called and repurchased  from
         the PBGC all of the outstanding  shares of Series A Preferred Stock and
         15 shares of the  outstanding  shares of Series B Preferred  stock.  On
         December 16, 1996,  the Company  repurchased an additional 15 shares of
         such stock. See "Item 1. Business  Corporate  Developments - Redemption
         of Series B Preferred Stock."

                  On November 8, 1993,  the Plan of  Liquidation  of UPAC became
         effective and was substantially consummated.  Pursuant to the UPAC Plan
         of   Liquidation,   the  Company   received  a  cash   distribution  of
         approximately  $6.8 million  following the liquidation of the assets of
         the UPAC estate and  accordingly  recorded income from the UPAC Plan of
         Liquidation  in the  amount  of  approximately  $6.8  million  shown as
         recovery of pension expense in the  accompanying  financial  statements
         for the fiscal year ended October 2, 1994.

                  In connection with matters relating to its acquisition of UPC,
         on May 6, 1993 the Company  entered  into a settlement  agreement  (the
         "Company  Settlement")  with Uniroyal,  Inc.,  CDU Holding  Liquidating
         Trust,  and  Uniroyal  Holding,  Inc.   (collectively,   the  "Uniroyal
         Parties")  pursuant  to which  the  Company  and the  Uniroyal  Parties
         resolved  certain  existing  and  potential  disputes  arising from the
         acquisition  of UPC by UPAC from  Uniroyal,  Inc.  Uniroyal,  Inc.  was
         dissolved in December 1986. CDU Holding  Liquidating Trust and Uniroyal
         Holding, Inc. were affiliates of Uniroyal,  Inc. In connection with the
         resolution  of the  matters  covered  by the  Company  Settlement,  the
         Uniroyal  Parties  paid  $2.25  million  in  cash  to the  Company.  In
         exchange,   the  Company  agreed  to  certain  matters   involving  the
         prosecution  and  settlement  of  claims  under   insurance   policies,
         including   certain  claims  of  the  Uniroyal   Parties  that  covered
         environmental  liabilities at certain of the Known Sites.  See "Item 1.
         Business -  Environmental  Matters." As a result of this  agreement and
         related agreements reached with insurance  companies during Fiscal 1994
         as to  amounts  with  respect  to  environmental  claims,  the  Company
         recorded  as income  in Fiscal  1994  approximately  $1,176,000  and in
         Fiscal 1995 approximately $70,000, net of certain professional fees and
         other expenses.

                  The Company  Settlement  also  provides  that the Company will
         indemnify and hold  harmless the Uniroyal  Parties with respect to: (i)
         environmental  liabilities  associated  with  sites  that were owned or
         operated by the Company or the  Predecessor  Companies on or before May
         6, 1993;  and (ii) future  environmental  expenditures  by the Uniroyal
         Parties with respect to the  businesses of UPC, net of recoveries  from
         third parties (including insurance proceeds),  but only with respect to
         the portion of such expenditures,  if any, that exceeds $30 million and
         is less  than $45  million.  See  "Item  1.  Business  -  Environmental
         Matters."

                  Pursuant  to the  Company  Settlement,  the  Company  and  the
         Uniroyal  Parties  also  agreed  to  share on a 35  percent  (35%) - 65
         percent  (65%) basis,  respectively,  the costs of  providing  medical,
         prescription drug and life insurance benefits to certain retired former
         salaried  employees  of UPC or  Uniroyal  who are  class  members  in a
         federal class action lawsuit against  certain of the Uniroyal  Parties.
         The Company's  cost for providing such medical,  prescription  drug and
         life insurance benefits in Fiscal 1996 was approximately  $943,000. The
         Company and the Uniroyal Parties also mutually released each other from
         all  claims  and  causes of  action,  if any,  related to or arising in
         connection with the acquisition of UPC from Uniroyal in 1986 and all of
         the agreements entered into in connection therewith.


                  In a separate settlement agreement entered into on May 6, 1993
         (the "UPAC Settlement"), UPAC and Jesup (each of which was an affiliate
         of the Predecessor Companies) settled their claims against the Uniroyal
         Parties and  certain of their  insiders  and  affiliates, The  Uniroyal
         Parties and such insiders and affiliates are  collectively  referred to
         as the "Uniroyal Affiliated Parties".  Pursuant to the UPAC Settlement,
         the Uniroyal  Affiliated  Parties  paid $16.0  million in cash to UPAC.
         Such cash  constituted  the major portion of the  bankruptcy  estate of
         UPAC.

Item 2.  Properties

                  The  following  table sets forth the location,  size,  general
         character and nature of the Company's facilities:
<TABLE>
<CAPTION>
                                                                                                             
                                                              SQUARE FEET       GENERAL CHARACTER            OWNED OR
          LOCATION AND ENTITY                                 OF FACILITY         OF PROPERTY                 LEASED
          <S>                                                    <C>           <C>                            <C>
          Sarasota, Florida                                        18,000      Corporate offices              Leased

          High Performance Plastics Segment
          Mishawaka, Indiana(1)                                    12,000      Offices                        Leased
          Stamford, Connecticut                                     5,500      Offices                        Leased
          Stamford, Connecticut                                    81,000      Manufacture of cell cast       Owned
                                                                                 acrylics
          Hackensack, New Jersey                                   46,000      Manufacture of cell cast       Owned
                                                                                 acrylics
          Rome, Georgia                                            45,062      Manufacture of thermoplastic   Owned
                                                                                 products
          Redlands, California                                     60,000      Manufacture of thermoplastic   Owned
                                                                                 products
          Stirling, New Jersey                                     50,000      Manufacture of acrylic sheet   Owned
                                                                                 rods and tubes
          Warsaw, Indiana                                         225,000      Manufacture of thermoplastic   Owned
                                                                               products and warehouse
          Coated Fabrics Segment
          Sarasota, Florida                                         6,000      Offices                        Leased
          Stoughton, Wisconsin                                    198,275      Manufacture of coated          Owned
                                                                                 fabrics products
          Port Clinton, Ohio                                      240,000      Manufacture of coated          Owned
                                                                                 fabrics products
          Troy, Michigan                                            2,200      Offices                        Leased

          Specialty Adhesives
            Segment
          Mishawaka, Indiana (1) (2)                              692,245      Manufacture of closed-cell     Leased
                                                                                 foam products, adhesives and
                                                                                 sealants
          South Bend, Indiana (2)                                 240,000      Offices                        Owned
                                                                               Manufacture of adhesives and
                                                                                 sealants

         All of the owned  properties  are  subject  to the  liens of  mortgages
         securing the Company's 11.75% Senior Secured Notes Due 2003. (See "Note
         8 to Financial Statements".)

<FN>
(1)  Applicable fire and safety regulations and the configuration of the 704,245
     square  feet  currently  leased and  used by the  Company in the Mishawaka,
     Indiana facility  require  the Company to heat and light at its own expense
     an additional  approximately 829,060 square feet of adjacent or nearby pre-
     mises that currently  are not used by  the Company.   Such expenses  may be 
     credited against the rent expenses due under the Company's lease.


(2)  On July 17, 1996, the Company  acquired a  manufacturing  facility in South
     Bend,  Indiana.  The  new  facility  will  house  the  Company's  Specialty
     Adhesives  Segment,  the headquarters of the Royalite  Division and certain
     other Company  operations.  The Company plans to move these operations from
     the  existing  leased  facility  in  Mishawaka,  Indiana to the South Bend,
     Indiana facility during the first six months of Fiscal 1997.
</FN>
</TABLE>

Item 3.  Legal Proceedings


                  URBI,   an   organization   unaffiliated   with  the  Company,
         administers medical,  prescription drug and life insurance programs for
         certain retired  employees of the Predecessor  Companies and certain of
         their affiliates.  The Company contributes funding for a portion of the
         costs of the benefits programs  administered by URBI in accordance with
         the terms of an  agreement  entered  into with  URBI's  predecessor  in
         connection with the Plan of Reorganization.  See "Business - History of
         Company."  As a  result  of  disputes  between  the  Company  and  URBI
         concerning the  eligibility  requirements  applicable to URBI's medical
         plan and the  level of  payments  due from the  Company,  URBI  filed a
         complaint  with the United  States  Bankruptcy  Court for the  Northern
         District of Indiana,  South Bend  Division  (the  "Bankruptcy  Court"),
         claiming  that the Company had  breached  its  agreement to fund URBI's
         operations.  The Company  filed  counterclaims  against  URBI  claiming
         breach  of  contract,   fraud,  negligent   misrepresentation,   unjust
         enrichment,  declaratory  judgment and  clarification or reformation of
         contract.  On December 20, 1995, the Bankruptcy Court ruled in favor of
         URBI with  respect to certain  matters and in favor of the Company with
         respect  to other  matters  resulting  in a net  judgment  against  the
         Company of approximately  $211,000.  The Company filed an appeal of the
         Bankruptcy  Court's  December  20, 1995  ruling with the United  States
         District  Court  for the  Northern  District  of  Indiana,  South  Bend
         Division,  which appeal is still  pending.  On November 28, 1995,  URBI
         filed an additional  complaint  with the Bankruptcy  Court,  concerning
         funding  payments due in Fiscal 1996. The Bankruptcy  Court ordered the
         Company to  increase  its  monthly  payments  to URBI to  approximately
         $160,000 through  September 1996. In December 1996 the Bankruptcy Court
         ordered the Company to continue  payments at such level through January
         1997.  The  Company  has  agreed in  principle  with URBI to settle the
         foregoing  litigation  The proposed  settlement  provides,  among other
         things,  for a  compromise  on the level of funding  to reflect  URBI's
         current program needs. A definitive  settlement  agreement  between the
         Company and URBI has not yet been executed.


                  Approximately  130 hourly  employees at the Company's  acrylic
         sheet manufacturing  facility in Stamford,  Connecticut are represented
         by Teamsters  Local 191, which is affiliated  with the  Teamsters.  The
         Teamsters  declared a strike on July 11, 1994 on the  grounds  that the
         Company was allegedly bargaining in bad faith and called off the strike
         on December 10, 1994.  The Company and Teamsters  settled their dispute
         in June 1996.  The Company  agreed to settle the claim of the  striking
         employees  for  back  pay  following  the  release  of  claims  of such
         employees  in  exchange  for  a  payment  of   approximately   $808,000
         (inclusive  of  employment  taxes of  approximately  $58,000) in August
         1996. The settlement amount paid by the Company in connection with such
         matter was less than the accrued back pay at issue.

                  The Company is also involved in certain other  proceedings  in
         the ordinary course of its business  which, if determined  adversely to
         the Company would,  in the opinion of  management,  not have a material
         adverse effect on the Company or its operations.

                  In connection  with its  reorganization,  the Company  entered
         into a number of settlement  agreements,  including certain  agreements
         relating to environmental  matters.  See "Item 1. Business - History of
         the Company - Reorganization."

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

                  No matter was  submitted  during the fourth  quarter of Fiscal
         1996 to a vote of security holders, through the solicitation of proxies
         or otherwise.

Part II

Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters

                  Prior to the  effective  date of the  Plan of  Reorganization,
         none of the  Company's  common  stock,  par value  $.01 per share  (the
         "Common  Stock"),  was  issued,  and  consequently  there was no public
         market for the Common  Stock.  The Common Stock was admitted to trading
         on the Nasdaq National  Market System  ("Nasdaq") on September 28, 1992
         and trades under the symbol "UTCI." At the close of trading on November
         29, 1996,  the price per share of Common  Stock was $2.75.  The Plan of
         Reorganization  provides  for the  issuance of a maximum of  10,000,000
         shares of Common  Stock in  settlement  of claims and other  matters in
         connection  with the Bankruptcy  Proceedings.  As of November 29, 1996,
         9,861,986  of such shares of Common  Stock had been issued  pursuant to
         the  Plan  of  Reorganization  (including  shares  transferred  to  the
         Company's  treasury  as a  result  of the  election  by  certain  claim
         holders, as provided under the Plan of Reorganization,  to receive cash
         in lieu of Common Stock).  The remaining  shares are being held pending
         resolution of certain retiree medical claims.

                  As of November 29,  1996,  there were 966 holders of record of
         shares of Common Stock.

                  The  following  table sets forth the high and low sales  price
         per share of the  Company's  Common Stock as reported by Nasdaq for the
         indicated dates:
<PAGE>
<TABLE>
<CAPTION>
                                                   Fiscal Year Ended                          Fiscal Year Ended
                                                   September 29, 1996                          October 1, 1995
                                              ---------------------------                -------------------------
                     <S>                      <C>                  <C>                   <C>               <C>        
                     Quarter                   High                Low                    High              Low

                     First                    $3.750               $3.125                $4.000            $2.750
                     Second                   $3.563               $3.125                $4.250            $3.000
                     Third                    $4.438               $3.313                $3.625            $3.063
                     Fourth                   $3.750               $3.000                $4.500            $3.125
</TABLE>

                  The holders of record of shares of Common  Stock are  entitled
         to receive  dividends when and as declared by the Board of Directors of
         the Company,  provided that the Company has funds legally available for
         the  payment  of  such  dividends  and is not  otherwise  contractually
         restricted  from making payment  thereof.  The Company has not paid any
         cash dividends on the common stock in the last three fiscal years.  The
         Company's  ability to pay cash  dividends on Common Stock  currently is
         restricted  by the indenture in  connection  with the Company's  Senior
         Secured Notes. See "Note 10 to Financial Statements."

<PAGE>


Item 6.  Selected Financial Data

                  The  following  historical  financial  data  as of and for the
         fiscal years ended September 29, 1996,  October 1, 1995, and October 2,
         1994 have been derived from financial statements of the Company audited
         by Deloitte & Touche LLP and contained elsewhere in this Form 10-K. The
         selected historical  financial data presented below as of September 26,
         1993 and September 27, 1992 and for the fiscal year ended September 26,
         1993  have  been  derived  from  audited  financial  statements  of the
         Company. The selected historical financial data presented below for the
         fiscal year ended  September  27, 1992 have been  derived  from audited
         financial statements of the Predecessor Companies. All of the financial
         data set forth below should be read in  conjunction  with the Financial
         Statements and related notes and other financial  information contained
         in this Form 10-K.
<TABLE>
<CAPTION>
                                                                    SELECTED FINANCIAL DATA
                                           ------------------ ---------------- --------------- ----------------- ----------------
                                             September 29,      October 1,       October 2,     September 26,     September 27,
                                                 1996              1995           1994(1)            1993             1992
                                           ------------------ ---------------- --------------- ----------------- ----------------
                                                              (in thousands, except ratios, share and per share data)

 Operating Data:
<S>                                        <C>                <C>               <C>              <C>              <C>           
 Net sales..............................   $   209,348        $   214,951       $   197,536      $   173,361       $  165,565
 Depreciation and amortization (2)......         9,848              9,521             8,356            8,872            7,358
 (Loss) income before interest, reorgan- 
   ization items, income taxes and extra-
   ordinary item........................       (12,749)             9,549            15,414            6,462          (15,148)
 Interest expense(3)....................        (9,773)           (10,029)          (10,109)          (9,295)          (4,974)
 Reorganization items...................             -                  -                 -                -           52,520
 Income tax benefit (expense)...........         8,121                189            (2,217)             853           (5,085)
 (Loss) income before extraordinary
   item ................................       (14,401)              (291)            3,088           (1,980)          27,313
 Extraordinary gain.....................             -                363               727                -          127,842
 Net (loss) income......................       (14,401)                72             3,815           (1,980)         155,155
 (Loss) income per common share and common
 stock equivalent:
 Primary and fully diluted:                                                                                              (4)
 (Loss) income before extraordinary item   $     (1.09)      $      (0.02)      $      0.22      $     (0.20)
 Extraordinary gain.....................             -               0.02              0.05                -             N/A
                                           -----------       ------------       -----------      ----------- 
 Net (loss) income per share............   $     (1.09)      $       0.00       $      0.27      $     (0.20)
                                           ===========       ============       ===========      ===========  


 Average number of shares used in
 computation(5) ........................    13,167,466         14,507,605        14,317,298        9,971,552            (4)
                                            ==========         ==========        ==========        =========
 Balance Sheet Data:

 Cash and cash equivalents..............   $     2,023        $       291        $    4,249      $     3,683      $     1,047
 Working capital........................        29,148             31,292            34,454           25,174            7,723
 Total assets...........................       170,786            180,483           179,274          186,288          168,078
 Long-term debt (including current
 portion)...............................        72,775             76,763            79,371           89,953           69,904
 Shareholders' equity...................        43,499             57,669            57,533           53,936           54,400

<FN>
(1)      All fiscal years  presented are 52-week  periods except  for the fiscal
         year ended October 2, 1994 which was a 53-week fiscal year.

(2)      Excludes  amortization  of  reorganization  value in excess of  amounts
         allocable to identifiable assets of $765,000, $769,000,  $1,003,000 and
         $714,000 for the fiscal  years ended  September  29,  1996,  October 1,
         1995, October 2, 1994 and September 26, 1993,  respectively.  There was
         no corresponding charge for the fiscal year ended September 27, 1992.

(3)      Does not include $3,927,000 of contractual  interest on indebtedness of
         one of the  Predecessor  Companies for the fiscal year ended  September
         27,  1992 for which the Company  ceased  accruing  interest  during the
         Bankruptcy Proceedings.

(4)      Net (loss) income per common share based on the capital structures of
         the Predecessor Companies is not meaningful due to the debt discharge 
         and issuance of new common stock of the Company. See "Note 2 to Financial
         Statements."

(5)      See "Note 2 to Financial Statements".

</FN>
</TABLE>
<PAGE>

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

                  The  following   discussion  and  analysis  by  the  Company's
         management  should  be  read  in  conjunction  with  Item  6.  Selected
         Financial Data and Item 8. The Financial  Statements and  Supplementary
         Data appearing elsewhere in this Form 10-K.

         Results Of Operations

                  Comparison of Fiscal 1996 with Fiscal 1995

                  Net Sales. The Company's net sales decreased in Fiscal 1996 by
         approximately  three percent (3%) to $209.3 million from $215.0 million
         in Fiscal 1995.  While overall net sales  decreased  during the period,
         net sales in the Company's High Performance Plastics and Coated Fabrics
         Segments increased in the aggregate approximately three percent (3%) to
         $173.8 million in Fiscal 1996 from $168.3 million in Fiscal 1995.  Such
         increase was offset by decreased net sales in the  Specialty  Adhesives
         Segment  resulting  principally  from the  Ensolite  Sale,  the  prices
         received by the Company for its roofing  adhesives  and sealants  under
         the Firestone Agreement, which are generally lower than those which the
         Company had  historically  been able to obtain in the relevant  market,
         and the impact on the  commercial  roofing  sector  generally of severe
         winter weather conditions in the Northeastern  United States. See "Item
         1. Business - Business  Segments - Specialty  Adhesives" and "Note 3 to
         Financial Statements."

                  Net sales in the High Performance  Plastics Segment  increased
         in Fiscal 1996 by  approximately  three  percent (3%) to  approximately
         $115.1  million from $112.2  million in Fiscal 1995.  This increase was
         principally  due to  increased  sales  prices  and unit  volume  of the
         Royalite Division's  specialty  thermoplastic  sheet.  Decreases in the
         unit volume of Royalite's general purpose thermoplastic sheet partially
         offset  such  increase.  Management  believes  that this  shift in unit
         volume  resulted,  in part, from its efforts to focus on the production
         of  specialty  sheet  for  sale in  niche  markets  rather  than on the
         production of general  purpose sheet.  See "Item 1. Business - Business
         Segments - High Performance Plastics - Royalite Division." Increases in
         unit volume sales of both specialty and general  purpose  acrylic sheet
         by the  Polycast  Division  also  contributed  to such  increase in net
         sales.  These increases were partially offset by decreased sales prices
         for aerospace specialty acrylic sheet in response to market conditions.

                  The Coated  Fabrics  Segment's  net sales  increased in Fiscal
         1996  approximately  five  percent  (5%) to $58.7  million  from  $56.1
         million in Fiscal 1995. This increase resulted primarily from increased
         sales prices for, and unit volume of,  products sold to the  automotive
         industry.   Increased  sales  to  the  automotive   industry   resulted
         principally from the Company's  introduction of a new product line (see
         "Item 1. Business - Corporate Developments - Introduction of New Coated
         Fabric Product" and "- Business  Segments - Coated Fabrics")  qualified
         for use in the  manufacture  of  several  automobile  models by General
         Motors.  This increase was  partially  offset by decreased net sales of
         Naugahyde(R)  coated vinyl products resulting primarily from a delay in
         developing  and marketing  products in new styles and patterns which in
         Fiscal  1996 were  generally  in  greater  demand  than the  styles and
         patterns offered by the Company. In response to such market conditions,
         the Company employed a designer in 1996 in order to design and commence
         production of newer styles and patterns.

                  Net sales in the  Specialty  Adhesives  Segment  decreased  in
         Fiscal 1996 by  approximately  24 percent  (24%) to $35.5  million from
         $46.7 million in Fiscal 1995. This decrease  resulted  principally from
         the Ensolite Sale and the impact of severe winter weather conditions in
         the  Northeastern  United  States  on  the  commercial  roofing  sector
         generally.  See "Item 1.  Business  -  Business  Segments  -  Specialty
         Adhesives"  and "Note 3 to Financial  Statements."  In Fiscal 1996, net
         sales  of  Ensolite(R)  products  for  the  8  month  period  preceding
         consummation of the Ensolite Sale on June 10, 1996, were  approximately
         $17.2 million as compared to net sales of  approximately  $24.6 million
         during  Fiscal  1995.  Net  sales  of  liquid  adhesives  and  sealants
         decreased  approximately  17 percent  (17%) from  Fiscal 1995 to Fiscal
         1996.

                  (Loss) Income Before Interest,  Reorganization  Items,  Income
         Taxes and  Extraordinary  Item. In Fiscal 1996, the Company  incurred a
         loss  before   interest,   reorganization   items,   income  taxes  and
         extraordinary  item of $12.7  million  as  compared  to  income  before
         interest,  reorganization items, income taxes and extraordinary item of
         $9.5 million for Fiscal 1995.  This loss  resulted  from factors  which
         impacted all of the Company's  segments.  The  performance  of the High
         Performance  Plastics  Segment was impacted  principally  by a back pay
         labor  settlement  at the Polycast  Division and costs of  implementing
         quality assurance programs and improved manufacturing efficiency at the
         Royalite  Division.   In  the  Coated  Fabrics  Segment,   the  Company
         established  reserves totalling  approximately $12.5 million related to
         its decision to exit the Port Clinton, Ohio automotive operations.  See
         Item  1.  Business  -  Corporate  Developments  -  Disposition  of Port
         Clinton,   Ohio  Automotive   Operation"  and  "Note  15  to  Financial
         Statements".  In  addition  the  Company  suffered  incremental  losses
         resulting primarily from production problems encountered as a result of
         defective  adhesion materials  purchased from one of its suppliers.  In
         the Specialty  Adhesives  Segment,  performance was adversely  affected
         principally  by the  Ensolite  Sale  and the  impact  of the  Firestone
         Agreement  for all of Fiscal  1996.  See "Item 1.  Business  - Business
         Segments - Specialty Adhesives - General."

                  Income before interest, reorganization items, income taxes and
         extraordinary item for the High Performance  Plastics Segment decreased
         in Fiscal 1996 to $7.0  million  from $13.0  million  approximately  in
         Fiscal 1995 primarily as a result of higher MMA costs on average and an
         $808,000 charge incurred for estimated back pay and retraining costs in
         connection  with the settlement of a strike at the Polycast  Division's
         Stamford, Connecticut facility and a temporary decline in manufacturing
         efficiency  at such  facility  during  Fiscal  1996 as a result  of the
         required   retraining  of  employees  returning  from  the  strike.  In
         addition,  the Royalite  Division  incurred  approximately  $560,000 in
         consulting fees for production and  reengineering  studies  relating to
         its Warsaw, Indiana facility and certain additional costs in connection
         with the  implementation  of improved quality  standards,  training and
         support  programs  for  employees  and a more  efficient  manufacturing
         process at such facility.

                  The   Coated   Fabrics   Segment's   loss   before   interest,
         reorganization  items, income taxes and extraordinary item increased in
         Fiscal 1996 to approximately $19.0 million from a loss of approximately
         $4.9  million in Fiscal  1995.  In Fiscal 1996 the Company  established
         reserves totalling  approximately $12.5 million related to its decision
         to exit the Port Clinton,  Ohio  automotive  operation.  The automotive
         products  business  incurred  operating  losses of  approximately  $7.6
         million  (before  consideration  of reserves  totalling  $12.5  million
         described   above)  and  $5.5   million   in  Fiscal   1996  and  1995,
         respectively.  In addition, the increased losss resulted from decreased
         sales of instrument  panels for a transplant  automotive  customer as a
         result of defective adhesion materials provided by one of the Company's
         suppliers and the continued  incurrence of fixed costs  associated with
         the  operation  of such  facility at less than 50 percent  (50%) of its
         capacity as a result of the  decreased  sales caused by such  defective
         adhesion.  While  the  production  problems  caused  by such  defective
         materials have been  satisfactorily  resolved,  the Port Clinton,  Ohio
         facility has continued to operate at  significantly  reduced  levels as
         the Company sought to recover the segment's lost  automotive  sales and
         to expand the segment's sales in the automotive sector generally.

                  Income before interest, reorganization items, income taxes and
         extraordinary  item for the Specialty  Adhesives  Segment  decreased in
         Fiscal 1996 to $70,000 from  approximately $2.1 million in Fiscal 1995.
         This decrease resulted from decreased sales resulting  principally from
         the effect of the Ensolite Sale, the impact of reduced sales prices for
         roofing  adhesives under the Firestone  Agreement and the effect on the
         EPDM roofing  adhesives  market of severe winter weather  conditions in
         the  Northeastern  United States which caused delays in the  commercial
         roofing  industry  and  increased  costs  at the  Company's  Mishawaka,
         Indiana  manufacturing  facility  resulting  from general  energy price
         increases.  Energy prices represent a significant cost of operating the
         Mishawaka,  Indiana  facility.  Due to its configuration and applicable
         fire and safety regulations, the entire facility must be heated and lit
         even though the Company's  operations occupy less than 50 percent (50%)
         of the  facility.  The  Specialty  Adhesives  Segment will relocate its
         operations  from the  Mishawaka,  Indiana  facility to its  facility in
         South Bend,  Indiana  during the first six months of Fiscal  1997.  See
         "Item 2. Properties,  Note 2" and "Item 1. Business - Business Segments
         - Specialty Adhesives - Manufacturing Facilities." The effects of these
         items were  partially  offset by reduced  costs of raw materials and an
         approximately  $2.1 million gain from the Ensolite  Sale. The gain from
         the  Ensolite  Sale is net of an  approximately  $4.3  million  reserve
         established  in Fiscal 1996 for fixed asset  write-offs,  severance and
         incentive packages for Ensolite employees to be terminated and facility
         clean-up  costs. In prior years,  the Company  established a relocation
         reserve  for  its  planned  restructuring  and  move  of the  Specialty
         Adhesives Segment.  Management believes that such reserves are adequate
         to cover the costs to be incurred in connection  with the relocation of
         the  Specialty  Adhesives  Segments  to the new  plant at  South  Bend,
         Indiana.  See  "Item  1.  Business  -  Business  Segments  -  Specialty
         Adhesives - General."

                  Amortization  of  reorganization  value in excess  of  amounts
         allocable to  identifiable  assets in Fiscal 1996 decreased to $765,000
         from $769,000 in Fiscal 1995. This decrease  results from the write-off
         of the assets transferred in connection with the Ensolite Sale.

                  Approximately  $73,000 of miscellaneous  income in Fiscal 1995
         was not allocated to any  segment of the Company's business. There were
         no such unallocated amounts in Fiscal 1996.

                  Interest Expense. Interest expense in Fiscal 1996 decreased to
         approximately  $9.8  million  from $10.0  million in Fiscal 1995 due to
         interest  income  earned  by the  Company  on the $5.0  million,  11.75
         percent (11.75%) note issued to the Company by RBX, Inc. as part of the
         purchase  price of the Ensolite  Sale. See "Item 1. Business - Business
         Segments -  Specialty  Adhesives  - General"  and "Note 3 to  Financial
         Statements."

                  Income  Tax  Benefit.  Income tax  benefit in Fiscal  1996 was
         approximately  $8.1 million as compared to $189,000 in Fiscal 1995. The
         provisions  for income  tax  benefit  were  calculated  by the  Company
         through use of the estimated  income tax rates based upon its projected
         annualized income.

                  Extraordinary    Gain   on   the   Extinguishment   of   Debt.
         Extraordinary  gain on the  extinguishment  of debt for Fiscal 1995 was
         $363,000.  This amount represents a gain recognized by the Company as a
         result of open market purchases of  approximately  $7.5 million of face
         amount  of  its  Senior   Secured  Notes  (see  "Note  8  to  Financial
         Statements") net of the write-off of applicable debt issuance costs and
         unamortized  debt  discount  associated   therewith  and  approximately
         $310,000 of income taxes.

                  Comparison of Fiscal 1995 With Fiscal 1994

                  Net Sales. The Company's net sales increased in Fiscal 1995 by
         approximately  nine percent (9%) to  approximately  $215.0 million from
         approximately  $197.5  million in Fiscal 1994, as a result of increased
         net sales in each of the Company's three business segments. Fiscal 1995
         contained 52 weeks of operations  as compared to 53 weeks of operations
         in Fiscal 1994.

                  Net sales by the High Performance  Plastics Segment  increased
         in Fiscal  1995 by  approximately  six  percent  (6%) to  approximately
         $112.2 million from  approximately  $105.5 million in Fiscal 1994. This
         increase  was  primarily  due  to  increased   sales  prices  for  both
         Royalite(R)  thermoplastic  products and Polycast(R)  acrylic products.
         These  increases  were  partially  offset by  decreased  unit volume of
         thermoplastic  products  generally.  Total unit volume for the Royalite
         Division decreased ten percent (10%), principally as a result of Fiscal
         1995 decreases in sales of general purpose  thermoplastic sheet and, to
         a lesser extent, of specialty  thermoplastic sheet. Overall unit volume
         of sales of acrylic  products in Fiscal 1995 was  comparable  to Fiscal
         1994.

                  The Coated  Fabrics  Segment's  net sales  increased in Fiscal
         1995 approximately 14 percent (14%) to approximately $56.1 million from
         approximately  $49.2  million in Fiscal 1994,  as a result of increased
         sales  prices  for  both  Naugahyde(R)  vinyl  coated  fabric  products
         generally and products sold to the automotive  industry.  This increase
         was offset by decreased unit volume of Naugahyde(R) products generally.
         Overall, the segment's unit volume in Fiscal 1995 increased six percent
         (6%) compared to Fiscal 1994. Unit volume increased in products sold to
         the  automotive  industry as a result of sales of  laminated  composite
         products produced using new technology introduced at the Company's Port
         Clinton,   Ohio  facility  pursuant  to  the  technical   collaberation
         agreement  with a  Japanese  manufacturer.  See  "Item  1.  Business  -
         Business  Segment  - Coated  Fabrics  -  General"  For  example,  Honda
         commenced making purchase of such laminated composites from the Company
         in 1995.

                  Net sales of the  Specialty  Adhesives  Segment  increased  in
         Fiscal 1995 by  approximately  nine percent (9%) to $46.7  million from
         approximately  $42.8 million  in Fiscal 1994.  This  increase  resulted
         particularly from an increase in the segment's total unit volume.  Such
         increase in unit  volume is  attributable  principally  to a 27 percent
         (27%) increase in unit volume of sales of liquid adhesives and sealants
         for the EPDM roofing market as a result of sales to Firestone  pursuant
         to the Firestone  Agreement.  See "Item 1. Business - Business Segments
         Specialty  Adhesives."  The increase in total unit volume was partially
         offset by decreased sales prices of liquid adhesives and sealants under
         the Firestone Agreement. Also contributing to the increase in net sales
         were  increases  of unit  volume and sales  prices of  Ensolite's  foam
         products.  Ensolite unit volume  increased  four percent (4%) in Fiscal
         1995.

                  (Loss) Income Before Interest,  Reorganization  Items,  Income
         Taxes and Extraordinary  Item.  Income before interest,  reorganization
         items,  income  taxes  and  extraordinary  item  for  Fiscal  1995  was
         approximately $9.5 million compared to approximately  $15.4 million for
         Fiscal 1994.  This  decrease  was  primarily  due to gains  recorded in
         Fiscal 1994 of  approximately  $6.8  million and $1.2  million from the
         recovery of pension expenses incurred in previous years pursuant to the
         UPAC Settlement and from insurance settlements, respectively. See "Item
         3.  Litigation."  In  addition,  after  refining  its  estimate  of the
         restructuring  reserve  required in connection  with the  relocation of
         certain   manufacturing   operations  within  its  Mishawaka,   Indiana
         facility,  the Company, in Fiscal 1994, reduced the reserve recorded in
         a prior period by approximately $1.8 million to reflect the anticipated
         reduced costs of such relocation.  The original relocation plan assumed
         these  operations  would be moved to a new  facility.  In Fiscal  1994,
         management  developed a plan to  reconfigure  the existing  facility to
         improve  efficiencies,  and, therefore,  reduced the reserve to reflect
         the revised plan. Excluding these nonrecurring gains in Fiscal 1994 and
         a $70,000 nonrecurring gain in Fiscal 1995, operating income would have
         increased  $3.8  million.  This  increase is primarily due to increased
         sales and improved  margins which were partially  offset by an increase
         in excess  facility  expenses at the  Company's  facility in Mishawaka,
         Indiana.  As a result of the present  configuration  of such plant, the
         Company  incurs the cost of heating and  lighting  the entire  facility
         even  though the  Company  occupies  less than 50 percent  (50%) of the
         facility.

                  The  High   Performance   Plastics   Segment's  income  before
         interest, reorganization items, income taxes and extraordinary item for
         Fiscal 1995 increased to approximately  $13.0 million from $9.2 million
         in Fiscal 1994. This increase was principally due to an increase in net
         sales of and  improved  margins  on,  Royalite  products  and  Polycast
         products. During the third quarter of Fiscal 1994, the Teamsters, which
         represent  the hourly wage workers at the Acrylic  Products  Division's
         Stamford,   Connecticut   facility,   went  on  strike.  As  a  result,
         productivity  at such facility  decreased,  causing  reduced margins on
         acrylic products produced at such manufacturing facility. During Fiscal
         1995, the division made  significant  improvements in productivity  and
         produced acrylic sheet at pre-strike  productivity  levels.  The strike
         was settled during Fiscal 1996. See "Item 3. Litigation."

                  The   Coated   Fabrics   Segment's   loss   before   interest,
         reorganization  items,  income taxes and extraordinary  item marginally
         increased  in  Fiscal  1995 to  approximately  $4.9  million  from $4.8
         million in Fiscal 1994.  Although such  segment's net sales  increased,
         such  increase  was offset by  decreased  margins  caused by  increased
         production  costs  resulting  from  increased  raw  material  costs and
         production problems  encountered in the manufacturing of certain coated
         fabrics for an  automotive  customer  stemming  from certain  equipment
         failure at the  Company's  Port Clinton,  Ohio facility  which has been
         remedied.

                  The Specialty  Adhesives  Segment's  income  before  interest,
         reorganization  items, income taxes and extraordinary item decreased in
         Fiscal 1995 to  approximately  $2.1 million from $4.1 million in Fiscal
         1994.  The  effect of the  increase  in net sales was  offset by margin
         decreases  caused  by  reduced  sales  prices  for  product  under  the
         Firestone  Agreement.  See "Item 1.  Business  -  Business  Segments  -
         Specialty  Adhesives - Marketing and Competition." Also contributing to
         the  decrease  was an  increase  in certain  excess  facility  expenses
         associated  with the  operation  of the  Company's  Mishawaka,  Indiana
         leased  facility.  See "Item 2.  Properties"  and "Item 1.  Business  -
         Business Segments - Specialty Adhesives - Manufacturing Facilities." In
         previous  years,  the excess  facility  costs were  charged to reserves
         established in connection with the Plan of Reorganization. See "Item 1.
         Business - History of the Company." In addition, during Fiscal 1994 the
         restructuring   reserve  recorded  in  prior  periods  was  reduced  by
         approximately  $1.8 million as the Company  refined its estimate of the
         costs   associated   with   relocating   the  segment's   manufacturing
         operations.

                  Amortization  of  reorganization  value in excess  of  amounts
         allocable to  identifiable  assets in Fiscal 1995 decreased to $769,000
         from  approximately $1.0 million in Fiscal 1994. The decrease is due to
         adjustments made to reorganization value in excess of amounts allocable
         to identifiable assets in Fiscal 1994.

                  Not  allocated to any of the  Company's  business  segments in
         Fiscal 1995 was approximately  $70,000  of miscellaneous  income. Also,
         the gains of  approximately  $70,000  and  approximately  $1.2  million
         resulting  from the  settlement  of certain  environmental  claims with
         insurance  companies  recorded  during  Fiscal  1995 and  Fiscal  1994,
         respectively,  and the gain of approximately $6.8 million from the UPAC
         Settlement recorded during Fiscal 1994 were unallocated to any segment.

                  Interest  Expense.  Interest expense in Fiscal 1995 marginally
         decreased  to $10.0  million from $10.1  million in Fiscal  1994.  This
         decrease resulted  primarily from reduced total interest expense on the
         Company's Senior Secured Notes as a result of the Company's open market
         purchases of $7.5 million of face amount of Senior Secured Notes during
         Fiscal 1995.  See "Note 8 to Financial  Statements."  This decrease was
         partially  offset by increased  interest  expense on capitalized  lease
         obligations incurred in the last two quarters of Fiscal 1994 and during
         Fiscal 1995 and increased borrowings by the Company under its revolving
         line of credit  agreement  during the last two quarters of Fiscal 1995.
         See "Note 8 to Financial Statements."

                  Income Tax  Benefit  (Expense).  Income tax  benefit in Fiscal
         1995 was $189,000 as compared to an income tax expense of approximately
         $2.2  million in Fiscal  1994.  The  provisions  for income tax benefit
         (expense) were calculated through the use of estimated income tax rates
         based on annualized income.

                  Extraordinary    Gain   on   the   Extinguishment   of   Debt.
         Extraordinary  gain on the  extinguishment  of debt in Fiscal  1995 was
         $363,000. This amount represents the gain recognized as a result of the
         Company's  acquisition of approximately  $7.5 million of face amount of
         its  Senior  Secured  Notes net of the  write-off  of  applicable  debt
         issuance costs and unamortized debt discount and approximately $310,000
         of income taxes.  Extraordinary  gain on the extinguishment of debt for
         Fiscal 1994 was $727,000.  This amount  represents a gain in the amount
         of $2.2 million on the early retirement of a $10 million note issued by
         the  Company  pursuant  to the  Reorganization  Plan and payable to the
         PBGC, less applicable professional fees, expenses and income taxes. See
         "Note 8 to Financial Statements."

                  Liquidity and Capital Resources

                  For Fiscal 1996, the Company's  operations used  approximately
         $3.8 million of cash as compared to approximately $6.4 million provided
         during Fiscal 1995. This increase in cash used in operations for Fiscal
         1996  resulted  primarily  from  increased net losses,  trade  accounts
         receivable and  inventories  and was partially  offset by the timing of
         payments of trade accounts  payable and increases in other  liabilities
         resulting  from the  establishment  of reserves in connection  with the
         Ensolite Sale.

                  Net cash  provided by investing  activities  of the Company in
         Fiscal   1996  was   approximately   $10.5   million  as   compared  to
         approximately $7.4 million used during Fiscal 1995. Approximately $19.6
         million of such cash was provided from the Ensolite  Sale.  The primary
         use of  cash  during  Fiscal  1996  and  Fiscal  1995  was to  purchase
         property,  plant and  equipment.  The Company used  approximately  $1.8
         million to purchase the facility  located in South Bend,  Indiana.  See
         "Item 1. Business - Corporate  Developments." The Company does not have
         any  significant  specific  commitments  for the  purchase of property,
         plant and equipment.

                  Net cash used in financing  activities was $4.9 million during
         Fiscal 1996 as  compared  to  approximately  $3.0  million  used during
         Fiscal 1995.  Cash was used during  Fiscal 1996 to repay the  Company's
         obligation  under  its  revolving  credit  agreement.  See  "Note  8 to
         Financial  Statements."  At September 29, 1996 the Company did not have
         any borrowings  outstanding under this agreement.  The principal use of
         cash   during   Fiscal   1995  was  to  purchase  on  the  open  market
         approximately  $7.5  million  of face  value  of the  Company's  Senior
         Secured Notes. See "Note 8 to Financial Statements."

                  The Company on September  29,  1996,  had  approximately  $2.0
         million  in cash and cash  equivalents  as  compared  to  approximately
         $291,000 at October 1, 1995.  Working capital at September 29, 1996 was
         approximately  $29.1 million compared to approximately $31.3 million at
         October 1, 1995. The Company had short-term borrowings of approximately
         $3.8 million under a $15 million  revolving credit agreement at October
         1,  1995.  The  Company  had no  outstanding  borrowings  under its $25
         million  revolving  credit agreement at September 29, 1996. See "Note 8
         to Financial Statements."

                  The Company  believes  that cash from its  operations  and its
         ability to borrow under the revolving  credit facility  mentioned above
         provide it  sufficient  liquidity  to  finance  its  existing  level of
         operations and meet its debt service obligations. However, there can be
         no  assurance  that the  Company's  operations  together  with  amounts
         available  under the  revolving  credit  facility  will  continue to be
         sufficient  to finance its existing  level of  operations  and meet its
         debt  service  obligations.  The  Company's  ability  to meet  its debt
         service and other obligations depends on its future performance,  which
         in turn, is subject to general  economic  conditions  and to financial,
         business and other  factors,  including  factors  beyond the  Company's
         control. If the Company is unable to generate sufficient cash flow from
         operations,  it may be  required to  refinance  all or a portion of its
         existing debt or obtain additional financing. There can be no assurance
         that the Company will be able to obtain such  refinancing or additional
         financing.

                  Effects of Inflation

                  The  markets  in  which  the  Company   sells   products   are
         competitive.  In particular,  the Company has encountered in connection
         with its sales of coated  fabrics to the  automotive  industry  and its
         sales of acrylics to the aerospace  industry,  effective  resistance to
         price increases  generally.  Thus, in an  inflationary  environment the
         Company may not in all  instances  be able to pass through to consumers
         general price increases in which event the Company's  operations may be
         materially  impacted if such conditions were to occur.  The Company has
         not in the past been adversely impacted by general price inflation.

Item 8.  Financial Statements and Supplementary Data

                  See Index to Financial Statements on Page F-1.

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

                  None.
<PAGE>
Part III

Item 10. Directors and Executive Officers of the Registrant

Directors of the Company
<TABLE>
<CAPTION>
====================================================================================================================
NAME                           AGE                    POSITION                           DIRECTOR SINCE
====================================================================================================================
<S>                            <C>                   <C>                                     <C>                               
Peter C.B. Bynoe                45                    Director                                1992
--------------------------------------------------------------------------------------------------------------------
Howard R. Curd                  57          Chairman of the Board, Chief                      1992
                                           Executive Officer and Director
--------------------------------------------------------------------------------------------------------------------
Richard D. Kimbel               52                    Director                                1992
--------------------------------------------------------------------------------------------------------------------
Curtis L. Mack                  54                    Director                                1992
--------------------------------------------------------------------------------------------------------------------
Roland H. Meyer                 69                    Director                                1992
--------------------------------------------------------------------------------------------------------------------
John A. Porter                  53                    Director                                1994
--------------------------------------------------------------------------------------------------------------------
Thomas J. Russell               65                    Director                                1994
--------------------------------------------------------------------------------------------------------------------
Robert L. Soran                 53       President, Chief Operating Officer                   1993
                                                    and Director
--------------------------------------------------------------------------------------------------------------------
William J. Morgan (1)           42              Nominee for Director                            - 
--------------------------------------------------------------------------------------------------------------------
<FN>
(1)  While Mr. Morgan has been nominated by the holder of the Series B Preferred
     Stock, in view of the fact that the Series B Preferred Stock is expected to
     be redeemed on or about February 3, 1997, Mr. Morgan  will not be  included
     on the slate of nominees for election as a director.
</FN>
</TABLE>

         Peter C.B. Bynoe is Chairman of the Audit Committee and a member of the
Executive  Committee of the Board of Directors.  Since 1982,  Mr. Bynoe has been
the Chairman and Chief Executive  Officer of Telemat Ltd., a project  management
and financial services  consulting firm he founded.  He is also a partner in the
Chicago  law firm of  Rudnick & Wolfe.  Mr.  Bynoe also  formerly  served as the
Executive Director of the Illinois Sports Facilities Authority,  a joint venture
of the City of Chicago and the State of Illinois created to build a new Comiskey
Park for the Chicago White Sox. Mr. Bynoe is also a director of JG Industries, a
retailing  holding  company.  Mr.  Bynoe was  formerly the co-owner and Managing
General Partner of the National  Basketball  Association's  Denver Nuggets.  Mr.
Bynoe is also an Overseer of Harvard University.

         Howard R. Curd was appointed Chief Executive  Officer of the Company as
of September 21, 1992.  Mr. Curd is also a member of the Executive  Committee of
the Board of Directors.  Mr. Curd was Chief Executive  Officer,  President (from
September 1991),  Chairman of the Board and a director of The Jesup Group, Inc.,
the parent of the Predecessor  Companies ("Jesup"),  from 1981 until March 1993.

         Richard D. Kimbel is a member of the Audit,  Compensation,  Trust Funds
and Executive Committees of the Board of Directors. Mr. Kimbel had been employed
as an engineer by certain of the Predecessor Companies and the Company from 1962
until June 1994,  when he became Manager of Human Resources for the Ensolite and
Uniroyal Adhesives and Sealants divisions of the Company.  From 1983 to 1986 and
from 1989 to June 1994,  Mr. Kimbel was President of the United Rubber  Workers,
Local 65. Mr.  Kimbel also served as an  executive  board  officer of the United
Rubber Workers International from 1984 to 1987.

         Curtis L. Mack is Chairman of the Trust Funds Committee and a member of
the  Executive  Committee  of the Board of  Directors.  Mr.  Mack is an attorney
specializing  in labor law. Mr. Mack is  currently a partner in Mack,  Williams,
Hygood & McLean, a law firm based in Atlanta,  Georgia.  Mr. Mack was formerly a
partner in Mack & Bernstein, a law firm based in Atlanta,  Georgia, from 1983 to
1994.

         Roland H.  Meyer is  Chairman  of the  Compensation  Committee  and the
Option  Committee  and a  member  of the  Executive  Committee  of the  Board of
Directors. Mr. Meyer was elected Vice Chairman of American National Can Company,
a leading manufacturer of metal, glass and plastic packaging products,  in 1987.
He was elected  Chief  Operating  Officer of American  National  Can in 1988 and
President in 1989. Mr. Meyer served as President and Chief Operating  Officer of
American  National Can until his retirement in June 1992. Mr. Meyer is currently
a director of American National Can, a position he has held since 1985, and is a
member of American National Can's Executive Committee. Mr. Meyer also served for
various periods as a director of certain  subsidiaries of American National Can.
Mr.  Meyer has also served as a director and Vice  Chairman of First  Commercial
Bank of Tampa since 1989.

         John A. Porter is a member of the Audit and Executive Committees of the
Board of  Directors.  Mr.  Porter is Vice  Chairman of the Board of Directors of
LDDS Worldcom, Inc., a major long distance telephone carrier. He was Chairman of
the Board of Directors of LDDS Communications, Inc. ("LDDS") from 1988 until its
merger with Metromedia  Communications in 1993. He served as President and Chief
Executive  Officer of Telephone  Management  Corporation  from 1987 until it was
acquired by LDDS in August 1988. Mr. Porter also serves as Chairman of the Board
of Directors and Chief Executive Officer of Phillips &  Brooks/Gladwin,  Inc., a
manufacturer  of  pay  telephone   enclosures  and  equipment;   a  director  of
Intelligent  Electronics Inc., a distributor of computer products;  and Chairman
of the Board of Directors and Chief  Executive  Officer of  Industrial  Electric
Manufacturing Inc.

         Thomas J. Russell is a member of the Compensation,  Option, Trust Funds
and Executive Committees of the Board of Directors. Dr. Russell currently serves
as a  director  of  Adidas  AG,  a  German-based  international  sporting  goods
manufacturer;  Cordiant PLC, a U.K.-based advertising  conglomerate;  and Emcore
Corporation,  a U.S.-based  international compound  semiconductor  equipment and
material  manufacturer.  He founded  Bio/Dynamics,  Inc. in 1961 and managed the
company until its  acquisition  by IMS  International,  Inc. in 1973,  following
which he served as president of that company's Life Sciences Division. From 1984
he  served  as a  director  and  subsequently  as  chairman  of  IMS  until  its
acquisition  by Dunn &  Bradstreet  in  1988.  From  1988 to 1992 he  served  as
chairman of Applied Bioscience International,  Inc., and served as a director of
that company until 1996.

         Robert L. Soran was elected  President and Chief  Operating  Officer of
the  Company  as of  September  21,  1992.  Mr.  Soran is also a  member  of the
Executive  Committee  of the  Board of  Directors.  Mr.  Soran was  employed  by
Plastics Support Corp.  ("PSC"),  a Predecessor  Company,  from February 1992 to
September  27, 1992.  From  September  1991 to February  1992,  Mr. Soran was an
independent  consultant.  Mr. Soran was President and Chief Executive Officer of
Tropicana  Products Inc., a fruit beverage  processor  ("Tropicana"),  from 1986
until  September  1991,  and served as Executive Vice President of Operations of
Tropicana in 1985 and 1986.

         William J. Morgan is the President,  a director and a major shareholder
of the Pacholder Associates,  Inc. ("PAI"), a registered investment advisor. Mr.
Morgan  has been  nominated  by the PBGC as  holder  of 20  shares  of  Series B
Preferred  Stock of the  Company  for  election as a director at the 1997 Annual
Meeting of Stockholders.  Mr. Morgan has been with PAI since 1984. Pursuant to a
contract  dated  April 13,  1994,  between  PAI and the  PBGC,  PAI has full and
complete investment discretion with respect to the shares of the Company's stock
owned by the PBGC,  including  the power to vote such  shares.  Mr.  Morgan also
serves on the Board of Directors of the following  public  companies:  ICO, Inc.
(an oil field service company),  USF&G Pacholder Fund, Inc. (a closed and mutual
fund),  Duckwall - Alco Stores, Inc. (a discount retail chain), Kaiser Ventures,
Inc. (an environmental resources company) and PremiumWear, Inc. (a men's apparel
designer  and   distributor).   The  Company  has  not  reviewed  Mr.   Morgan's
qualifications.  While Mr. Morgan has been nominated by the holder of the Series
B  Preferred  Stock,  in view of the fact that the Series B  Preferred  Stock is
expected  to be redeemed on or about  February 3, 1997,  Mr.  Morgan will not be
included on the slate of nominees for election as a director.

Executive Officers of the Company

         Officers of the Company are appointed to serve until the meeting of the
Board of Directors  following the next annual meeting of  stockholders  or until
their respective successors have been duly elected and qualified. Any officer of
the Company may be removed,  pursuant to the Company's By-Laws,  with or without
cause, by a vote of a majority of the entire Board of Directors.  Any officer of
the  Company may resign at any time upon notice to the  Company.  The  following
table sets forth the name,  age and  position of each  executive  officer of the
Company:
<TABLE>
<CAPTION>
====================================================================================================================
                     NAME                               AGE                            POSITION
====================================================================================================================
<S>                                                    <C>         <C>                                                      
Howard R. Curd                                          57          Chairman of the Board of Directors and Chief
                                                                    Executive Officer
--------------------------------------------------------------------------------------------------------------------
Robert L. Soran                                         53          Director, President and Chief Operating Officer
--------------------------------------------------------------------------------------------------------------------
George J. Zulanas, Jr.                                  52         Executive Vice President, Chief Financial 
                                                                   Officer and Treasurer
--------------------------------------------------------------------------------------------------------------------
Oliver J. Janney                                        50          Vice President, General Counsel and Secretary
--------------------------------------------------------------------------------------------------------------------
Martin J. Gutfreund                                     55          Vice President, Human Resources and
                                                                    Administration
--------------------------------------------------------------------------------------------------------------------
</TABLE>
 
         The business  experience of Messrs.  Curd and Soran is described  above
under "Election of Directors - Nominees for Director".

         George J.  Zulanas,  Jr. was elected Vice  President,  Chief  Financial
Officer and  Treasurer  of the Company as of  September  21, 1992 and  appointed
Executive  Vice President in December 1996. Mr. Zulanas was employed by PSC from
February 1992 to September 27, 1992.  From  September 1991 to February 1992, Mr.
Zulanas was an  independent  consultant.  Mr.  Zulanas  served as Executive Vice
President of Tropicana from 1986 until September 1991.

         Oliver J.  Janney was  elected  Vice  President,  General  Counsel  and
Secretary of the Company as of September  21, 1992.  Mr.  Janney  served as Vice
President and General Counsel of Jesup from October 1990 until March 1993 and as
Secretary of Jesup from November 1990 until March 1993. From 1985 to 1990 he was
General Counsel and Secretary of RKO General, Inc., a wholly-owned subsidiary of
GenCorp Inc., engaged primarily in broadcasting,  soft drink bottling and motion
picture production and distribution.

         Martin J.  Gutfreund was elected Vice  President,  Human  Resources and
Administration as of September 21, 1992. Mr. Gutfreund served as Vice President,
Government  Affairs of Tropicana from November 1991 until August 1992. From 1985
to  November  1991 Mr.  Gutfreund  was Vice  President  of Human  Resources  and
Administration at Tropicana.

         Based on a review of the copies of reports of ownership  and changes in
ownership filed with the S.E.C. by officers,  directors and persons who own more
than ten  percent of a  registered  class of the  Company's  equity  securities,
furnished  to the  Company,  the Company  believes  that during  fiscal 1996 its
officers, directors and greater than ten-percent beneficial owners complied with
all  applicable  Section 16(a) filing  requirements,  except that Mr. Richard D.
Kimbel   reported  one   acquisition  of  an  option  to  acquire  Common  Stock
approximately five months late.

Item 11. Executive Compensation

Compensation of Directors

         Each  director who is not an officer of the Company  receives an annual
fee (the "Annual Retainer Fee") of $18,000,  plus $1,000 for each meeting of the
Board of Directors attended, $2,500 per annum for service on a committee (except
the chairman of a committee,  who receives  $3,000 per annum) and $500 to $1,000
for each  committee  meeting  attended,  depending  upon  whether the  committee
meeting  is held in  conjunction  with a  meeting  of the  Board  of  Directors,
independent  of a meeting of the Board of Directors or by  teleconference.  Each
director  receives  reimbursement  of his expenses  incurred in  attending  each
meeting of the Board of Directors or of a committee.

         Directors  who are not officers of the Company may elect to apply up to
the entire amount of their Annual  Retainer Fees and committee  retainer fees in
exchange for options to purchase Common Stock pursuant to the 1992 Non-Qualified
Stock Option Plan (the "1992  Non-Qualified  Plan"). The 1992 Non-Qualified Plan
provides that Common Stock  underlying  each option issued pursuant to such Plan
may be purchased for 100% of the market price of the Common Stock on the date of
grant.  Although the amount of the Annual Retainer Fee is initially paid for the
option,  such amount also constitutes 50% of the  consideration  payable for the
underlying Common Stock. When the Director  exercises the option, the additional
50% of the  purchase  price  of the  Common  Stock  must  be paid in cash by the
Director.  If the Director  does not timely  exercise the option to purchase the
Common  Stock,  the Annual  Retainer  Fee  applied to acquire the option will be
forfeited  by the  Director.  In  addition,  each  director  of the  Company has
received options to purchase shares of Common Stock under the 1995 Non-Qualified
Stock Option Plan.

Compensation Committee Interlocks and Insider Participation

         Mr. Kimbel, who serves as a member of the Compensation  Committee,  has
been  employed by the Company and  certain of its  predecessor  companies  since
1962. Mr. Kimbel had been employed as an engineer by certain of the  Predecessor
Companies and the Company from 1962 until June 1994, when he assumed his present
position as Manager of Human  Resources for the Ensolite and Uniroyal  Adhesives
and Sealants divisions of the Company.
         No executive officer of the Company served on the board of directors or
compensation  committee of any entity which has one or more  executive  officers
serving  as a  member  of the  Company's  Board  of  Directors  or  Compensation
Committee.

Compensation of Executive Officers

     Report of the Compensation Committee

         Role of the Compensation Committee

              The  Compensation  Committee is responsible for administering  the
         compensation  program for the executive  officers of the Company.

         Compensation Philosophy

              The  Company's   compensation   philosophy  with  respect  to  the
         compensation  of  the  Company's  executive  officers  consists  of the
         following core principles:

                  o   Base salary should be  competitive in order to attract and
                      retain well-qualified executives.
                  o   Incentive  compensation  should  be  directly  related  to
                      achieving   specified   levels  of   corporate   financial
                      performance. A significant part of the executive officers'
                      compensation  should be at risk, based upon the success of
                      the Company.
                  o   Long-term stock ownership of the Company's Common Stock by
                      the Company's  executive  officers creates a valuable link
                      between the Company's  management and stockholders.  Stock
                      ownership gives management  strong  incentives to properly
                      balance the need for  short-term  profits  with  long-term
                      goals and objectives and to develop  strategies that build
                      and sustain stockholder returns.

     Executive Compensation Program

     The Company's  executive  compensation  program  contains three  components
which are intended to reflect the Company's compensation philosophy.

         Base  Salary.  Base  salary and  adjustments  to base salary are set by
employment  agreements with Messrs. Curd,  Soran,  Zulanas and Janney.  The base
salaries  for  executive  officers  are  targeted at the upper  quartiles of the
competitive  market.  For this purpose,  the Compensation  Committee reviews and
considers  the salary ranges of executive  officers in  comparable  positions at
companies  comparable  to the Company in various  industries.  The  Compensation
Committee's  practice  is to review the base  salary of each  executive  officer
annually,  at which time the  executive  officer's  base salary may be increased
based upon the executive officer's  individual  performance and contributions to
the Company.

         Annual Bonus. The Company's executive officers,  as well as a number of
other key  employees  of the  Company,  are  eligible  for an annual  cash bonus
pursuant to the Company's Management  Incentive Plan (the "MIP").  Target annual
bonus amounts for the executive officers are established at the beginning of the
fiscal year by the Compensation  Committee.  For this purpose,  the Compensation
Committee  reviews and considers  bonus amounts awarded to officers of companies
in comparable positions in various industries  comparable in size to the Company
and also considers  Company  performance  and the  achievement of each executive
officer in his area of responsibility and the resulting  contribution to overall
corporate  performance.  Total payments into the MIP Plan for all  participants,
including  executive  officers,  were  $821,000 for fiscal  1993,  approximately
$515,000  for fiscal 1994 and  approximately  $1,200,000  for fiscal  1995,  and
approximately $775,000 for fiscal 1996.


         Long Term  Incentives.  The  executive  officers  of the Company and 53
other  members of  management  and other key  employees  have been granted stock
options pursuant to the Company's 1992 Stock Option Plan (the "1992 Stock Option
Plan") consistent with the Plan of Reorganization.  In addition,  124 members of
management and other key employees have been granted options under the Company's
1994 Stock  Option Plan (the "1994 Stock  Option  Plan").  The 1992 Stock Option
Plan and 1994 Stock Option Plan are intended to provide  opportunities for stock
ownership  by  management  employees,  which  will  increase  their  proprietary
interest  in the  Company  and,  consequently,  their  identification  with  the
interests  of the  stockholders  of the  Company.  In  addition,  the  executive
officers  have  purchased  stock  on  their  own  as a  demonstration  of  their
commitment to the business.  Stock options granted under the 1992 and 1994 Stock
Option  Plans  have  exercise  prices  equal  to the  fair  market  value of the
Company's  Common Stock on the dates of grant and in most cases options  granted
under the 1992  Stock  Option  Plan and the 1994  Stock  Option  Plan were fully
vested on December 1, 1996. The stock options have a ten-year term, except stock
options  granted  under the 1994 Stock  Option  Plan for a  three-year  term.  A
deferred  compensation plan was instituted for the executive  officers in fiscal
1995;  this will allow an improvement in the Company's  short-term  cash flow. A
split-dollar  life insurance plan was also instituted,  to facilitate  executive
officers' saving for retirement.

     Internal  Revenue  Code  Section  162(m).  Section  162(m) of the  Internal
Revenue  Code of 1986,  as amended,  which became  effective in 1994,  generally
disallows a tax deduction to public companies for  compensation  over $1 million
paid to the corporation's chief executive officer and the four other most highly
compensated   executive   officers.   Certain   exceptions   are   provided  for
non-discretionary,  performance-related compensation. The Compensation Committee
considers it unlikely that the  compensation  level of any executive  officer in
1997 would exceed the limit under Section  162(m).  The  Compensation  Committee
will  review the  effects of Section  162(m),  from time to time,  as it reviews
changes in the design of compensation plans, to the extent it deems appropriate.

     Chief Executive Officer's Performance

         The  Compensation  Committee has reviewed the compensation of the Chief
Executive  Officer and has found the level  appropriate in comparison of persons
holding  similar  positions in  comparable  companies  and in light of favorable
developments  at the  Company  during  fiscal  1996,  including  the  following:
continued  strengthening  of the Company's  balance  sheet,  replacement  of the
Company's revolving credit agreement with one having terms more favorable to the
Company,  successful implementation of the SAP information system to improve the
Company's competitive position and relationship with key customers,  the sale of
substantially  all of the assets of the  Company's  Ensolite  Division  on terms
highly  favorable to the Company to enhance  shareholder  value and arrangements
for the relocation  from the plant leased by the Company in Mishawaka,  Indiana,
resulting in the projected  elimination of a substantial excess facility charge.


     ROLAND H. MEYER, CHAIRMAN
     RICHARD D. KIMBEL
     THOMAS J. RUSSELL





<PAGE>




                           Summary Compensation Table
         The following table sets forth the cash and other  compensation paid by
the Company in respect of the fiscal year ended September 29, 1996, to the Chief
Executive  Officer  and the other four most highly  compensated  officers of the
Company.  Certain of the executive officers of the Company also received certain
other compensation,  including automobile  allowances.  The amount of such other
compensation  received  by each of these  officers  was less than the  lesser of
$50,000 or 10% of each officer's  respective  cash  compensation as set forth in
the Salary and Bonus columns of this table.
<TABLE>
<CAPTION>

   -------------------------------------------------------------------------------------=========================
                                                                                               LONG-TERM
                                                                                              COMPENSATION
                                                                  ANNUAL COMPENSATION            AWARDS
   -------------------------------------------------------------------------------------=========================
    =================================== ============== ================ ================ ========================
    Name and Principal Position                                                           Securities Underlying
                                         Fiscal Year       Salary            Bonus               Options
                                                              ($)              ($)                  (#)
    =================================== ============== ================ ================ ========================
    =================================== -------------- ---------------- ---------------- ========================
   <S>                                          <C>           <C>              <C>                       <C>   
    Howard R. Curd                          1996               523,640          147,279                   10,000
    Chairman of the  Board and Chief        1995               508,659          189,406                   79,053
    Executive  Officer                      1994               493,954           25,000                  123,864


    =================================== -------------- ---------------- ---------------- ========================
    Robert L. Soran                         1996               430,107          117,208                   10,000
    President & Chief                       1995               418,322          155,813                   63,242
    Operating Officer                       1994               406,120           20,000                  104,545

    =================================== -------------- ---------------- ---------------- ========================
    George J. Zulanas, Jr                   1996               217,776           58,393                        0
    Executive Vice President,               1995               211,809           75,186                   47,432
    Chief Financial Officer &               1994               205,630           15,000                   56,818
    Treasurer

    =================================== -------------- ---------------- ---------------- ========================
    Oliver J. Janney                        1996               213,141           59,612                        0
    Vice President,                         1995               207,043           76,574                   31,621
    General Counsel &                       1994               200,981           12,500                   47,727
    Secretary
    =================================== ============== ================ ================ ========================
    Martin J. Gutfreund                     1996               120,000           33,751                        0
    Vice President,                         1995               139,689           44,696                   15,811
    Human Resources and                     1994               110,000              ---                   28,409
    Administration
    =================================== ============== ================ ================ ========================
</TABLE>

         The Company has a salary administration program and the MIP for certain
management  employees.  The Board of  Directors  will  consider  any  changes in
compensation   for  executive   officers,   including   changes  to  the  salary
administration program and the MIP, except for adjustments required pursuant to
employment agreements.

 Compensation Pursuant to Other Programs; Stock Option Plan

         In addition to the salary  administration  program and MIP, in order to
retain and attract  quality  management,  the Company  maintains a  compensation
program that includes stock option plans and benefit programs such as disability
and health  insurance  and death  benefits.  Stock options for key employees are
granted by the Option  Committee,  and the Option  Committee  reviews  the other
benefit  programs.   The  Compensation  Committee  has  delegated  to  the  Vice
President,  Human  Resources and  Administration  the authority to grant limited
stock options to key employees other than executive  officers  following written
approval by the Chief Executive Officer and the Chief Operating Officer of the
Company.

<PAGE>
         The  options  granted in the last  fiscal  year to the Chief  Executive
Officer and the four most highly  compensated  executive officers of the Company
other than the Chief Executive Officer are set forth in the following table:

<TABLE>
<CAPTION>

                                                 OPTION GRANTS IN LAST FISCAL YEAR

====================================================================================================================================
                                                                                                    Potential Realizable Value at
                                                                                                    Assumed Annual Rates of Stock
                                                                                                    Price Appreciation for Option
                                                                                                    Term
                                                Individual Grants
====================================================================================================================================
============================== =============== ======================= ============== ============== ================= =============
                                 Number of
                                 Securities    % of Total Options
                                 Underlying    Granted to Employees      Exercise
                                  Options      in Fiscal Year              Price       Expiration           5%              10%
Name                              Granted                                ($/Share)        Date             ($)              ($)
============================== =============== ======================= ============== ============== ================= =============
============================== --------------- ----------------------- -------------- -------------- ----------------- -------------
<S>                                   <C>              <C>                <C>          <C>               <C>                 <C> 
Howard R. Curd                         10,000           30%                3.375        03/14/99          5,320               11,171
============================== --------------- ----------------------- -------------- -------------- ----------------- =============
Robert L. Soran                        10,000           30%                3.375        03/14/99          5,320               11,171
============================== --------------- ----------------------- -------------- -------------- ----------------- =============
George J. Zulanas, Jr.                      0           ---                 ---            ---             ---              ---
============================== --------------- ----------------------- -------------- -------------- ----------------- =============
Oliver J. Janney                            0           ---                 ---            ---             ---              ---
============================== =============== ======================= ============== ============== ================= =============
Martin J. Gutfreund                         0           ---                 ---            ---             ---              ---
============================== =============== ======================= ============== ============== ================= =============
</TABLE>




<TABLE>
<CAPTION>

                                          AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
                                                                AND
                                                   FISCAL YEAR END OPTION VALUES







           ============================ =================================== ================================================
                                           Number of Securities Underlying   Value of Unexercised In-the-Money Options at
                                         Unexercised Options at October 1,                  October 1,1996 (2)
                                                                    1996(1)                       ($)
           ============================ =================================== ================================================
           ============================ =================================== ================================================
           Name                                  Exercisable/Unexercisable                        Exercisable/Unexercisable
           ============================ =================================== ================================================
           ============================ ----------------------------------- ================================================
          <S>                                                   <C>                                               <C>               
           Howard R. Curd                                        384,508/0                                         24,432/0
           ============================ ----------------------------------- ================================================
           Robert L. Soran                                       323,242/0                                         20,739/0
           ============================ ----------------------------------- ================================================
           George J. Zulanas, Jr.                                183,796/0                                         11,364/0
           ============================ ----------------------------------- ================================================
           Oliver J. Janney                                      145,257/0                                          9,375/0
           ============================ =================================== ================================================
           Martin J. Gutfreund                                    83,992/0                                          5,682/0
           ============================ =================================== ================================================
<FN>    
           1    All of the options set forth in this table are fully vested.
           2    The values are based on the closing price of the Common Stock on the Nasdaq
                 National Market on December 4, 1996, which was $3.00 per share.
</FN>
</TABLE>


         No options were  exercised by any executive  officer  during the fiscal
year ended September 29, 1996.

Transactions with Executive Officers; Employment Agreements

         Mr.  Curd,  Chairman  of the Board and Chief  Executive  Officer of the
Company, is employed pursuant to an agreement dated as of October 1, 1988, which
was  assigned  from Jesup to PSC in November  1991,  was amended and restated on
September 27, 1992,  was assigned to and assumed by the Company on September 27,
1992 and was amended and restated as of April 25, 1995.  The agreement  provides
for a base salary of $480,300.  Mr.  Curd's base salary is subject to adjustment
annually during the term of the agreement based on changes in the U.S.  Consumer
Price Index for all Urban Consumers,  U.S. City Average (the "CPI"). Pursuant to
this  provision,  Mr.  Curd's  base  salary  was  increased  by 3.0%,  effective
September 1, 1996.  Mr. Curd is also entitled to receive a bonus pursuant to the
MIP at the end of each fiscal year. Mr. Curd's employment agreement provides for
a three-year base term, initially  terminating on September 26, 1995, subject to
automatic  one-year  extensions on each anniversary date of the agreement unless
such agreement is terminated by either party. In addition,  Mr. Curd is entitled
to receive an amount equal to two years' salary as severance upon termination of
his employment by the Company.

         Mr. Soran,  President and Chief  Operating  Officer of the Company,  is
employed  pursuant to an agreement  entered into between Mr. Soran and PSC as of
September  17, 1992,  which  agreement  was amended and restated as of April 25,
1995.  The grant is for a two-year term  initially  terminating on September 16,
1994, and subject to automatic  annual one-year  extensions on each  anniversary
date of the agreement  unless such agreement is terminated by either party.  Mr.
Soran's employment agreement provides for a base salary of $395,000. Mr. Soran's
base salary is subject to adjustment  annually  during the term of the agreement
based on changes in the CPI. Pursuant to this provision, Mr. Soran's base salary
was increased by 3.0%,  effective  September 1, 1996. Mr. Soran is also entitled
to  receive  a bonus  pursuant  to the MIP at the end of each  fiscal  year,  as
determined  by the Board of  Directors.  In  addition,  Mr. Soran is entitled to
receive an amount equal to one year's salary as severance  upon  termination  of
his employment by the Company.

         Mr.  Zulanas,Executive  Vice  President,  Treasurer and Chief Financial
Officer of the  Company,  is employed  pursuant  to an  agreement  entered  into
between Mr.  Zulanas and PSC as of  September  17,  1992,  which  agreement  was
amended and  restated  as of April 25,  1995.  The grant is for a two-year  term
initially  terminating  on  September  16,  1994,  subject  to  annual  one-year
automatic  extensions  on each  anniversary  date of the  agreement  unless such
agreement is terminated  by either  party.  Mr.  Zulanas'  employment  agreement
provides for a base salary of $200,000.  Mr.  Zulanas' base salary is subject to
adjustment  annually  during the term of the  agreement  based on changes in the
CPI. Pursuant to this provision, Mr. Zulanas' base salary was increased by 3.0%,
effective  September 1, 1996.  Mr.  Zulanas is also  entitled to receive a bonus
pursuant to the MIP at the end of each fiscal year,  as  determined by the Board
of Directors. In addition, Mr. Zulanas is entitled to receive an amount equal to
one  year's  salary as  severance  upon  termination  of his  employment  by the
Company.

         Mr.  Janney,  Vice  President,  Secretary  and  General  Counsel of the
Company, is employed pursuant to an agreement dated as of September 1, 1990 (and
amended as of July 15,  1991),  which was assigned from Jesup to PSC in November
1991, amended and restated on September 27, 1992, assigned to and assumed by the
Company on September  27,  1992,  and amended and restated as of April 25, 1995.
The agreement  provides for a base salary of $195,500.  Mr. Janney's base salary
is subject to  adjustment  annually  during the term of the  agreement  based on
changes in the CPI.  Pursuant to this  provision,  Mr.  Janney's base salary was
increased by 3.0%,  effective  September 1, 1996. Mr. Janney is also entitled to
receive  a bonus  pursuant  to the  MIP  at the  end of each  fiscal  year.  Mr.
Janney's  employment  agreement  provides  for a two-year  base term,  initially
terminating on September 26, 1994, subject to automatic  one-year  extensions on
each  anniversary  date of the agreement  unless such agreement is terminated by
either party. In addition,  Mr. Janney is entitled to receive an amount equal to
one  year's  salary as  severance  upon  termination  of his  employment  by the
Company.

                                STOCK PERFORMANCE

         The following is a comparison of the four-year  cumulative total return
among the Company,  Standard & Poor's 500 Composite  Index and Standard & Poor's
Chemical Index:
<TABLE>
<CAPTION>
                                          Total Shareholder Returns - Dividends Reinvested

        ----------------------------------------------------- --------------------------------------------------
                            Annual Return Percentage
                                  Years Ending
        ----------------------------------------------------- ------------ ------------ ------------ -----------
                           Company/Index                       Sept. 93     Sept. 94     Sept. 95     Sept. 96
        ----------------------------------------------------- ------------ ------------ ------------ -----------
       <S>                                                         <C>          <C>          <C>         <C>              
        UNIROYAL TECHNOLOGY CORP.                                   25.00       -34.73        36.19      -21.88
        ----------------------------------------------------- ------------ ------------ ------------ -----------
        S&P 500 INDEX                                               12.16         3.69        29.74       20.33
        ----------------------------------------------------- ------------ ------------ ------------ -----------
        CHEMICALS (SPECIALTY) - 500                                  7.32        -3.96        28.59        7.74
        ----------------------------------------- --------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                                         Indexed Returns
                                                                          Years Ending
        ----------------------------------------- ----------- ------------ ------------ ------------ -----------
                     Company/Index                   9/28/92  Sept. 93     Sept. 94     Sept. 95     Sept. 96
        ----------------------------------------- ----------- ------------ ------------ ------------ -----------
       <S>                                              <C>       <C>           <C>         <C>          <C>                     
        UNIROYAL TECHNOLOGY CORP.                        100       125.00        81.58       111.11       86.81
        ----------------------------------------- ----------- ------------ ------------ ------------ -----------
        S&P 500 INDEX                                    100       112.16       116.29       150.89      181.56
        ----------------------------------------- ----------- ------------ ------------ ------------ -----------
        CHEMICALS (SPECIALTY) - 500                      100       107.32       103.07       132.54      142.80
        ----------------------------------------- ----------- ------------ ------------ ------------ -----------
</TABLE>
The Company's Common Stock was admitted to trading on the Nasdaq National Market
and commenced trading on a when-issued basis on September 28, 1992; accordingly,
only four fiscal years of experience are available for purposes of comparison.

Source:  Standard & Poor's Compustat

Item 12. Security Ownership of Certain Beneficial Owners and Management

VOTING SECURITIES AND PRINCIPAL HOLDERS

         All 20 shares of the Series B Preferred Stock are held of record by the
Pension  Benefit  Guaranty  Corporation  (the  "PBGC")  and managed and voted by
Pacholder  Associates,  Inc.  Each of such shares is entitled to one vote on all
matters  to come  before  the  meeting,  and the class is  entitled  to elect an
additional director at the annual meeting of stockholders.

The following  table sets forth  certain  information  regarding the  beneficial
ownership  of Common  Stock as of November  30, 1996 by (a) each person known to
the Company to be the  beneficial  owner of more than five percent of the Common
Stock, (b) all directors and nominees,  (c) the Chief Executive  Officer and the
other four most highly compensated executive officers of the Company and (d) all
directors and executive officers of the Company as a group:



<PAGE>
<TABLE>
<CAPTION>

                                          At November 30, 1996

                                              Common Stock

Name and Address(1) of Beneficial Owner         Number of Shares Owned (2)        Percent of Class (3)
---------------------------------------         --------------------------        -------------------- 
<S>                                                <C>                                   <C>     
Pension Benefit Guaranty Corporation                2,238,381 (4)                         14.93%
  Washington, D.C. 20006

Enforcement Counsel for Superfund                   1,054,832                              7.04%
  United States Environmental Protection Agency
  401 M Street, N.W., Mail Code LE 134-5
  Washington, D.C. 20460

Thomas J. Russell                                  1,824,820 (5)                          12.17%

John A. Porter                                       477,695 (6)                           3.19%

Howard R. Curd                                       510,140 (7)                           3.40%

Robert L. Soran                                      429,874 (8)                           2.87%

George J. Zulanas, Jr.                               287,107 (9)                           1.92%

Oliver J. Janney                                     165,889 (10)                          1.11%

Martin J. Gutfreund                                   98,870 (11)                           (12)

Roland H. Meyer                                       73,374 (13)                           (12)

Richard D. Kimbel                                     58,807 (14)                           (12)

Curtis L. Mack                                        22,013 (15)                           (12)

Peter C.B. Bynoe                                      10,000 (16)                           (12)

All directors and executive officers of
 the Company as a group                            3,958,589 (17)                         26.40%

<FN>
 1  The address for all directors and executive officers is c/o the Company, Two
    North Tamiami Trail, Suite 900, Sarasota, Florida 34236.
 2  Information  contained  in the  table  reflects  "beneficial  ownership"  as
    defined in Rule 13d-3 under the Securities  Exchange Act of 1934. This table
    is based on  information  supplied by  directors,  officers  and  beneficial
    owners of ten  percent or more of the Common  Stock and Forms 13D filed with
    the Securities and Exchange Commission by beneficial owners of 5% or more of
    the Common Stock. Unless otherwise indicated, the stockholders identified in
    this table have sole voting and investment  power with respect to the shares
    beneficially owned by them.
 3  Applicable  percentages  are based on  14,992,484  shares  of  Common  Stock
    outstanding,  which include  shares issued and to be issued  pursuant to the
    Predecessor Companies' Plan of Reorganization, shares of Common Stock issued
    as stock  dividends on preferred  stock,  Common Stock issued in the private
    placement  on May 31, 1994,  Common  Stock  issued  pursuant to exercises of
    options  under the  Company's  1992 Stock  Option  Plan and shares  issuable
    pursuant to currently  exercisable  options under the Company's stock option
    plans.
 4  Does not include  761,421 shares of Common Stock issuable upon conversion of
    the Series B Preferred Stock at December 16, 1996. These shares are voted by
    Pacholder   Associates,  Inc.  of  which  William  J. Morgan,  a nominee for
    director, is President. 
 5  Includes  24,115  shares of Common  Stock  issuable  pursuant  to  currently
    exercisable  options  granted under the Company's 1992  Non-Qualified  Stock
    Option Plan and 1995 Non-Qualified Stock Option Plan.
 6  Includes  22,695  shares of Common  Stock  issuable  pursuant  to  currently
    exercisable  options  granted under the Company's 1992  Non-Qualified  Stock
    Option Plan and 1995 Non-Qualified Stock Option Plan.
 7  Includes  384,508  shares of Common  Stock  issuable  pursuant to  currently
    exercisable  options  granted under Company's stock option plans.
 8  Includes  323,242  shares of Common  Stock  issuable  pursuant to  currently
    exercisable options granted under the Company's stock option plans.
 9  Includes  183,796  shares of Common  Stock  issuable  pursuant to  currently
    exercisable options granted under the Company's stock option plans.
10  Includes  145,257  shares of Common  Stock  issuable  pursuant to  currently
    exercisable options granted under the Company's stock option plans.
11  Includes  83,992  shares of Common  Stock  issuable  pursuant  to  currently
    exercisable options granted under the Company's stock option plans.
12  Less than one percent.
13  Includes  37,374  shares of Common  Stock  issuable  pursuant  to  currently
    exercisable  options  granted under the Company's 1992  Non-Qualified  Stock
    Option Plan and 1995 Non-Qualified Stock Option Plan.
14  Includes  30,207  shares of Common  Stock  issuable  pursuant  to  currently
    exercisable options granted under the Company's stock option plans.
15  Consists of 22,013  shares of Common  Stock  issuable  pursuant to currently
    exercisable  options  granted under the Company's 1992  Non-Qualified  Stock
    Option Plan and 1995 Non-Qualified Stock Option Plan.
16  Consists of Common Stock issuable pursuant to a currently exercisable option
    granted under the Company's 1995 Non-Qualified Stock Option Plan.
17  Includes  1,267,199  shares of Common Stock  issuable  pursuant to currently
    exercisable options granted under the Company's stock option plans.
</FN>
</TABLE>

Item 13. Certain Relationships and Related Transactions

         On account of its claims against the Company's predecessors-in-interest
(the "Predecessor  Companies") in bankruptcy proceedings under Chapter 11 of the
United States  Bankruptcy  Code, the Pension Benefit  Guaranty  Corporation (the
"PBGC") received the following  securities issued by the Company:  (a) 1,500,000
shares  of  Common  Stock,  (b) a  promissory  note in the  principal  amount of
approximately  $18,547,000,  which has been repaid, (c) a promissory note in the
principal  amount of  $17,500,000,  which has been repaid,  (d) 50 shares of the
Company's  Series A  Preferred  Stock,  par value $.01 per share (the  "Series A
Preferred  Stock"),  which  have  been  repurchased,  and (e) 50  shares  of the
Company's  Series B Preferred  Stock,  30 shares of which have been  repurchased
(collectively  with the Series A Preferred  Stock, the "Preferred  Stock").  The
remaining 20 shares of Preferred  Stock have an  aggregate  redemption  value of
$3.0  million,  are redeemable  at the option of the Company in whole or in part
at any time or from time to time and are  convertible  into Common  Stock at the
option of the PBGC  between  November 1 and  November 30 of each year and during
the 30-day period following notice by the Company of its intent to redeem all or
any portion of the Preferred Stock.

         The  Company's  Amended  and  Restated   Certificate  of  Incorporation
provides that the holders of the Series B Preferred  Stock are entitled to elect
one  director.  Such  director is in addition to those elected by the holders of
the Common Stock and Series B Preferred Stock voting together.

         The Common Stock  received by the PBGC in  connection  with the Plan of
Reorganization    (the   "Plan   of    Reorganization")    of   the    Company's
predecessors-in-interest is subject to certain restrictions on transfer, because
the PBGC could be deemed to be an  affiliate  of the  Company.  To provide  this
shareholder  with liquidity for its Common Stock and the Common Stock into which
the Preferred  Stock can be converted,  the Company  entered into a Registration
Rights  Agreement  with the  PBGC,  effective  as of  September  27,  1992.  The
Registration  Rights Agreement  grants to the PBGC a single right,  with certain
limited  exceptions,  to demand at any time after  September 27, 1993,  that the
Company  register under the Securities Act of 1933, as amended (the  "Securities
Act"),  primarily at the Company's expense, all or a portion of the Common Stock
held by the PBGC  ("Registrable  Securities"),  provided  that such right may be
exercised only by a holder of at least 750,000 shares of Common Stock.  The PBGC
also has the right to participate,  or "piggyback," in certain equity  offerings
initiated by the Company. Under the Registration Rights Agreement, the PBGC will
have the right to include its Registrable  Securities in any such  registration,
subject to the right of the Company (in the case of a non-underwritten offering)
or the  managing  underwriter(s)  (in the case of an  underwritten  offering) to
reduce the total amount or kind of  securities  to be sold to such amount as can
be sold without an adverse effect on the price,  timing or  distribution  of the
contemplated  offering.  The  Registration  Rights Agreement may not be assigned
without the prior written consent of the Company.

         In connection with the Ensolite Sale, the Company utilized the services
of an  investment  banking firm that employs a relative of one of the  Company's
executive  officers.  This firm also  provides  certain  other  services  to the
Company on a periodic basis. The Company  incurred  expenses related to services
provided  by this firm of  approximately  $258,000  during the fiscal year ended
September 29, 1996.

Part IV

Item 14. Exhibits, Financial Statement Schedule, and Reports on Form 8-K
<TABLE>
<CAPTION>
          <S>  <C>                                                                   <C>
         (a)   Financial  Statements as of  September 29, 1996, and October 1,
               1995 and for the Years Ended September 29, 1996,  October 1, 1995
               and October 2, 1994:

               Independent Auditors' Report                                          F-2 

               Balance Sheets as of September 29, 1996 and October 1, 1995           F-3

               Statements of Operations  for the  Years  Ended  September  29,
               1996, October 1, 1995 and October 2, 1994                             F-5 

               Statements  of Changes in  Stockholders'  Equity for the Years  
               Ended  September  29, 1996,  October 1, 1995 and October 2, 1994      F-6 

               Statements of Cash Flows for the Years Ended September 29, 1996,
               October 1, 1995 and October 2, 1994                                   F-7

               Notes to Financial Statements                                         F-9

         (b)   Financial Statement Schedule:
              
               Independent Auditors' Report                                          S-1
                                                                  
               Schedule VIII - Valuation and Qualifying Accounts                     S-2
</TABLE>
<TABLE>
          <S>  <C>                                              
         (c)   Exhibits:
           2.1      Certificate of Ownership and Merger, dated June 7, 1993, of Polycast Technology  Corporation,  Uniroyal
                    Engineered Products,  Inc., Uniroyal Adhesives and Sealants,  Inc. and Ensolite, Inc. with the Company.
                    (8)

           3.1      Amended and Restated  Certificate  of  Incorporation  of the Company as corrected by a  Certificate  of
                    Correction of the Amended and Restated Certificate of Incorporation of the Company. (1)

           3.2      By-Laws of the Company, as amended to November 14, 1996. (15)

           4.1      Indenture, dated as of June 1, 1993, between the Company and The Bank of New York, as trustee. (8)

           4.2      Warrant  Agreement,  dated as of June 1, 1993, between the Company and The Bank of New York, as warrant
                    agent. (8)

           10.1     Asset  Acquisition  Agreement,  dated as of September 27, 1992,  among Old  Polycast,  Polycast and the
                    Company. (2)

           10.2     Asset Acquisition Agreement, dated as of September 27, 1992, among Old UEP, UEP and the Company. (2)

           10.3     Asset  Acquisition  Agreement,  dated as of September 27, 1992,  among Old  Ensolite,  Ensolite and the
                    Company. (2)

           10.4     Asset Acquisition Agreement, dated as of September 27, 1992, among Old UAS, UAS and the Company. (2)

           10.5     Asset Acquisition  Agreement,  dated as of September 27, 1992,  between Plastics Support Corp.  ("PSC")
                    and the Company. (2)

           10.6     Asset Acquisition  Agreement,  dated as of September 27, 1992, among U.E. Systems,  Inc.,  Ensolite and
                    the Company. (2)

           10.7     Amended and Restated Employment  Agreement,  dated as of April 25, 1995, between Howard R. Curd and the
                    Company. (9)

           10.8     Amended and Restated  Employment  Agreement,  dated as of April 25, 1995,  between Oliver J. Janney and
                    the Company. (9)

           10.9     Amended and Restated Employment Agreement,  dated as of April 25, 1995, between Robert L. Soran and the
                    Company. (9)

           10.10    Amended and Restated Employment  Agreement,  dated as of April 25, 1995, between George J. Zulanas, Jr.
                    and the Company. (9)

           10.11    Joint  Stipulation  Between the Debtors and the United  States of America on Behalf of Its Agency,  The
                    Internal Revenue Service, Regarding Treatment of Tax Claims. (3)

           10.14    Supply  Agreement,  dated as of February  17, 1992,  between Old Polycast and E.I.  duPont de Nemours &
                    Company, Inc. assumed by ICI Acrylics Inc. (3)

           10.15    Uniroyal Technology Corporation Employee Stock Ownership Plan. (4)

           10.16    Amended and Restated Uniroyal Technology Corporation 1992 Stock Option Plan. (15)

           10.19    Registration Rights Agreement, dated September 27, 1992, between the PBGC and the Company. (2)

           10.21    Settlement  Agreement  among  Old  Polycast,  Old UAS,  Old UEP,  Old  Ensolite  and the  Official
                    Retirees' Committee. (3)

           10.22    Settlement  Agreement  and  Stipulated  Order  among  Old  Polycast,  Old UAS,  Old UEP,  Old  Ensolite,
                    the United States of America, the State of Indiana and the State of Wisconsin. (3)

           10.23    Plan Disbursing Agent Agreement,  dated September  27,1992,  among Old Polycast,  Old UAS, Old UEP, Old
                    Ensolite and the Company. (2)

           10.24    Technical Collaboration Agreement, dated June 20, 1988, between UPC and Okamoto Industries, Inc. (3)

           10.25    Assignment of Technical Collaboration Agreement,  among UPC, Old UEP, The Jesup Group, Inc. and Okamoto
                    Industries, Inc. (3)

           10.26    Letter  Amendment to Technical  Collaboration  Agreement,  dated January 21, 1991,  between Old UEP and
                    Okamoto Industries, Inc. (3)

           10.27    Amendment No. 2 to Technical  Collaboration  Agreement,  dated as of July 31, 1992, between Old UEP and
                    Okamoto Industries, Inc. (3)

           10.28    Amended and Restated Uniroyal Technology Corporation 1992 Non-Qualified Stock Option Plan. (15)

           10.29    Agreement  dated  August 20, 1993 among the  Company,  UPAC,  and the  Official  Committee of Unsecured
                    Creditors of UPAC.(7)

           10.30    Settlement Agreement dated December 6, 1993 among the Company, UPAC, Jesup and the PBGC.(7)

           10.34    Uniroyal Technology Corporation Deferred Compensation Plan Effective as of August 1, 1995. (10)

           10.35    Split-Dollar  Insurance  Agreement  dated as of August  15,  1995 by and  between  Uniroyal  Technology
                    Corporation and Howard R. Curd. (11)

           10.39    Financing  Agreement dated as of June 5, 1996 by and between The CIT  Group/Business  Credit,  Inc. and
                    Uniroyal Technology Corporation. (12)

           10.40    Amended and Restated Uniroyal Technology Corporation 1994 Stock Option Plan. (15)

           10.41    Amended and Restated Uniroyal Technology Corporation 1995 Non-Qualified Stock Option Plan.  (15)

           10.42    Asset Purchase Agreement between Rubatex  Corporation and Uniroyal Technology  Corporation,  dated June
                    5, 1996. (13)

           10.43    Amendment No. 3 to Technical Collaboration Agreement,  dated March 1, 1996, between Uniroyal Technology
                    Corporation and Okamoto Industries, Inc.  (15)

           10.44    Shareholder Rights Agreement, dated as of December 18, 1996, between Uniroyal Technology Corporation and 
                    The Bank of New York, as rights agent.  (14)

           23.1     Independent Auditors' Consent
<FN>
           (1)      Incorporated by reference to Amendment No. 2 to the Company's  Registration Statement on Form 10, dated
                    September 25, 1992.

           (2)      Incorporated by reference to Amendment No. 4 to the Company's  Registration Statement on Form 10, dated
                    October 1, 1992.

           (3)      Incorporated by reference to the Company's Amendment No. 1 to the Company's  Registration  Statement on
                    Form 10, dated September 17, 1992.

           (4)      Incorporated by reference to the Company's Form 10-K, dated December 24, 1992.

           (5)      Incorporated by reference to the Company's Registration Statement on Form 10, dated July 28, 1992.

           (6)      Incorporated by reference to the Company's Form 10-K/A, dated May 26, 1993.

           (7)      Incorporated by reference to the Company's Form 10-K, dated December 17, 1993.

           (8)      Incorporated by reference to the Company's Form 8-K, dated June 9, 1993.

           (9)      Incorporated by reference to the Company's  Quarterly Report
                    on Form 10-Q for the quarterly period ended April 2, 1995.

           (10)     Incorporated by reference to the Company's  Quarterly Report
                    on Form 10-Q for the quarterly period ended July 2, 1995.

           (11)     Incorporated  by  reference to the  Company's  Form 10-Q dated  August 14,  1995.  Virtually  identical
                    agreements were entered into between the Company and each of Robert L. Soran,  George J. Zulanas,  Jr.,
                    Oliver J. Janney and Martin J. Gutfreund.

           (12)     Incorporated by reference to the Company's  Quarterly Report
                    on Form 10-Q for the  quarterly  period  ended June 30, 1996
                    filed August 13, 1996.

           (13)     Incorporated by reference to the Company's Form 8-K,  dated June 10, 1996.

           (14)     Incorporated by reference to the Company's Registration Statement on Form 8-A,
                    dated December 20, 1996.

           (15)     Incorporated by reference to the Company's annual report on Form 10K for the fiscal 
                    year ended September 29, 1996, filed December 27, 1996.          
</FN>

           (d)      Reports on Form 8-K:

                    No reports on Form 8-K were filed during the last quarter of
                    Fiscal 1996.
  </TABLE>
<PAGE>

Item 8.  Financial Statements and Supplementary Data.
<TABLE>
<CAPTION>
         Index to Financial Statements

         Financial  Statements  as of September  29, 1996 and October 1, 1995 and
         for the Years Ended  September  29, 1996, October 1, 1995 and October 2, 1994:
                   <S>                                                                                           <C>
                   Independent Auditors' Report                                                                  F-2

                   Balance Sheets as of September 29, 1996 and October 1, 1995                                   F-3

                   Statements of Operations for the Years Ended September 29, 1996,
                   October 1, 1995 and October 2,                                                                F-5

                   Statements of Changes in  Stockholders'  Equity for the Years
                   Ended September 29, 1996, October 1, 1995 and October 2, 1994                                 F-6

                   Statements of Cash Flows for the Years Ended September 29, 1996,
                   October 1, 1995 and October 2, 1994                                                           F-7

                   Notes to Financial Statements                                                                 F-9

         Financial Statement Schedule:

                   Independent Auditors' Report                                                                  S-1

                   Schedule VIII - Valuation and Qualifying Accounts                                             S-2

                   Schedules Omitted - Certain other schedules have been omitted
                   because  they are not  required  or because  the  information
                   required  therein has been included in Notes to the Financial
                   Statements.

</TABLE>




                                              F-1

<PAGE>


INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders
Uniroyal Technology Corporation
Sarasota, Florida


We  have  audited  the  accompanying   balance  sheets  of  Uniroyal  Technology
Corporation  (the  "Company") as of September 29, 1996 and October 1, 1995,  and
the related statements of operations,  changes in stockholders'  equity and cash
flows for each of the three years in the period ended September 29, 1996.  These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the financial position of the Company as of September 29,
1996 and  October 1, 1995 and the results of its  operations  and its cash flows
for  each of the  three  years  in the  period  ended  September  29,  1996,  in
conformity with generally accepted accounting principles.

As  discussed  in  Note 2 to  the  financial  statements,  the  Company  adopted
Statement  of  Financial  Accounting  Standards  No.  121, "Accounting  for  the
Impairment of  Long-Lived  Assets and for Long-Lived  Assets to be Disposed Of",
during the year ended September 29, 1996.


/S/ DELOITTE & TOUCHE LLP
-------------------------

DELOITTE & TOUCHE LLP
Tampa, Florida
December 20, 1996,
  except for the second paragraph
  of Note 15 as to which the 
  date is January 3, 1997


<PAGE>
<TABLE>
<CAPTION>

                                              UNIROYAL TECHNOLOGY CORPORATION
                                                      BALANCE SHEETS
                                                      (In thousands)


                                                          ASSETS

                                                                                  September 29,             October 1,
                                                                                      1996                     1995
                                                                                   -----------             -----------  
<S>                                                                                <C>                     <C>                
Current assets:

     Cash and cash  equivalents  (including  restricted cash
         and cash equivalent of $764 at September 29, 1996) (Note 2)              $    2,023               $      291

     Trade accounts  receivable (less estimated reserve for 
         doubtful accounts of $369 and $437, respectively) (Notes 2 and 8)             25,094                   27,042
     Inventories (Notes 2, 4 and 8)                                                    33,170                   32,632
     Prepaid expenses and other current assets                                          1,507                    1,903
     Deferred income taxes (Notes 2 and 9)                                              7,408                    6,541
                                                                                   ----------               ----------
         Total current assets                                                          69,202                   68,409

Property, plant and equipment - net (Notes 2, 5 and 8)                                 63,312                   90,728
Property, plant and equipment held for sale (Notes 2 and 15)                           11,504                        -
Note receivable (Note 3)                                                                5,000                        -
Reorganization value in excess of amounts allocable to identifiable
     assets - net (Note 2)                                                              8,288                    9,228
Deferred income taxes (Notes 2 and 9)                                                   1,485                        -  
Other assets (Notes 6 and 8)                                                           11,995                   12,118
                                                                                   ----------               ----------
         TOTAL ASSETS                                                              $  170,786               $  180,483
                                                                                   ==========               ==========
</TABLE>

<PAGE>
<TABLE>
<CAPTION>

                                              UNIROYAL TECHNOLOGY CORPORATION
                                                      BALANCE SHEETS
                                             (In thousands, except share data)

                                           LIABILITIES AND STOCKHOLDERS' EQUITY


                                                                                  September 29,         October 1,
                                                                                      1996                 1995
                                                                                  -------------        ------------    
<S>                                                                              <C>                    <C>
Current liabilities:
   Current portion of long-term debt (Note 8)                                     $       659           $    4,290
   Trade accounts payable                                                              16,549               16,686
   Accrued expenses:
     Compensation and benefits                                                         10,166                8,145
     Interest                                                                           2,861                2,930
     Taxes, other than income                                                           1,939                2,061
     State income taxes                                                                   259                  253
     Other                                                                              7,621                2,752
                                                                                  -----------          -----------
         Total current liabilities                                                     40,054               37,117
Long-term debt (Note 8)                                                                72,116               72,473
Other liabilities (Note 7)                                                             15,117                6,804
Deferred income taxes (Notes 2 and 9)                                                       -                6,420
                                                                                  -----------          -----------
         Total liabilities                                                            127,287              122,814
                                                                                  -----------          -----------
Commitments and contingencies (Note 12)
Stockholders' equity (Notes 8 and 10):
   Preferred  stock - par value $0.01;  1,000 shares  authorized;
     Series B - 35 shares issued and outstanding (redemption value 
     of $150,000 per share)                                                             5,250                5,250
   Common stock - par value $0.01; 35,000,000 shares authorized;
     13,233,912 and 13,103,113 shares issued or to be issued,
     respectively                                                                         133                  131
   Additional paid-in capital                                                          52,517               52,331
   Deficit                                                                            (14,401)                   -
                                                                                  -----------          -----------
                                                                                       43,499               57,712
   Less treasury stock at cost - 50,843 and 52,369 shares, respectively                     -                  (43)
                                                                                  -----------          -----------
    
         Total stockholders' equity                                                    43,499               57,669
                                                                                  -----------          -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                        $   170,786          $   180,483
                                                                                  ===========          ===========
</TABLE>
                                            See notes to financial statements.



<PAGE>
<TABLE>
<CAPTION>

                                              UNIROYAL TECHNOLOGY CORPORATION
                                                 STATEMENTS OF OPERATIONS
                                      (In thousands, except share and per share data)


                                                                                   Fiscal Years Ended
                                                                    -------------------------------------------------

                                                                       September 29,     October 1,      October 2,
                                                                           1996             1995            1994
                                                                       ------------     ------------    -----------
<S>                                                                      <C>               <C>             <C>                      
Net sales                                                              $  209,348        $  214,951      $  197,536
Costs, expenses and (other income):                              
   Costs of goods sold                                                    170,088           166,384         154,710
   Selling and administrative                                              28,626            26,783          26,770
   Amortization of reorganization value in excess of amounts
     allocable to identifiable assets                                         765               769           1,003
   Depreciation and other amortization                                      9,848             9,521           8,356
   Excess facility expense                                                    924             1,307             409
   Reorganization professional fees subsequent to effective date              640               708             599
   Gain on sale of division (Note 3)                                       (2,102)                -               -
   Loss on assets to be disposed of (Note 15)                              12,500                -               -    
   Strike settlement and training expense                                     808                 -               -
   Recovery from insurance settlement (Note 13)                                 -               (70)         (1,176)
   Recovery of pension expense (Note 11)                                        -                 -          (6,761)
   Reduction of restructuring reserve (Note 5)                                  -                 -          (1,788)
                                                                       ----------        ----------      ----------
                                                                                           
   (Loss) income before interest, income taxes
      and extraordinary item                                              (12,749)            9,549          15,414
   Interest expense - net                                                  (9,773)          (10,029)        (10,109)
                                                                       ----------        ----------      ----------
   (Loss) income before income taxes and extraordinary item               (22,522)             (480)          5,305
   Income tax benefit (expense) (Notes 2 and 9)                             8,121               189          (2,217)
                                                                       ----------        ----------      ----------
   (Loss) income before extraordinary item                                (14,401)             (291)          3,088
   Extraordinary gain on the extinguishment of
     debt - net (Note 8)                                                        -               363             727
                                                                       ----------        ----------      ----------
   Net (loss) income                                                   $  (14,401)       $       72      $    3,815
                                                                       ==========        ==========      ==========
   (Loss) income per common share and common stock equivalent
     (Notes 2 and 10)
       Primary and fully diluted:
       (Loss) income before extraordinary item                         $    (1.09)       $    (0.02)     $     0.22
       Extraordinary gain                                                       -              0.02            0.05
                                                                       ----------        ----------      ----------
       Net (loss) income                                               $    (1.09)       $     0.00      $     0.27
                                                                       ==========        ==========      ==========
                                                                    
       Average number of shares used in computation                    13,167,466        14,507,605      14,317,298
                                                                       ==========        ==========      ==========

</TABLE>
                                            See notes to financial statements.

<PAGE>
<TABLE>
<CAPTION>

                                               UNIROYAL TECHNOLOGY CORPORATION
                                         STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                                                        (In thousands)



                                            Preferred Stock                 Additional
                                          --------------------    Common     Paid-In                 Treasury  Stockholders'
                                          Series A    Series B     Stock     Capital     Deficit       Stock      Equity
                                          --------    --------    --------   --------    --------    --------    --------
<S>                                       <C>         <C>         <C>        <C>         <C>         <C>         <C>     
Balance at September 26, 1993             $  7,500    $  7,500    $    100   $ 40,845    $ (1,980)   $    (29)   $ 53,936
Common stock issued in 
 conjunction with Private
 Placement                                       -           -          25     10,500           -           -      10,525
Stock issuance costs                             -           -           -       (775)          -           -        (775)
Preferred stock repurchase
 in conjunction with Private
 Placement                                  (7,500)     (2,250)          -       (322)          -           -     (10,072)
Common stock issued under
 stock option plan                               -           -           -          7           -           -           7
Amounts received pursuant
 to Directors' stock option
 plan                                            -           -           -        111           -           -         111
Purchase of treasury stock                       -           -           -          -           -         (14)        (14)
Stock dividends paid (Note 10)                   -           -           5      1,830      (1,835)          -           -
Net income                                       -           -           -          -       3,815           -        3,815
                                          --------    --------    --------   --------    --------    --------     --------
Balance at October 2, 1994                       -       5,250         130     52,196           -         (43)      57,533
Common stock issued under
 stock option plans                              -           -           -          8           -           -            8
Amounts received pursuant
 to Directors' stock option plan                 -           -           -         56           -           -           56
Stock dividends paid (Note 10)                   -           -           1         71         (72)          -            -
Net income                                       -           -           -          -          72           -           72
                                          --------    --------    --------   --------    --------    --------     --------
Balance at October 1, 1995                       -       5,250         131     52,331           -         (43)      57,669
Common stock issued under
 stock option plans                              -           -           1         20           -           -           21
Common stock issued to
 employee benefit plan                           -           -           1        166           -          43          210
Stock dividends paid (Note 10)                   -           -           -          -           -           -            -
Net loss                                         -           -           -          -     (14,401)          -      (14,401)
                                          --------    --------    --------   --------    --------    --------     --------
Balance at September 29, 1996             $      -    $  5,250    $    133   $ 52,517    $(14,401)   $      -     $ 43,499
                                          ========    ========    ========   ========    ========    ========     ========


                                                             See notes to financial statements.
</TABLE>
<PAGE>

<TABLE>
<CAPTION>

                                               UNIROYAL TECHNOLOGY CORPORATION
                                                  STATEMENTS OF CASH FLOWS
                                                       (In thousands)

                                                                                Fiscal Years Ended
                                                              -------------------------------------------------------

                                                               September 29,       October 1,         October 2,
                                                                    1996              1995               1994
                                                               -------------      ------------       ------------
   <S>                                                           <C>              <C>                  <C>   
   OPERATING ACTIVITIES:
    Net (loss) income                                            $(14,401)         $      72           $  3,815
    Adjustments to reconcile net (loss) income to net cash
       (used in) provided by operating activities:
       Depreciation and other amortization                          9,848              9,521              8,356
       Deferred tax (benefit) expense                              (8,904)              (431)             2,053
       (Recovery of) provision for doubtful accounts                   (6)              (217)                38
       Amortization of reorganization value in excess of
           amounts allocable to identifiable assets                   765                769              1,003
       Amortization of Senior Secured Notes discount                  100                 92                 85
       Amortization of debt issuance costs                            457                466                436
       Reduction of restructuring reserve                               -                  -             (1,788)
       Gain on sale of division                                    (2,102)                 -                  -
       Loss on assets to be disposed of                            12,500                  -                  - 
       Extraordinary gain                                               -               (363)              (727)
       Other                                                          106                299                370
       Changes in assets and liabilities:
           Increase in trade accounts receivable                   (1,858)            (5,837)            (2,175)
           Increase in inventories                                 (2,456)            (2,995)            (1,924)
           (Increase) decrease in prepaid expenses and
                other assets                                         (359)             1,532             (2,167)
           Increase in trade accounts payable                         757              3,363              2,457
           Increase (decrease) in accrued expenses                  1,130               (773)            (1,300)
           Increase (decrease) in other liabilities                   609                920             (1,503)
                                                                ---------         ----------          ---------
    Net cash (used in) provided by operating activities            (3,814)             6,418              7,029
                                                                ---------         ----------          ---------
INVESTING ACTIVITIES:
    Purchases of property, plant and equipment                     (9,181)           (7,422)             (6,042)
    Proceeds from sale of division                                 19,641                 -                   -
    Proceeds from sale of U.S. Treasury Notes - restricted              -                 -              10,094
                                                                ---------         ---------           ---------  
    Net cash provided by (used in) investing activities            10,460            (7,422)              4,052
                                                                ---------         ---------           ---------
 FINANCING ACTIVITIES:
    Note retirement costs                                               -                 -                (823)
    Repurchase of Senior Secured Notes                                  -            (6,223)                  -
    Other(decrease) increase  in debt, net                         (4,934)            3,261              (9,363)
    Preferred stock redeemed                                            -                 -             (10,072)
    Common stock issued                                                 -                 -              10,525
    Stock options exercised                                            20                 8                   7
    Purchases of treasury stock                                         -                 -                 (14)
    Common stock issuance costs                                         -                 -                (775)
                                                                ---------         ---------           ---------

     Net cash used in financing activities                         (4,914)           (2,954)            (10,515)
                                                                ---------         ---------           ---------

Net increase (decrease) in cash and cash equivalents                1,732            (3,958)                566

Cash and cash equivalents at beginning of year                        291             4,249               3,683
                                                                ---------         ---------           ---------

Cash and cash equivalents at end of year                        $   2,023         $     291           $   4,249
                                                                =========         =========           =========
</TABLE>

<PAGE>
<TABLE>
<CAPTION>

                                             UNIROYAL TECHNOLOGY CORPORATION
                                                STATEMENTS OF CASH FLOWS
                                                       (Continued)

Supplemental Disclosures:

Payments for income taxes and interest expense were (in thousands):


                                                                            Fiscal Years Ended
                                                       --------------------------------------------------------------
                                                         September 29,           October 1,            October 2,
                                                              1996                  1995                  1994
                                                       -------------------    -----------------      ----------------
<S>                                                       <C>                    <C>                    <C>       
Income tax payments                                         $     570               $   155              $    172
Interest payments                                               9,549                 9,784                 9,626
</TABLE>
The  amounts  shown as payment  of debt is the net  activity  for the  Company's
revolving loan and term loan facilities which includes draws and payments on the
revolving loan facilities during the periods shown. The following summarizes the
activity of these facilities (in thousands):

<TABLE>
<CAPTION>

                                                                            Fiscal Years Ended
                                                       --------------------------------------------------------------
                                                         September 29,           October 1,            October 2,
                                                              1996                  1995                  1994
                                                       -------------------    -----------------      ----------------
<S>                                                         <C>                     <C>                  <C> 
Term loan payments                                          $       -               $  (500)             $ (9,363)
(Decrease) increase in revolver loan balances                  (4,934)                3,761                     -
                                                            ---------               -------              --------
Other (decrease) increase in debt, net                      $  (4,934)              $ 3,261              $ (9,363)
                                                            =========               =======              ========
</TABLE>

The purchases of property, plant and equipment and the other increase (decrease)
in debt, net for the fiscal years ended September 29, 1996,  October 1, 1995 and
October 2, 1994 do not include $846,000, $1,404,000 and $696,000,  respectively,
related to property held under capitalized leases (Note 12).

Net cash used in financing  activities for the fiscal years ended  September 29,
1996,  October 1, 1995 and October 2, 1994 do not include the dividends declared
on the Series A Preferred  Stock or the Series B Preferred Stock since they were
paid with the issuance of 115,657, 125,588 and 495,403 shares, respectively,  of
the Company's common stock (Note 10). Net cash used in financing  activities for
the fiscal years ended October 1, 1995 and October 2, 1994 do not include 36,409
and 48,999 options  purchased  pursuant to the 1992  Non-Qualified  Stock Option
Plan. No such options were purchased  during the fiscal year ended September 29,
1996.

                                See notes to financial statements.



<PAGE>


                          UNIROYAL TECHNOLOGY CORPORATION
                           NOTES TO FINANCIAL STATEMENTS

                   For the Fiscal Years Ended September 29, 1996,
                       October 1, 1995 and October 2, 1994

1.       THE COMPANY

         Uniroyal Technology  Corporation,  a Delaware corporation,  through its
         operating divisions,  Royalite  Thermoplastics  ("Royalite"),  Polycast
         Technology  ("Polycast"),  Uniroyal  Engineered  Products ("UEP"),  and
         Uniroyal Adhesives and Sealants ("UAS")  (collectively,  the "Company")
         is engaged in the  manufacture and sale of high  performance  plastics,
         coated fabrics and specialty adhesives.  During Fiscal 1996 the Company
         sold substantially all the assets, net of certain  liabilities,  of its
         Ensolite closed cell foam division (Note 3).

2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         Fiscal Year End

         The Company's  fiscal year ends on the Sunday following the last Friday
         in  September.  The dates on which the  fiscal  year ended for the past
         three fiscal years were September 29, 1996, October 1, 1995 and October
         2, 1994.  Fiscal 1996 and Fiscal 1995 were  52-week  periods and Fiscal
         1994 was a 53-week period.

         Use of Estimates

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

         Cash and Cash Equivalents

         Cash  and cash  equivalents  includes  all  highly  liquid  investments
         purchased with an original maturity of three months or less. Restricted
         cash and cash  equivalents  are the net  proceeds  from the sale of the
         Ensolite  division placed in escrow in accordance with the terms of the
         indenture agreement for the Company's Senior Secured Notes (Notes 3 and
         8).

         Fair Value of Financial Instruments

         The  estimated  fair  value  of  amounts   reported  in  the  financial
         statements have been determined using available market  information and
         valuation  methodologies,  as  applicable.  The  carrying  value of all
         current assets and liabilities  approximates  the fair value because of
         their short term nature.
         
         Trade Accounts Receivable

         The Company  grants  credit to its  customers  generally in the form of
         short-term trade accounts receivable. The creditworthiness of customers
         is evaluated  prior to the sale of inventory.  There are no significant
         concentrations of credit risk to the Company.

         Inventories

         Inventories  are  stated  at the  lower  of  cost  or  market.  Cost is
         determined using a monthly average basis for raw materials and supplies
         and the first-in,  first-out  ("FIFO")  basis of accounting or standard
         costs  (which  approximates  actual  costs)  for  work in  process  and
         finished goods.

         Property, Plant and Equipment

         Property, plant and equipment are stated at cost. The cost of property,
         plant and equipment  held under capital leases is equal to the lower of
         the net present value of the minimum  lease  payments or the fair value
         of the leased  asset at the  inception  of the lease.  Depreciation  is
         computed  principally under the straight-line  method based on the cost
         and estimated  useful lives of the related assets including assets held
         under capital leases.

         During March 1995 the  Financial  Accounting  Standards  Board  adopted
         Statement of Financial  Accounting  Standards No. 121 ("SFAS  No.121"),
         Accounting for the  Impairment of Long-Lived  Assets and for Long-Lived
         Assets to Be Disposed Of. SFAS No. 121 establishes accounting standards
         for  the  impairment  of  long-lived   assets,   certain   identifiable
         intangibles,  and goodwill  related to those assets to be held and used
         for  long-lived  assets  and  certain  identifiable  intangibles  to be
         disposed of. In  accordance  with SFAS No. 121,  during the fiscal year
         ended  September 29, 1996 the Company  established  reserves  totalling
         approximately $12,500,000 related  to its  decision  to exit  the  Port
         Clinton,  Ohio automotive  operation of the Coated Fabrics Segment. See
         Note 15. Other than the establishment of these reserves the adoption of
         SFAS  No.  121 did  not  have a  significant  effect  on the  Company's
         financial statements.
         
         Property, Plant and Equipment Held for Sale

         Property,  plant and equipment held for sale is  stated at the lower of
         cost or market.
          
         Amortization

         Debt discount and debt issuance costs are amortized  using the interest
         method over the life of the related debt.  Patents and  trademarks  are
         being  amortized  using the  straight-line  method over periods ranging
         from 7 to 20 years. Reorganization value in excess of amounts allocable
         to identifiable  assets is amortized on a  straight-line  basis over 15
         years.   Reorganization   value  in  excess  of  amounts  allocable  to
         identifiable  assets is reported  net of  accumulated  amortization  of
         $3,251,000  and  $2,486,000  at September 29, 1996 and October 1, 1995,
         respectively.

         Research and Development Expenses

         Research  and  development   expenditures  are  expensed  as  incurred.
         Research and development  expenditures were $4,918,000,  $4,689,000 and
         $4,021,000  for the fiscal years ended  September 29, 1996,  October 1,
         1995 and October 2, 1994, respectively.

         Employee Compensation
         The cost of post-retirement benefits other than pensions are recognized
         in the financial statements over an employee's term of service with the
         Company.

         Income Taxes

         The Company  utilizes the asset and liability  method of accounting for
         income taxes.  Under the asset and liability  method,  deferred  income
         taxes  are   recognized   for  the  tax   consequences   of  "temporary
         differences"  by applying  enacted  statutory  tax rates  applicable to
         future years to differences  between the financial  statement  carrying
         amounts  and the tax basis of  existing  assets  and  liabilities.  The
         effect on  deferred  taxes of a change in tax  rates is  recognized  in
         income in the period that includes the enactment date.

         The  Company has  recorded a net  deferred  tax asset of  approximately
         $8,893,000.  Realization is dependent on generating  sufficient taxable
         income  prior  to  expiration  of  the  loss  carryforwards.   Although
         realization is not assured,  management believes it is more likely than
         not that all of the deferred tax asset will be realized.  The amount of
         the deferred tax asset considered realizable, however, could be reduced
         in the near term if  estimates  of future  taxable  income  during  the
         carryforward period are reduced.

         Net (Loss) Income Per Common Share

         Primary  and fully  diluted  loss per common  share for the fiscal year
         ended  September 29, 1996 do not include the assumed  conversion of the
         Series B  Preferred  Stock nor the  exercise  of the  warrants  and the
         employee   stock  options  since  their   inclusion   would  have  been
         anti-dilutive. The computations of primary and fully diluted income per
         common share for the fiscal years ended  October 1, 1995 and October 2,
         1994 are based on the weighted  average  number of common shares issued
         and  outstanding  (or to be issued  pursuant to the Plan, as defined in
         Note 12) less the average  number of shares  held in  treasury  for the
         period  and  also  include  the  assumed  conversion  of the  Series  B
         Preferred  Stock and the  exercise of all stock  options  and  warrants
         having exercise prices less than the average market price of the common
         stock using the treasury stock method. The convertible  preferred stock
         issued  to the  Pension  Benefit  Guaranty  Corporation  ("PBGC"),  the
         warrants  and  stock   options  are   considered  to  be  common  stock
         equivalents.

         Reclassifications

         Certain prior years' amounts have been reclassified to conform with the
         current year's presentation.

3.       SALE OF ENSOLITE DIVISION

         Pursuant to an asset purchase  agreement,  the Company sold on June 10,
         1996  substantially  all the assets net of certain  liabilities  of its
         Ensolite  closed-cell foam division to Rubatex Corporation  ("Rubatex")
         for  $25,000,000  consisting of cash in the amount of $20,000,000 and a
         promissory  note of the parent of  Rubatex in the amount of  $5,000,000
         (the  "Ensolite  Sale").  Interest  on the  promissory  note is payable
         semi-annually  at 11.75% per annum.  The promissory note matures on May
         1, 2006. Cash proceeds from the sale were used to pay off the Company's
         borrowings  under its revolving  credit  agreement.  The remaining cash
         proceeds,  net of  amounts  placed  in escrow  in  accordance  with the
         Company's  indenture  agreement  for the  Senior  Secured  Notes,  were
         invested  in  short-term   highly  liquid   investments.   The  Company
         recognized a pre-tax gain on the sale of  approximately  $2,102,000 net
         of  transaction  costs,  the  write-down  of certain  fixed  assets not
         acquired by Rubatex and after  consideration  of reserves for severance
         and incentive packages for Ensolite employees,  facility clean-up costs
         and the  recognition  of  Ensolite's  pro rata  share of the  Company's
         transition  obligation,  net  of a  curtailment  gain  of  $664,000  in
         accordance  with  Statement of Financial  Accounts  Standards  No. 106,
         Employer's  Accounting for Postretirement  Benefits Other Than Pensions
         ("SFAS No. 106"). In connection with the Ensolite Sale Rubatex received
         an  option  to  purchase  certain  additional  equipment  housed at the
         Company's Mishawaka,  Indiana manufacturing facility for $250,000 which
         it exercised  in November  1996.  The  purchase  price was adjusted for
         changes in working capital, as defined in the asset purchase agreement,
         between  October  1, 1995 and June 10,  1996.  The  change  in  working
         capital  resulted in additional  proceeds and select assets paid to the
         Company by  Rubatex of  approximately  $700,000.  Such  amount has been
         included in the  pre-tax  gain on sale.  The  Company and Rubatex  also
         entered  into an earn-out  agreement  whereby  the  Company  could earn
         between $.15 and $.20 per board foot of Ensolite  products  produced by
         Rubatex  in excess  of the base  volume as  defined  in such  agreement
         during  each of the four year  periods  following  the  closing  of the
         Ensolite  Sale. In no event will the total amount earned by the Company
         under the  earn-out  agreement  during  the  forty-eight  month  period
         following the closing of the sale exceed $3,000,000.

         In conjunction  with the Ensolite Sale, the Company entered into a toll
         manufacturing agreement with Rubatex. The Company is producing Ensolite
         products  for the benefit of Rubatex at its leased  Mishawaka,  Indiana
         manufacturing  facility for an initial period of  approximately  twelve
         months,  and in no event  beyond  July 31,  1997.  The Company is being
         reimbursed by Rubatex for the variable costs incurred in the production
         of Ensolite products and is being paid a fixed amount for manufacturing
         period  costs based on actual  costs  incurred  by the  Company  during
         Fiscal  1995 and  adjusted  for  inflation.  In  addition  the  Company
         provides  certain  support  services  to Rubatex and is  reimbursed  by
         Rubatex for the costs of such services.

4.       INVENTORIES

         Inventories consisted of the following (in thousands):
<TABLE>
<CAPTION>
                                                                             September 29,         October 1,
                                                                                 1996                 1995
                                                                           ------------------   -----------------
           <S>                                                                 <C>                   <C> 
           Raw materials and supplies                                           $  17,058             $  14,926
           Work in process                                                          4,400                 5,253
           Finished goods                                                          11,712                12,453
                                                                                ---------             ---------
           Total                                                                $  33,170             $  32,632
                                                                                =========             =========
</TABLE>

5.       PROPERTY, PLANT AND EQUIPMENT

         Property,   plant  and   equipment   consisted  of  the  following  (in
         thousands):
<TABLE>
<CAPTION>
                                                          Estimated
                                                           Useful            September 29,         October 1,
                                                            Lives                1996                 1995
                                                       ----------------    ------------------    ----------------
           <S>                                           <C>                    <C>                    <C>      
           Land and improvements                             -                  $   5,014              $  5,358
           Buildings and improvements                    3-40 years                16,083                19,025
           Machinery, equipment and office
                furnishings                              3-15 years                57,170                85,097
           Construction in progress                          -                      7,412                 5,959
                                                                                ---------              --------
                                                                                   85,679               115,439
           Accumulated depreciation                                               (22,367)              (24,711)
                                                                                ---------              --------
                    Total                                                       $  63,312              $ 90,728
                                                                                =========              ========
</TABLE>

         On July 17, 1996 the Company acquired a manufacturing facility in South
         Bend, Indiana for a purchase price of approximately $1,800,000 in cash.
         This  facility  will house the  Company's UAS division and the Royalite
         division's  headquarters  as well as certain other Company  operations.
         The  Company  plans to move all these  operations  from their  existing
         leased  facility in Mishawaka,  Indiana  during the first six months of
         Fiscal 1997.

         In prior years the Company had  established  reserves for the estimated
         costs for asset  write-offs,  property  clean-up  costs and  relocation
         costs  associated  with the  Company's  move of its UAS  division.  The
         reserves totaled  $1,658,000 as of September 29, 1996. Such amounts are
         classified as current and are included in other accrued expenses in the
         accompanying financial statements.
<PAGE>
  6.     OTHER ASSETS

         Other assets consisted of the following (in thousands):
<TABLE>
<CAPTION>

                                                                                September 29,          October 1,
                                                                                    1996                  1995
                                                                              -----------------      ----------------
          <S>                                                                       <C>                 <C>
          Patents and trademarks                                                     $  5,322            $   6,457
          Debt issuance costs                                                           4,110                4,425
          Other                                                                         2,563                1,236
                                                                                     --------            ---------
          Total                                                                      $ 11,995            $  12,118
                                                                                     ========            =========
</TABLE>
         Patents and trademarks are reported net of accumulated  amortization of
         $2,142,000  and  $1,776,000  at September 29, 1996 and October 1, 1995,
         respectively.  During the fiscal year ended October 1, 1995 the Company
         wrote  off  $466,000  of debt  issuance  costs in  connection  with the
         acquisition of $7,497,000 of face value of the Company's Senior Secured
         Notes  (Note 8).  During  the  fiscal  year  ended  October 2, 1994 the
         Company wrote off $228,000 of debt  issuance  costs related to the PBGC
         debt  retirement  (Note  8).  Debt  issuance  costs  are  shown  net of
         accumulated  amortization of $1,502,000 and $1,045,000 at September 29,
         1996 and October 1, 1995, respectively.

7.       OTHER LIABILITIES

         Other liabilities consisted of the following (in thousands):
<TABLE>
<CAPTION>

                                                                                September 29,          October 1,
                                                                                    1996                  1995
                                                                              ------------------     ----------------
          <S>                                                                       <C>                 <C>
          Accrued retirement benefits                                                $ 13,639             $  5,058
          Taxes, other than income                                                      1,478                1,746
                                                                                     --------             --------
          Total                                                                      $ 15,117             $  6,804
                                                                                     ========             ========
</TABLE>

8.       LONG-TERM DEBT

         Long-term debt consisted of the following (in thousands):
<TABLE>
<CAPTION>

                                                                                September 29,           October 1,
                                                                                     1996                 1995
                                                                              -----------------     ----------------
         <S>                                                                      <C>                     <C>  
         11.75% Senior Secured Notes,  principal due June 1, 2003,
             interest due semi-annually on December 1 and June 1                    $  72,503             $  72,503
          Revolving credit agreement                                                        -                 3,761
          Unamortized debt discount                                                    (1,130)               (1,230)
                                                                                    ---------             ---------
                                                                                       71,373                75,034
          Other obligations                                                             1,402                 1,729
                                                                                    ---------             ---------
                                                                                       72,775                76,763
          Less current portion                                                           (659)               (4,290)
                                                                                    ---------             ---------
          Long-term debt                                                            $  72,116             $  72,473
                                                                                    =========             =========
</TABLE>

         Debt  amounts  become  due during  subsequent  fiscal  years  ending in
         September as follows (in thousands):
<TABLE>
                             <S>                                                     <C>                
                             1997                                                    $    659
                             1998                                                         450
                             1999                                                         161
                             2000                                                         118
                             2001                                                          14
                             Subsequent years                                          72,503
                             Less unamortized debt discount                            (1,130)
                                                                                     --------     
                                                                                       72,775
                             Less current portion                                        (659)
                                                                                     --------               
                             Total                                                   $ 72,116
                                                                                     ========
</TABLE>
<PAGE>
         Prior to Fiscal  1994,  the Company  consummated  a public  offering of
         80,000 units,  consisting of $80,000,000  aggregate principal amount of
         its 11.75% Senior Secured Notes Due 2003 ("Senior  Secured  Notes") and
         warrants  to  purchase  an  aggregate  of 800,000  shares of its common
         stock. The warrants issued with the Senior Secured Notes are detachable
         and therefore were allocated a portion of the proceeds in the amount of
         approximately $1,566,000 which was an estimate of their market value at
         the time they were  issued.  The  proceeds  allocated to the notes were
         approximately  $78,434,000  resulting in a note discount of $1,566,000,
         which is being  amortized  using the  interest  method.  The  effective
         interest  rate  of the  notes  based  on  the  allocated  proceeds  was
         calculated to be approximately 12.09%. The notes will mature on June 1,
         2003.  Interest is payable on June 1 and December 1 of each year at the
         rate of 11.75% per  annum.  The notes are  collateralized  by a lien on
         substantially  all of the  non-cash  assets of the Company  (other than
         trade  accounts  receivable)  and  net  cash  proceeds  of the  sale of
         collateral.  The notes are redeemable at the option of the Company,  in
         whole or in part, on or after June 1, 1998, at 104.41% of the principal
         amount,  declining  to par on and after  June 1,  2001.  The  indenture
         contains  certain  covenants  which  limit,  among  other  things,  the
         Company's  ability to incur additional  debt, pay cash dividends,  make
         certain other payments,  sell its assets, and redeem its capital stock.
         The Company was in  compliance  with these  covenants at September  29,
         1996 and October 1, 1995.

         During the  fiscal  year ended  October  1, 1995 the  Company  acquired
         $7,497,000  of face  value of the Senior  Secured  Notes  through  open
         market  purchases.  These purchases  resulted in an extraordinary  gain
         (net of the write-off of applicable  debt issuance  costs,  unamortized
         debt discount and other transaction costs totaling $601,000, and net of
         applicable  income taxes of $310,000) of  approximately  $363,000.  The
         Company did not acquire  any such notes  during the fiscal  years ended
         September 29, 1996 and October 2, 1994.

         On June 5, 1996, the Company entered into a revolving  credit agreement
         with The CIT Group/Business  Credit Inc., pursuant to which, subject to
         the  satisfaction  of certain  borrowing  conditions,  the  Company may
         borrow the lesser of $25,000,000 or 85% of eligible accounts receivable
         but in no event at any time more than 75% of the Company's Accounts, as
         defined in the  agreement,  determined  in  accordance  with  generally
         accepted  accounting  principles.  Interest is payable monthly at prime
         plus .5% per  annum or at the  LIBOR  rate  plus  2.75% if the  Company
         elects to borrow funds under a LIBOR Loan as defined in the  agreement.
         The loan matures on June 5, 2001.  All of the Company's  trade accounts
         receivable  are  pledged as  collateral  for this loan.  The  agreement
         restricts the creation of certain additional indebtedness.  The Company
         was in compliance  with the covenants under this agreement at September
         29,  1996.  The  Company  repaid  in full  its  obligations  to  Heller
         Financial,  Inc. with borrowings under this agreement. At September 29,
         1996 the  Company had  approximately  $19,727,000  available  under the
         revolving credit agreement.  The Company had no outstanding  borrowings
         under this agreement at September 29, 1996.

         On December 7, 1993,  the Company  repaid at a discount  its  remaining
         obligation  to the  PBGC in the  amount  of  $10,000,000  plus  accrued
         interest of $243,000 with a payment of $8,000,000.  Concurrent with the
         payment,  the  PBGC  released  its  lien on the  Company's  $10,000,000
         investment  in U.S.  Treasury  Notes,  which were sold and the proceeds
         therefrom were used, in part, to make the repayment. A gain of $727,000
         resulting  from  this  transaction,  net of  applicable  income  tax of
         $465,000 and certain expenses, including the write-off of loan costs of
         $228,000,  is  shown in the  accompanying  financial  statements  as an
         extraordinary  item for the  fiscal  year ended  October  2,  1994.  In
         addition  to the  forgiveness  of debt,  the PBGC  also  agreed to make
         certain  payments to the Company as a result of any recoveries the PBGC
         receives  on  account  of its claims  against  the  estate of  Uniroyal
         Plastics  Company,  Inc.  ("UPC")  which is  currently  in  liquidation
         proceedings  under  Chapter  7 of the  U.S.  Bankruptcy  Code and is an
         affiliate of the Predecessor  Companies,  which are the predecessors of
         the Company's  current  operating  divisions.  The Company acquired the
         businesses  of  the  Predecessor   Companies  in  connection  with  the
         consummation of their plan of reorganization  (the "Plan") on September
         27, 1992. The amount and timing of the recovery of additional  amounts,
         if any,  cannot be estimated  and are not included in the  accompanying
         financial statements.

         The Company leases certain machinery and equipment under non-cancelable
         capital  leases which extend for varying  periods up to 5 years.  Other
         obligations   include   remaining   capitalized  lease  obligations  of
         $1,402,000 and $1,729,000 as of September 29, 1996 and October 1, 1995,
         respectively (Note 12).
<PAGE>
9.       INCOME TAXES

         The effective tax rate differs from the  statutory  federal  income tax
         rate for the following reasons (in thousands):
<TABLE>
<CAPTION>
                                                                           Fiscal Years Ended
                                                           ---------------------------------------------------------
                                                             September 29,           October 1,         October 2,
                                                                 1996                  1995               1994
                                                           ------------------    ----------------    ---------------
          <S>                                                  <C>                 <C>                 <C>
          Income tax calculated at the statutory
            rate applied to income  before income
            tax                                                $   (7,657)          $    (163)         $    1,804
                                                                                
          Increase (decrease) resulting from:
             Exclusion of extraordinary gain
             on the extinguishment of debt                              -                 310                 465
                                                         
            Amortization of reorganization value
              in excess of amounts allocable to
              identifiable assets                                     145                 145                 204

            State income taxes                                       (593)                  -                   -
                                                          
            Other                                                     (16)               (171)                209
                                                               ----------          ----------          ----------
                                                         
          Income tax (benefit) expense                         $   (8,121)         $      121          $    2,682
                                                               ==========          ==========          ==========
                                                                                
</TABLE>

         Income tax (benefit) expense consisted of the following  components (in
         thousands):
<TABLE>
<CAPTION>

                                                                          Fiscal Years Ended
                                                          ---------------------------------------------------------
                                                            September 29,         October 1,          October 2,
                                                                 1996                1995                1994
                                                          ------------------    -----------------    --------------
          <S>                                               <C>                  <C>                  <C>        
          Current
            Federal                                           $      118          $        -           $        -        
            State                                                    533                 242                  164
                                                              ----------          ----------           ----------
              Total                                           $      651          $      242           $      164
                                                              ==========          ==========           ==========
                                                           
          Net deferred tax
          (benefit) expense
            Federal                                           $   (7,647)         $     (106)          $    2,195
            State                                                 (1,125)                (15)                 323          
                                                              ----------          ----------           ----------
              Total                                           $   (8,772)         $     (121)          $    2,518
                                                              ==========          ==========           ==========
                                                           

          Total
            Federal                                           $   (7,529)         $     (106)          $    2,195
            State                                                   (592)                227                  487
                                                              ----------          ----------           ----------      
              Total                                           $   (8,121)         $      121           $    2,682
                                                              ==========          ==========           ==========
   </TABLE>

         The total income tax expense of $121,000 and  $2,682,000 for the fiscal
         years ended October 1, 1995 and October 1, 1994, respectively, includes
         an  expense  in the  amount of  $310,000  and  $465,000,  respectively,
         applicable to the extraordinary item (Note 8).
<PAGE>
         The components of the deferred tax assets and liabilities  consisted of
         the following (in thousands):
<TABLE>
<CAPTION>
                                                                               September 29, 1996
                                                            -----------------------------------------------------------
                                                                Assets             Liabilities             Total
                                                            ----------------    ------------------    -----------------
           <S>                                               <C>                  <C>                  <C>       
           Current 
            Accrued expenses deductible in future
              period                                          $    7,408            $        -          $    7,408
                                                              ==========            ==========          ==========

          Non-Current
            Acquired tax loss carryforward benefits           $    7,872            $        -          $    7,872
            Net operating loss carryforward                        4,906                     -               4,906
            Book basis in excess of tax basis of
              assets                                                 -                  (7,931)             (7,931)
            Long-term accrual of expenses deductible
              in future periods                                    4,510                     -               4,510     
            Valuation allowance                                   (7,872)                    -              (7,872)
                                                              ----------            ----------          ----------
                Total                                         $    9,416            $   (7,931)         $    1,485
                                                              ==========            ==========          ==========
               
</TABLE>
<TABLE>
<CAPTION>
                                                                                   October 1, 1995
                                                            -----------------------------------------------------------
                                                                Assets               Liabilities           Total
                                                            ----------------    ------------------    -----------------
          <S>                                                <C>                  <C>                  <C>  
          Current
            Accrued expenses deductible in future
              period                                          $    6,541            $        -          $    6,541
                                                              ==========            ==========          ==========

          Non-Current
            Acquired tax loss carryforward benefits
                                                              $    7,872     $               -          $    7,872
            Net operating loss carryforward                        6,395                     -               6,395
            Book basis in excess of tax basis of
              assets                                                 -                 (12,815)            (12,815)
            Valuation allowance                                   (7,872)                    -              (7,872)
                                                              ----------            ----------          ----------
                Total                                         $    6,395            $  (12,815)         $   (6,420)
                                                              ==========            ==========          ==========
</TABLE>
                                                         
         The ultimate realization of the acquired tax loss carryforward benefits
         is uncertain and subject to interpretation of the tax law as it applies
         to the Company's bankruptcy reorganization.

         The net operating and acquired tax loss carryforward benefits expire in
         various  years  ending  in 2010.  The  acquired  tax loss  carryforward
         benefits  consist of tax net operating loss  carryforwards  and pension
         contribution deductions.  The acquired net operating loss carryforwards
         are  subject  to  an  annual  limitation  arising  from  the  Company's
         September 27, 1992 bankruptcy reorganization.  The annual limitation on
         utilization of the acquired  benefits for tax purposes is approximately
         $700,000 per year.  Utilization  of the acquired tax loss  carryforward
         benefits  in future  periods  will be applied to reduce  reorganization
         value in excess of amounts allocable to identifiable assets.

10.      STOCKHOLDERS' EQUITY

         The Company's certificate of incorporation provides that the authorized
         capital stock of the Company  consists of  35,000,000  shares of common
         stock and 1,000 shares of preferred  stock,  each having a par value of
         $0.01 per share.  At September  29, 1996,  13,002,595  shares of common
         stock had been issued. Approximately 230,000 shares of common stock are
         reserved  for issuance  pending  resolution  of disputed  claims in the
         bankruptcy proceedings (Note 12).

         The holder of the Series B  Preferred  Stock is  entitled  to vote as a
         separate class of shareholders for the purpose of electing one director
         to the  Board  of  Directors  of the  Company.  A  holder  of  Series B
         Preferred Stock has no preemptive or preferential rights to purchase or
         subscribe  to any  additional  shares of capital  stock  except for the
         conversion rights described below.

         The  Company has the right to redeem all or any portion of the Series B
         Preferred  Stock at any time following 30 days' notice to the holder of
         such Preferred Stock by (a) paying $150,000 per share for each share of
         Series B  Preferred  Stock that the  Company,  in its sole  discretion,
         elects to redeem;  and (b)  issuing  all common  stock  dividends  then
         accrued but unpaid on the Preferred  Stock to be redeemed.  The Company
         has the right, but no obligation,  to redeem, at its option, any or all
         whole or  fractional  shares  of  Preferred  Stock.  In the  event of a
         liquidation of the Company,  the holder of the Preferred  Stock will be
         entitled to receive,  following all  distributions  to creditors of the
         Company required under Delaware law, a liquidation  payment of $150,000
         per  share  plus  all  accrued  but  unpaid   dividends  prior  to  any
         distributions to common stockholders.

         The holder of Series B  Preferred  Stock may  require  that the Company
         convert  all of its  Series B  Preferred  Stock into  common  stock (a)
         during  a  period  commencing  on  November  1 and  ending  on the last
         business  day  prior  to  November  30 of each  year for so long as the
         Series B  Preferred  Stock is  outstanding  (the  "Series B  Conversion
         Period") or (b) during a 30-day period  following notice by the Company
         of its intention to exercise its redemption  option with respect to the
         Series B Preferred Stock (the "Series B Redemption Conversion Period").
         Pursuant  to the  certificate  of  incorporation,  the number of common
         shares into which each share of Series B Preferred Stock is convertible
         has  been  fixed  at  approximately  38,071  shares  for the  remaining
         outstanding shares of Series B Preferred Stock.

         On May 31, 1994, the Company issued  2,476,586  shares of the Company's
         common stock (the  "Private  Placement")  at a price of $4.25 per share
         for aggregate proceeds of approximately  $10,525,000.  The net proceeds
         after   certain   expenses   totalling   approximately   $775,000  were
         approximately $9,750,000 or $3.94 per share. The Company used these net
         proceeds together with approximately  $322,000 of the Company's cash on
         hand to  repurchase  all of the  outstanding  shares (50 shares) of the
         Company's Series A Preferred Stock and 15 of the 50 outstanding  shares
         of Series B Preferred Stock (aggregate  redemption value of $9,750,000)
         for an aggregate of approximately  $10,072,000  representing a price of
         $4.07 for the Underlying  Common Stock. The excess  redemption price of
         $322,000 has been charged to additional  paid-in  capital.  On December
         16, 1996, the Company redeemed 15 shares of Series B Preferred Stock.

         The holders of record of shares of common stock are entitled to receive
         dividends  when  and as  declared  by the  Board  of  Directors  of the
         Company,  provided that the Company has funds legally available for the
         payment of dividends and is not otherwise contractually restricted from
         the payment of dividends.  The Company's  ability to pay cash dividends
         on common stock  currently is restricted by the indenture in connection
         with the Senior Secured Notes.

         Since  September  1, 1992,  the holder of shares of Series A  Preferred
         Stock and  Series B  Preferred  Stock has been  entitled  to receive an
         annual  dividend  equal to 8% of the redemption  price for  outstanding
         shares of Series A  Preferred  Stock and Series B Preferred  Stock,  as
         applicable,  payable  only in shares of common  stock  which  number of
         shares is based on the average of the last  reported bid prices for the
         30  calendar  days  preceding  the  declaration  date.  The Company has
         declared such dividends,  on a quarterly basis,  since January 1, 1994,
         and pays such dividends within 30 days after each such declaration.  To
         the extent  that  outstanding  shares of Series A  Preferred  Stock and
         Series B  Preferred  Stock  were  repurchased  in  connection  with the
         Private  Placement,  the PBGC agreed that no  dividends of common stock
         would accrue on such  repurchased  shares of preferred stock subsequent
         to March 31,  1994.  In  connection  with such  repurchase  the Company
         agreed to issue to the PBGC shares of the Company's  common stock in an
         amount  equal to the  dividends  that would have  accrued on the shares
         repurchased for a period of 30 days subsequent to March 31, 1994.

         During the fiscal years ended September 29, 1996,  October 1, 1995, and
         October 2, 1994,  the Company  declared  stock  dividends  of $420,000,
         $420,000  and  $2,069,000,  respectively,  resulting in the issuance of
         115,657, 125,588 and 495,403 shares of common stock,  respectively,  at
         an  average  price  per  common  share  of  $3.63,   $3.34  and  $4.18,
         respectively. The $420,000 of dividends declared during the fiscal year
         ended September 29, 1996 were charged to additional paid-in capital. Of
         the $420,000 of dividends declared during the fiscal year ended October
         1, 1995,  $72,000 were charged to retained  earnings and the  remaining
         $348,000 was charged to additional  paid-in capital.  Of the $2,069,000
         of  dividends  declared  during the fiscal year ended  October 2, 1994,
         $1,835,000 were charged to retained earnings and the remaining $234,000
         were charged to additional paid-in capital.

         The dividend for the period July 1, 1996 through  September 29, 1996 as
         declared on October 1, 1996 was approximately  $105,000, which resulted
         in the issuance in October 1996 of 32,796  shares of common stock based
         on a share price of $3.20.

         On December  18, 1996,  The Board  designated a new series of preferred
         stock of the Company termed Series C Participating Preferred Stock $.01
         par value  ("Series C  Preferred")  and reserved 500 shares of Series C
         Preferred for issuance. At the same time, the Board declared a dividend
         of a right to acquire 1/100,000 of a share of Series C Preferred to the
         holder  of  each  share  of  Common  Stock  (the  "Rights")  under  the
         Shareholders  Rights  Plan  adopted on the same date.  The Rights  will
         trade with the common stock and be detachable from the common stock and
         exercisable  only in the event of an  acquistion  of 15% or more of the
         common  stock  by one  party or a  common  group  or a tender  offer to
         acquire 15% or more of the Common Stock.
 <PAGE>
         Warrants

         The Company has 800,000  warrants  outstanding to purchase an aggregate
         of 800,000  shares of its Common  Stock at a price  equal to $4.375 per
         share  subject  to  adjustments   under  certain   circumstances.   All
         outstanding warrants are exercisable at any time on or prior to June 1,
         2003, at which time they will  terminate and become void.  The warrants
         are  detachable  from the Senior  Secured  Notes and,  therefore,  were
         allocated a portion of the  proceeds of the sale of the Senior  Secured
         Notes and warrants in the amount of approximately $1,566,000, which was
         their market value at the time they were issued.  This amount was added
         to additional paid-in capital. As of September 29, 1996 no warrants had
         been exercised.

         Stock Options

         The Company has reserved  1,363,636 shares of common stock to be issued
         and sold pursuant to the 1992 Stock Option Plan that was adopted by the
         Company effective September 27, 1992.  Generally,  of the options under
         this plan granted,  60% vested on May 1, 1994 and the remainder  vested
         on November 1, 1995. Vesting provisions for any additional options will
         be  determined  by the Board of Directors of the Company at the time of
         the grant of such  options.  The stock options are  exercisable  over a
         period  determined  by the Board of Directors or its Option  Committee,
         but not longer than ten years after the date granted.

         During the fiscal year ended  September 26, 1993,  the Company  adopted
         the 1992  Non-Qualified  Stock Option Plan for  non-officer  directors.
         This plan provides  that  directors who are not officers of the Company
         are entitled to forego up to 100% of their annual  retainer in exchange
         for options to purchase the  Company's  common stock at an option price
         of 50% of the market price of the  underlying  common stock at the date
         of grant. The options are exercisable for a period of 10 years starting
         with the date of the grant of each  option.  The plan  provides for the
         granting of stock  options to  purchase up to 150,000  shares of common
         stock.

         During the fiscal year ended October 2, 1994,  the Company  adopted the
         1994 Stock  Option Plan  available  for certain  key  employees  of the
         Company.  The Company has reserved 800,000 shares of common stock to be
         issued under this plan,  provided that the aggregate  number of options
         that may be  granted  under the 1994  Stock  Option  Plan and all other
         stock  option  plans of the Company for  employees  may not at any time
         exceed in the aggregate  15% of the then  currently  authorized  common
         stock  outstanding,  on a fully diluted  basis.  Stock options  granted
         under this plan are exercisable until not later than January 1, 2004.

         During the fiscal year ended  September 29, 1996,  the Company  adopted
         the 1995 Non-Qualified Stock Option Plan available for directors.  Each
         director  is  granted  an  option  to  purchase  10,000  shares  of the
         Company's  common  stock in the case of the  initial  grant  and  5,000
         shares for any  subsequent  grant.  The initial grant occurred upon the
         adoption of this plan.  Options  granted under this plan have a term of
         three  years and may be  exercised  nine  months  after the date of the
         grant. This plan terminates on February 14, 2006.

         Transactions  in stock  options  under  these plans are  summarized  as
         follows (in thousands):
<TABLE>
<CAPTION>
                                                                           Fiscal Years Ended
                                                       -------------------------------------------------------------
                                                        September 29,           October 1,             October 2,
                                                             1996                  1995                   1994
                                                       ----------------     -----------------      -----------------
          <S>                                               <C>                    <C>                 <C>    
          Options outstanding at beginning
            of year                                           1,734                  1,409                    788
          Options granted                                        96                    421                    641
          Options exercised                                       7                      3                      2
          Options canceled                                       29                     93                     18
                                                        -----------             ----------             ----------
          Options outstanding at end of year                  1,794                  1,734                  1,409         
                                                        ===========             ==========             ==========
          Options exercisable at end of year                  1,778                    840                    851 
                                                        ===========             ==========             ==========
                                             
          Option prices per share: 
            Granted                                        $3.375               $1.69-$4.25            $1.75-$4.13
            Exercised                                    $2.75-$3.44                $2.75              $2.75-$3.44
            Canceled                                     $2.75-$4.13            $2.75-$4.13            $2.75-$4.13
</TABLE>

         Approximately  570,000  options  are  available  for  grant  under  the
         Company's stock option plans as of September 29, 1996.

         In  October  1995  the  Financial  Accounting  Standards  Board  issued
         Statement of Financial  Accounting  Standards No. 123,  Accounting  for
         Stock-Based  Compensation  ("SFAS No. 123"). SFAS No. 123 establishes a
         fair value based  method of  accounting  for  stock-based  compensation
         plans,  including  stock option and stock purchase plans. It encourages
         entities to adopt that method in place of the  provisions of Accounting
         Practice Bulletin No. 25, Accounting for Stock Issued to Employees, for
         all arrangements under which employees receive shares of stock or other
         equity  instruments of the employer or the employer incurs  liabilities
         to employees in amounts  based on the price of its stock.  SFAS No. 123
         also establishes  fair value as the measurement  basis for transactions
         in which an entity  acquires  goods or services  from  nonemployees  in
         exchange for equity  instruments.  SFAS No. 123 is effective for fiscal
         years beginning  after December 15, 1995 and will become  effective for
         the Company  beginning in Fiscal 1997.  The adoption of SFAS No. 123 is
         not expected to have a significant  effect on the Company's  results of
         operations, cash flows or financial condition.

         Employee Stock Ownership Plan

         The  Company  has  established  the  Uniroyal  Technology   Corporation
         Employee  Stock  Ownership  Plan (the "ESOP")  effective  September 27,
         1992.  The ESOP is a stock bonus plan  intended to  encourage  eligible
         employees  to  save  for  their   retirement   and  to  increase  their
         proprietary  interest  in the  Company by  accumulating  the  Company's
         common stock.  Eligible employees  generally are all employees employed
         by the  Company  on or  after  January  1,  1993,  excluding  executive
         officers of the Company.

         The Company made an initial  contribution to the ESOP of 425,000 shares
         of common stock. Future contributions by the Company are discretionary.
         The initial  contribution  has been allocated to eligible  employees of
         the Company  ratably based upon the respective  compensation  levels of
         the eligible  employees.  Shares allocated to each participant  account
         under the ESOP become vested upon the participant's completion of three
         years of cumulative service with the Company.  The Company did not make
         any  contributions  to the ESOP during the fiscal years ended September
         29, 1996, October 1, 1995 and October 2, 1994. The Company did not have
         any ESOP  expense  during the fiscal  years ended  September  29, 1996,
         October 1, 1995 and October 2, 1994.

11.      EMPLOYEE COMPENSATION

         Retirement Plan

         All salaried and non-union hourly employees and certain union employees
         of the Predecessor Companies were covered by a retirement plan prior to
         September 27, 1992. The PBGC approved the termination of the retirement
         plan effective  February 20, 1992. During the fiscal year ended October
         2, 1994, the Company received approximately $6,761,000,  net of certain
         expenses,  from the Uniroyal Plastics Acquisition Corp. ("UPAC") estate
         related  to a claim  filed by the  Company  with the  Bankruptcy  Court
         against the UPAC estate. The claim was filed to recover amounts paid by
         the Company to the PBGC on behalf of UPAC. UPAC was an affiliate of the
         Predecessor  Companies.  Such  amount is shown as a recovery of pension
         expense in the accompanying financial statements.

         Post-retirement Health Care and Life Insurance Benefits

         Certain retired employees are currently  provided with specified health
         care and life  insurance  benefits.  Generally,  the plan  provides for
         reimbursement of approved medical and prescription drug costs not fully
         covered by Medicare. The plan also provides for certain deductibles and
         co-payments. The life insurance benefits provide for amounts based upon
         the retirees' compensation at the time of their retirement. Eligibility
         requirements for such benefits vary by division,  but generally provide
         that benefits are available to employees who retire after a certain age
         with specified years of service or a combined total of age and years of
         service.  The Company has the right to modify or  terminate  certain of
         these  benefits.  The  Company's  policy is to pay the actual  expenses
         incurred  by the  retirees;  the  Company  does not  intend to fund any
         amounts in excess of those  obligations.  The Company is also obligated
         to provide  benefits to certain  salaried  retirees of UPC or Uniroyal,
         Inc.  ("Uniroyal")  (not  affiliated  with the  Company)  who are class
         members under a federal district court order. In the Company Settlement
         (Note 13), the Company and the Uniroyal  Parties  (Note 13),  agreed to
         share on a 35%-65% basis, respectively, the costs of providing medical,
         prescription  drug and life insurance  benefits to these retirees.  The
         Company is further  obligated  to make  payments  to an  administrative
         corporation  established to provide benefits to certain retirees of the
         Predecessor Companies and UPC.

         The  Company  adopted  SFAS No. 106 as of  September  27,  1992,  which
         requires that the cost of the  foregoing  benefits be recognized in the
         Company's  financial  statements over an employee's service period with
         the   Company.    The   Company   determined   that   the   accumulated
         post-retirement benefit obligation  ("Transition  Obligation") of these
         plans  upon  adoption  of SFAS No.  106 was  $28,085,000.  The  Company
         elected  to defer the  recognition  of the  Transition  Obligation  and
         amortize it over the greater of the average remaining service period or
         life  expectancy  period of the  participants,  which is expected to be
         approximately  16 years. In connection with the Ensolite Sale (Note 3),
         the  Company  recognized  approximately  $4,500,000  of the  Transition
         Obligation  relating to this employee group as reduction to the gain on
         the sale.

         The following table summarizes the accumulated post-retirement and
         benefit  obligation  included  in  the  Company's  balance  sheets  (in
         thousands):
<TABLE>
<CAPTION>

                                                                           September 29,            October 1, 1995
                                                                               1996
                                                                         ------------------         ----------------
          <S>                                                              <C>                        <C>                    
          Accumulated post-retirement benefit obligation:
            Retirees                                                       $     25,919               $     26,731
            Fully eligible active plan participants                               4,836                      4,554
            Other active plan participants                                        2,904                      4,302
            Plan assets at fair value                                                 -                          -
            Unrecognized prior service cost                                        (290)                      (322)
            Unamortized transition obligation                                   (16,613)                   (22,819)
            Unrecognized net loss                                                (6,279)                    (8,123)   
                                                                           ------------               ------------ 
            Accrued post-retirement benefit obligation                     $     10,477               $      4,323
                                                                           ============               ============ 
</TABLE>
         Not  reflected in the above table is  approximately  $3,600,000  of the
         Transition  Obligation the Company  recognized as of September 29, 1996
         in  connection  with  its  decision  to exit  the  Port  Clinton,  Ohio
         automotive operation (Note 15).

         The net periodic  post-retirement  benefit cost  contains the following
         components (in thousands):

<TABLE>
<CAPTION>
                                                                             Fiscal Years Ended
                                                           -------------------------------------------------------
                                                             September 29,        October 1,          October 2, 
                                                                1996                1995                1994 
                                                           ----------------     --------------    ----------------
          <S>                                            <C>                 <C>               <C>           
          Service cost                                     $      205            $      196           $     196
          Interest cost on projected benefit                    2,366                 2,202               2,202
            obligation                                                                
          Amortization of unrecognized transition  
            obligation                                          1,651                 1,755               1,755
          Amortization of net loss                                362                   140                 140
                                                           ----------            ----------           --------- 
          Net periodic post-retirement benefit cost        $    4,584            $    4,293           $   4,293
                                                           ==========            ==========           =========
</TABLE>

         All post-retirement  benefits are based on actual costs incurred except
         for a certain  group of retirees  which is covered  under an  agreement
         providing   payments  based  on  the  number  of   beneficiaries.   For
         measurement  purposes, an approximately 7.6% annual rate of increase in
         the cost of covered  health  care  benefits  was  assumed for years one
         through  four,  approximately  6.5% for years five through  seven,  and
         approximately  5.5%  thereafter.   The  health  care  cost  trend  rate
         assumption  has a  significant  effect  on the  amounts  reported.  For
         example,  increasing the health care trend rate by one percentage point
         in each year would  increase the  accumulated  post-retirement  benefit
         obligation as of September 29, 1996 by $3,265,000  and the net periodic
         post-retirement benefit cost by $283,000.

         The weighted  average discount rate used in determining the accumulated
         post-retirement  benefit  obligation  and net periodic  post-retirement
         benefit cost was 7.75% for the fiscal year ended September 29, 1996 and
         7.00% for the fiscal years ended October 1, 1995 and October 2, 1994.

         Other Benefit Plans

         The  Royalite,  UEP and UAS  divisions  provide  additional  retirement
         benefits  to  substantially  all of their  employees  and the  Polycast
         division provides such benefits to certain of its employees through two
         defined  contribution  savings  plans.  The plans  provide for employee
         contributions and employer contributions to employee savings.  Employer
         contributions are generally either 2% of salaried and certain non-union
         hourly participants' gross earnings or rates per hour ranging generally
         from $.05 to $.51 based on years of service. The expenses pertaining to
         these plans amounted to approximately $699,000,  $670,000 and $608,000,
         for the fiscal years ended in 1996, 1995 and 1994, respectively.

         In addition,  the Company  provides a savings plan under Section 401(k)
         of the  Internal  Revenue  Code.  The savings  plan covers all eligible
         salaried and non-union wage employees of the Company.  The savings plan
         allows all  eligible  employees to defer up to 15% of their income on a
         pretax  basis  through  contributions  to the savings  plan.  For every
         dollar an employee  contributes  the Company may  contribute  an amount
         equal to 25% of each  participant's  before-tax  obligation up to 6% of
         the participant's compensation.  Such employer contribution may be made
         in cash or in Company  common  stock.  The expenses  pertaining to this
         savings  plan were  approximately  $228,000 and $174,000 for the fiscal
         years ended 1996 and 1995. No expenses were incurred by the Company for
         the fiscal year ended 1994. During Fiscal 1996 the Company  contributed
         60,648 shares of its common stock with a market value of  approximately
         $212,000  to the  savings  plan.  The  Company  did not  make  any such
         contributions during the fiscal years ended in 1995 and 1994.

12.      COMMITMENTS AND CONTINGENCIES

         Bankruptcy Proceedings

         Notwithstanding  the  confirmation  and  effectiveness of the Plan, the
         United States  Bankruptcy  Court for the Northern  District of Indiana,
         South  Bend  Division  (the  "Bankruptcy   Court")  continues  to  have
         jurisdiction  to,  among other  things,  resolve  disputed  prepetition
         claims and to resolve other  matters that may arise in connection  with
         or relate to the Predecessor Companies' Plan. The Company has resolved,
         through  negotiation  or through  dismissal  by the  Bankruptcy  Court,
         approximately  $38,000,000  in disputed  claims.  During  Fiscal  1996,
         pursuant to the Predecessor  Companies'  Plan, the Company  distributed
         1,061,998  shares of common  stock  reserved  for the  satisfaction  of
         disputed  claims;  a total of 9,768,683 such shares have been issued to
         the holders of unsecured  claims against the  Predecessor  Companies in
         settlement of the allowed  unsecured  claims against the estates of the
         Predecessor  Companies and to the Company's ESOP. The Company  retained
         50,843 shares of common stock which are included in treasury stock. The
         remaining  shares are being held pending  resolution of certain retiree
         medical claims.

         Litigation

         Uniroyal  Retiree  Benefits,  Inc.  ("URBI"),  an organization  that is
         unaffiliated with the Company, administers a medical, prescription drug
         and  life  insurance  program  for  certain  retired  employees  of the
         Predecessor   Companies  and  certain  affiliates  of  the  Predecessor
         Companies.   This  program  is  partially  funded  by  the  Company  in
         accordance  with terms of an agreement  entered into by and between the
         predecessors of URBI and the Company in connection with the Predecessor
         Companies'  Plan. The Company has had disputes with URBI concerning the
         eligibility  of certain  participants  in URBI's  medical  plan and the
         level of payments due. URBI had filed a complaint  with the  Bankruptcy
         Court  claiming  the Company had  breached  its  agreement  relating to
         funding URBl's operations. The Company filed counterclaims against URBI
         claiming breach of contract, fraud, negligent misrepresentation, unjust
         enrichment,  declaratory  judgment and  clarification or reformation of
         contract.  The Bankruptcy  Court ruled in favor of URBI with respect to
         certain  matters  and in favor of the  Company  with  respect  to other
         matters.  The effect to the  Company  was a net  judgment  against  the
         Company of approximately  $211,000.  URBI filed an additional complaint
         with the Bankruptcy Court  concerning  payments due in Fiscal 1996. The
         Bankruptcy  Court then  ordered  the  Company to  increase  its monthly
         payments to URBI to approximately  $160,000 through  September 1996 and
         later  ordered the Company to continue  payments at that level  through
         January  1997.  The  Company  filed an  appeal  of  Bankruptcy  Court's
         December 20, 1995 ruling with the United States  District Court for the
         Northern  District  of  Indiana,  South  Bend  Division  which is still
         pending.  The Company has agreed in  principle  with URBI to settle the
         foregoing  litigation  on a level of funding to reflect  URBI's current
         program needs.

         Approximately  130 hourly  employees  at the  Company's  acrylic  sheet
         manufacturing  facility in Stamford,  Connecticut  are  represented  by
         Teamsters  Local  191,  which  is  affiliated  with  the  International
         Brotherhood  of  Teamsters,  Chauffeurs,  Warehousemen  and  Helpers of
         America (the "Teamsters").  The Teamsters declared a strike on July 11,
         1994 and called off the strike  December  10,  1994.  The  Company  and
         Teamsters  settled  their dispute in June 1996.  The Company  agreed to
         settle the claim of the striking  employees  for back pay following the
         receipt of release of claims from such  employees.  The Company settled
         its  obligation  to the  employees  in August  1996  with a payment  of
         approximately $808,000, inclusive of employment taxes of $58,000.

         The  Company is also  engaged  in  litigation  arising in the  ordinary
         course of business.  Management  believes the ultimate  outcome of such
         litigation  will not have a material  adverse effect upon the Company's
         results of operations, cash flows or financial position.

         Environmental Factors

         The Company is subject to a wide range of federal, state and local laws
         and  regulations  designed to protect the environment and worker health
         and safety. The Company's management  emphasizes  compliance with these
         laws and  regulations.  The Company has instituted  programs to provide
         guidance and training and to audit compliance with  environmental  laws
         and  regulations at Company owned or leased  facilities.  The Company's
         policy  is to  accrue  environmental  and  cleanup-related  costs  of a
         non-capital  nature when it is probable  both that a liability has been
         incurred and that the amount can be reasonably estimated.

         The  Company  may  become   subject  to  claims   relating  to  certain
         environmental  matters. The operations of the Predecessor Companies and
         certain of their  affiliates  produced waste materials  that,  prior to
         1980, were disposed of at some 36 known  unregulated  sites  throughout
         the United  States.  After 1980,  waste  disposal  was limited to sites
         permitted under federal and state  environmental  laws and regulations.
         If any of the disposal sites (unregulated or regulated) are found to be
         releasing  hazardous  substances  into the  environment,  under current
         federal and state environmental laws, the companies that sent hazardous
         waste materials to such sites could be subject to liability for cleanup
         and containment costs.

         Prior to the effective date of the Predecessor  Companies' Plan several
         sites were  identified  where there were potential  liabilities for the
         cost of  environmental  cleanup.  In  most  instances,  this  potential
         liability  resulted  from  the  alleged  arrangement  for the  off-site
         disposal of hazardous substances by Uniroyal, Inc.

         Pursuant to a settlement agreement with the United States Environmental
         Protection Agency ("EPA"), the United States Department of the Interior
         and  the  States  of  Wisconsin   and  Indiana  (the  "EPA   Settlement
         Agreement"),  entered into in connection with the Plan, the Predecessor
         Companies  compromised and settled (in exchange for common stock of the
         Company)  substantially  all  of  the  prepetition  liabilities  of the
         Predecessor  Companies and the Company relating to disposal  activities
         under Sections 106 and 107 of the Comprehensive  Environmental Response
         Compensation and Liability Act ("CERCLA"), Section 3008 of the Resource
         Conservation  and  Recovery  Act  ("RCRA")  and similar  state laws for
         cleanup of the remaining unsettled 20 designated sites not owned by any
         of the  Predecessor  Companies  (the  "Known  Sites")  and for  natural
         resource  damages  at 15 of the 20  Known  Sites.  Pursuant  to the EPA
         Settlement  Agreement,   the  Predecessor  Companies  and  the  Company
         received from the United States and the States of Indiana and Wisconsin
         a covenant not to sue for  response  costs and,  with the  exception of
         five Known Sites,  natural resource damages at each of the Known Sites.
         In addition,  pursuant to Section 113(f)(2) of CERCLA,  and as provided
         under the EPA Settlement  Agreement,  the Predecessor Companies and the
         Company will be protected against  contribution claims filed by private
         parties  for any Known Site for matters  covered by the EPA  Settlement
         Agreement. The EPA Settlement Agreement established a mechanism for the
         Company to resolve its  liability  for any other  sites,  except  those
         owned by the Company (the "Additional Sites"), arising from prepetition
         disposal  activity.   The  Company  also  agreed  to  share  with  such
         governmental parties the proceeds of claims relating to the Known Sites
         made against certain  insurers of the  Predecessor  Companies and their
         affiliates.

         In the event that the United  States,  or the State of Wisconsin or the
         State  of  Indiana  asserts  a  claim  against  any of the  Predecessor
         Companies or the Company for response costs associated with prepetition
         disposal activities at any Additional Site, the governmental party will
         be entitled to pursue its claim in the ordinary course, and the Company
         and the  Predecessor  Companies will be entitled to assert all of their
         defenses.  However,  if and when the Company or any of the  Predecessor
         Companies is held liable,  and if the  liability is determined to arise
         from prepetition disposal  activities,  the Company or such Predecessor
         Company may pay the claims in discounted  "plan  dollars" (the value of
         the  consideration  that the party  asserting  such  claim  would  have
         received if the  liability  were treated as a general  unsecured  claim
         under the Plan).  Such payment may be made in cash or securities,  or a
         combination  thereof,  at the Company's or such  Predecessor  Company's
         option. The Company  is not  aware  of any material claims  related  to
         Additional Sites.

         Claims arising from real property owned by the Company are not affected
         by the EPA Settlement Agreement.  In connection with the acquisition of
         a manufacturing  facility in South Bend,  Indiana,  the Company assumed
         costs of remediation of soil and ground water  contamination  which the
         Company   estimates  will  cost  not  more  than   $1,000,000   over  a
         five-to-seven-year  period.  The  Company has placed  $1,000,000  in an
         escrow  account to be used for such  clean-up  in  accordance  with the
         terms of the purchase agreement.

         The Company has  established  a reserve  for cleanup  costs,  including
         environmental  remediation costs,  related to the Ensolite Sale and the
         Company's planned exit from its Mishawaka, Indiana leased manufacturing
         facility.  The Company estimates the cost for all such cleanup costs to
         be approximately  $610,000;  however,  the ultimate cost will depend on
         the  extent  of  contamination  found as the  project  progresses.  The
         Company expects the clean-up to be  substantially  completed within one
         year.

         Based on  information  available as of September 29, 1996,  the Company
         believes that the costs of known environmental matters either have been
         adequately  provided  for or are  unlikely  to have a material  adverse
         effect on the Company's operations, cash flows or financial position.

         Leases

         The Company is a party to  non-cancelable  lease  agreements  involving
         equipment.  The  leases  extend for  varying  periods up to 5 years and
         generally  provide for the payment of taxes,  insurance and maintenance
         by the  lessee.  Generally  these  leases  have  options to purchase at
         varying dates.

         The  Company's  property  held under  capitalized  leases,  included in
         property,  plant and  equipment  (Note 5) consists of the following (in
         thousands):
<PAGE>
<TABLE>
<CAPTION>
                                                                        September 29,             October 1,
                                                                            1996                     1995 
                                                                      ----------------          --------------
          <S>                                                         <C>                         <C>     
          Machinery, equipment and office furnishing                  $       1,445               $     1,199
          Construction in progress                                              969                       969
          Less accumulated amortization                                        (308)                     (146)
                                                                      -------------               -----------
                                                                      $       2,106               $     2,022
                                                                      =============               ===========
</TABLE> 
         The   approximate   minimum  future  lease   obligations  on  long-term
         non-cancelable capital lease obligations included in long-term debt
         (Note 8) during  subsequent  fiscal years  ending in  September  are as
         follows (in thousands):
<TABLE>
                                <S>                                   <C>   
                                Fiscal Year
                                  1997                                $         761
                                  1998                                          500
                                  1999                                          182     
                                  2000                                          125
                                  2001                                           14
                                                                      -------------
                                                                              1,582       
                                Less imputed interest                           180
                                                                      -------------
                                Total                                 $       1,402
                                                                      =============
</TABLE>
     
         Interest is imputed  using the rate that would equate the present value
         of  the  minimum  lease  payments  to the  fair  value  of  the  leased
         equipment.

         The Company leases  equipment,  vehicles and warehouse and office space
         under  various  lease  agreements,  certain  of which  are  subject  to
         escalations  based upon  increases in specified  operating  expenses or
         increases in the Consumer Price Index.  The approximate  future minimum
         rentals under non-cancelable  operating leases during subsequent fiscal
         years ending in September are as follows (in thousands):

 <TABLE>
                                <S>                                   <C>   
                                Fiscal Year
                                  1997                                $       1,021
                                  1998                                          650
                                  1999                                          505     
                                  2000                                          497
                                  2001                                           47
                                                                      -------------
                                Total                                 $       2,720
                                                                      =============
</TABLE>                           

         Rent expense was  approximately  $1,592,000,  $1,643,000 and $2,056,000
         for the years ended September 29, 1996,  October 1, 1995 and October 2,
         1994, respectively.

         Officers' Compensation

         On August 1, 1995 the Company implemented a Deferred  Compensation Plan
         providing  certain key employees the  opportunity  to participate in an
         unfunded deferred compensation program. Under the program, participants
         may defer a portion of their base  compensation and bonuses earned each
         year. Amounts deferred will earn interest at 12% per annum. The program
         is not  qualified  under  Section 401 of the Internal  Revenue Code. At
         September 29, 1996 and October 1, 1995 participant  deferrals which are
         included   in  accrued   liabilities   were   $173,000   and   $17,000,
         respectively.  The expense  during the fiscal year ended  September 29,
         1996 and October 1, 1995 was $156,000 and $17,000, respectively.

         Also during the fiscal year ended  October 1, 1995,  split  dollar life
         insurance  contracts  were purchased on the lives of the five executive
         officers.  Insurance  premiums of $186,000 were paid during each of the
         fiscal  years  ended  September  29,  1996 and  October 1, 1995.  As of
         September  29,  1996  and  October  1,  1995,  $356,000  and  $178,000,
         respectively,  had been capitalized to reflect the cash surrender value
         of these contracts net of loan balances.

         As of September 29, 1996,  the Company had  employment  contracts  with
         four officers of the Company,  providing  for total annual  payments of
         approximately $1,339,000 plus bonuses through September 1997.

13.      RECOVERY FROM INSURANCE SETTLEMENT

         As a result of the EPA  Settlement  Agreement  (Note 12),  the  Company
         filed  claims  to  recover  amounts  payable  under  various  insurance
         policies issued in the name of Uniroyal.  To consolidate the processing
         of claims of the Company and Uniroyal and to establish their respective
         entitlement  to proceeds,  if any, of the claims  submitted,  on May 6,
         1993,  the Company  entered into a settlement  agreement  (the "Company
         Settlement") with Uniroyal,  CDU Holding  Liquidating Trust ("CDU") and
         Uniroyal Holding,  Inc. ("UHI")  (collectively the "Uniroyal  Parties")
         pursuant to which the Company and the Uniroyal Parties resolved certain
         existing and potential disputes arising from the acquisition by UPAC of
         UPC from Uniroyal.  Uniroyal was dissolved in December 1986 and CDU and
         UHI were  affiliates of Uniroyal.  In connection with the resolution of
         the matters  covered by the Company  Settlement,  the Uniroyal  Parties
         paid  $2,250,000  in cash to the Company upon  execution of the Company
         Settlement.   In  exchange,  the  Company  agreed  to  certain  matters
         involving the  prosecution  and  settlement  of claims under  insurance
         policies of the Uniroyal Parties that covered environmental liabilities
         at certain of the Known Sites (the "Class A Sites").

         The Company  Settlement  also provides that the Company will  indemnify
         and  hold   harmless  the   Uniroyal   Parties  with  respect  to:  (a)
         environmental  liabilities  associated  with  sites  that were owned or
         operated by the Company or the Predecessor Companies on or prior to the
         date  of  the  Company   Settlement;   and  (b)  future   environmental
         expenditures by the Uniroyal  Parties with respect to the businesses of
         UPC net of recoveries  from third parties  (including  insurance),  but
         only with  respect to the portion of such  expenditures,  if any,  that
         exceeds $30,000,000 and is less than $45,000,000.

         During the fiscal years ended October 1, 1995 and October 2, 1994,  the
         Company reached agreements with several insurance  companies to recover
         amounts  with  respect to  environmental  claims.  As a result of these
         agreements, the Company recorded as income approximately $1,176,000 net
         of certain  professional  fees and other  expenses  in the fiscal  year
         ended  October 2, 1994 and  approximately  $70,000  in the fiscal  year
         ended October 1, 1995.

14.      RELATED PARTY TRANSACTIONS

         In connection with the Ensolite Sale, the Company utilized the services
         of an  investment  banking  firm that  employs a relative of one of the
         Company's  executive  officers.  This firm also provides  certain other
         services  to the  Company on a periodic  basis.  The  Company  incurred
         expenses  related to services  provided  by this firm of  approximately
         $258,000 during the fiscal year ended September 29, 1996.

15.      SUBSEQUENT EVENTS
         
         On December 11, 1996 the Company  determined  to exit the Port Clinton,
         Ohio automotive operation of the Coated Fabrics Segment. The automotive
         operation incurred operating losses of approximately $7,640,000 (before
         consideration  of the estimated loss reserves  totalling  $12,500,000),
         $5,540,000 and $3,696,000  during the fiscal years ended  September 29,
         1996, October 1, 1995 and October 2, 1994, respectively.  In accordance
         with  SFAS  No.  121  the  Company   established   reserves   totalling
         approximately  $12,500,000  during the fiscal year ended  September 29,
         1996. The carrying value of the long-lived assets to be disposed of was
         $11,504,000 as of September 29, 1996.

         On January 3, 1997, the Company  issued a  notice  that it would redeem
         the remaining 20 shares of Series B Preferred Stock held by the PBGC on
         February 3, 1997.  See Note 10 for further  description  of  redemption
         terms.

<PAGE>
16.      SEGMENT INFORMATION

         Identifiable assets by segment are those assets that are used solely in
         the Company's  operations  in each segment.  The Company did not derive
         10% or more of its sales  from any  single  customer  during the fiscal
         years ended September 29, 1996, October 1, 1995 and October 2, 1994 .

         Segment data for the fiscal years ended September 29, 1996,  October 1,
         1995 and October 2, 1994 are as follows (in millions):
<TABLE>
<CAPTION>

                                                                           Fiscal Years Ended
                                                        ------------------------------------------------------------
                                                         September 29,          October 1,              October 2,
                                                              1996                 1995                    1994
                                                        -----------------      ---------------        --------------
          <S>                                              <C>                 <C>                    <C> 
          Net sales:
            High performance plastics                       $      115.1       $      112.2           $      105.5
            Coated fabrics                                          58.7               56.1                   49.2
            Specialty adhesives                                     35.5               46.7                   42.8 
                                                            ------------       ------------           ------------
              Total                                         $      209.3       $      215.0           $      197.5
                                                            ============       ============           ============

          Operating (loss) income:
            High performance plastics                       $        7.0       $       13.0           $        9.2
            Coated fabrics                                         (19.0)              (4.9)                  (4.8)
            Specialty adhesives                                      0.1                2.1                    4.1
            Unallocated                                             (0.8)              (0.7)                   6.9   
                                                            ------------       ------------           ------------
              Total                                         $      (12.7)      $        9.5           $       15.4  
                                                            ============       ============           ============

          Identifiable assets:
            High performance plastics                       $       81.7       $       80.1           $       74.0
            Coated fabrics                                          45.9               51.0                   51.3
            Specialty adhesives                                      9.3               24.9                   24.9
            Corporate                                               33.9               24.5                   29.1
                                                            ------------       ------------           ------------
              Total                                         $      170.8       $      180.5           $      179.3
                                                            ============       ============           ============

          Depreciation and amortization:
            High performance plastics                       $        4.4       $        4.0           $        3.5
            Coated fabrics                                           3.7                3.6                    3.1
            Specialty adhesives                                      1.6                1.9                    1.8
            Unallocated                                              0.9                0.8                    1.0
                                                            ------------       ------------           ------------
              Total                                         $       10.6       $       10.3           $        9.4
                                                            ============       ============           ============

          Capital expenditures:
            High performance plastics                       $        3.9       $        4.5           $        4.1
            Coated fabrics                                           2.4                1.3                    1.1
            Specialty adhesives                                      1.8                0.8                    1.1
            Corporate                                                2.0                2.2                    0.4
                                                            ------------       ------------           ------------
              Total                                         $       10.1       $        8.8           $        6.7
                                                            ============       ============           ============
                                                                               
</TABLE>

         The amount shown as unallocated  operating (loss) income for the fiscal
         year ended October 2, 1994 includes (i) amortization of  reorganization
         value  in  excess  of  amounts  allocable  to  identifiable  assets  of
         $1,003,000;  (ii) recovery from insurance settlement of $1,176,000; and
         (iii) recovery of pension expense of $6,761,000.



<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders
Uniroyal Technology Corporation
Sarasota, Florida

We have  audited the  balance  sheets of Uniroyal  Technology  Corporation  (the
"Company")  as of  September  29,  1996 and  October  1, 1995,  and the  related
statements of  operations,  changes in  stockholders'  equity and cash flows for
each of the three years in the period ended  September  29, 1996 and have issued
our report thereon dated December 20, 1996,  except for the second  paragraph of
Note 15 as to which the date is January 3, 1997  (included in this Form 10-K/A).
Our audits also included the accompanying financial statement schedule listed in
Item  14  of  this  Form  10-K/A.  This  financial  statement  schedule  is  the
responsibility of the Company's management.  Our responsibility is to express an
opinion based on our audits. In our opinion,  such financial statement schedule,
when considered in relation to the basic financial  statements taken as a whole,
presents fairly in all material respects the information set forth therein.



/S/ DELOITTE & TOUCHE LLP
-------------------------
DELOITTE & TOUCHE LLP
Tampa, Florida
December 20, 1996,
  except for the second paragraph
  of Note 15 as to which the 
  date is January 3, 1997






























                                       S-1
<PAGE>
<TABLE>
<CAPTION>
                                                                           SCHEDULE VIII


                                                                   UNIROYAL TECHNOLOGY CORPORATION
                                                                  VALUATION AND QUALIFYING ACCOUNTS
                                                                            (in thousands)




                                          COLUMN A          COLUMN B          COLUMN C        COLUMN D       COLUMN E

                                                                                ADDITIONS
                                         BALANCE AT        CHARGED (CREDITED)    CHARGED                        
                                       BEGINNING OF         TO COSTS AND        TO OTHER                        BALANCE AT
                                           PERIOD             EXPENSES            ACCTS.        DEDUCTION      END OF PERIOD
              DESCRIPTION
                                                                 (a)               (b)
<S>                                            <C>            <C>               <C>             <C>              <C>                
  Year ended September 29, 1996                $ 437           $   (6)           $  27           $ (89)           $ 369
    Estimated reserve for
    doubtful accounts

  Year ended October 1, 1995                   $ 629           $ (217)           $ 114           $ (89)           $ 437
    Estimated reserve for
    doubtful accounts

<FN>
(a)       Amount represents recovery of amounts previously written-off.
(b)       Amount includes write-off of uncollectible accounts.
</FN>
</TABLE>

























                                       S-2
<PAGE>
                                   SIGNATURES

Pursuant to the  requirements  of Section 13 or 15(d) of the  Securities  Act of
1934,  the  Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.

                        UNIROYAL TECHNOLOGY CORPORATION


Date:  January 22, 1997                         By:  /s/ George J. Zulanas, Jr.
                                                     --------------------------
                                                     George J. Zulanas, Jr.
                                                     Vice President,
                                                        and Chief Financial 
                                                        Officer

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





* Howard  R. Curd                                    * Curtis L.Mack
----------------------                               ------------------------
Howard R. Curd, Chairman of                          Curtis L. Mack, Director
 the Board and Chief Executive Officer               Date:  January 22, 1997 
Date:  January 22, 1997                                         


* Robert  L. Soran                                   * Roland H. Meyer 
--------------------------                           ------------------------
Robert L. Soran, Director, President                 Roland H. Meyer, Director 
  and Chief Operating Officer                        Date:  January 22, 1997 
Date:  January 22, 1997

                            
/s/  George J. Zulanas Jr.                           * John A. Porter 
--------------------------                           ------------------------
George J. Zulanas Jr. Vice                           John A. Porter, Director
  President and Chief Financial Officer              Date:  January 22, 1997
Date:  January 22, 1997


* Peter C. B. Bynoe                                  * Thomas J. Russell
--------------------------                           ------------------------
Peter C. B. Bynoe, Director                          Thomas J. Russell, Director
Date:  January 22, 1997                              Date:  January 22, 1997

 
* Richard D.Kimbel
-------------------------- 
Richard D. Kimbel, Director
Date: January 22, 1997


* By: /S/ Oliver J. Janney
       ------------------
       Oliver J. Janney, Attorney-in-Fact
       January 22, 1997