SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC  20549

FORM 10-K
(Mark One)
|_X_|	Annual report pursuant to Section 13 or 15(d) of the Securities 
Exchange Act of 1934
		For the fiscal year ended December 31, 1998
 ___
|   |Transition report pursuant to Section 13 or 15(d) of the Securities 
Act of 1934
		For the transition period from _____________ to ____________

Commission file number 1-1212
DRIVER-HARRIS COMPANY
---------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
         New Jersey						                           22-0870220
---------------------                            ----------------------
(State or other jurisdiction of incorporation     I.R.S. Employer I.D.#
  or organization

308 Middlesex Street, Harrison, New Jersey	                     07029
----------------------------------------------              -----------
(Address of principal executive offices)		                    (Zip Code)

Registrant's telephone number, including area code		(973) 483-4802
							------------------------------------
Securities registered pursuant to Section 12(b) of the Act:
                       						     			Name of each exchange
	Title of each class:		      			     on which registered:
	----------------------					         ------------------------
	Common stock - par value $0.83 1/3			American Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:		NONE

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 shorted period that the 
Registrant was required to file such reports), and (2) has been subject to 
such filing requirements for the past 90 days.       YES  _X_        NO ___

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

The aggregate market value of the voting stock held by non-affiliates and 
the total number of common shares outstanding as of March 22, 1999:
Market Value-$3,512,325                       Common Stock - 1,352,833 Shares

DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the annual proxy statement anticipated to be filed on or about 
April 28, 1999 are incorporated into Part III.
<PAGE>
PART I

Item 1.		Business
(a)        General Development of Business

The Company is engaged in the business of manufacturing and marketing non-
ferrous metal products, principally insulated electrical wire and cable 
through its wholly owned subsidiary, Irish Driver-Harris Co. Ltd., located 
in Ireland and the U.K.

In 1994, the Company restructured its operations whereby the Company 
transferred its overseas resistance operations and its U.S. operating 
subsidiary to Harrison Alloys Inc., ("Harrison") in exchange for an 
increase to 50% of the Company's ownership of Harrison.

In February 1995, Harrison sold its foreign operations to Kanthal AB, 
a Swedish company, and used a portion of the proceeds to repay a bank 
loan ($2,529,000) which the Company had guaranteed.

In September 1997, the Company sold its 50% interest in Quality Heat 
Treatment Pty. Ltd., a company in the furnace manufacturing and heat 
treating business, located in Australia, for a net profit of $128,000.

In November 1996, the Company acquired the assets of a distribution company, 
Kestrel Cables Distribution Ltd. ("Kestrel") in the U.K. for $1,342,000.  
After incurring substantial losses in 1997 and 1998, Kestrel was closed 
and the net assets transferred to the Company's other U.K. distributor 
Kingston Cable Distributors.

(b)        Financial Information About Industry Segments

Financial information about the Company's operating segments, manufacturing, 
located in Ireland and distribution, located in the U.K. is presented in 
Note 8 to the accompanying financial statements.

(c)	Narrative Description of Business

(i)  The principal products manufactured by the Registrant and its 
subsidiaries are insulated electrical wire and cable.  These products are 
sold principally to the construction, appliance, and electrical equipment 
industries by the Company's sales staff and through agents.

	The following represents a breakdown of the Registrant's total net sales 
for the last three fiscal years (in thousands):
<TABLE>
	          			Insulated Electrical
				          Wire & Cable          		Other
  <C>          <C>                   <C>
		1996		       $36,974		            	$3,321
		1997		        39,525              	 1,066
		1998		        40,38	                    0
</TABLE>
 <PAGE>
(ii)  The Company's specialty cable operation in Kilkenny, Ireland began 
producing cable in the fall of 1997.  The focus of this factory is to 
manufacture lower volume, higher value-added cable products as part of the 
Company's ongoing effort to shift its manufactured product orientation 
toward higher margin specialty cable.  The Kilkenny plant's initial product 
is a high quality fire alarm cable designed to comply with the most 
stringent alarm cable standards worldwide.	      

(iii)  The principal sources of raw material for insulated electrical 
wire and cable products-- copper wire conductor and PVC insulating materials
 -- are refining and wire drawing and chemical companies, respectively.  
During the past fiscal year, availability of raw materials was satisfactory, 
although copper prices experienced a gradual decline throughout the year.


(iv)  The Company owns certain trademarks which are maintained 
internationally.  As part of the 1994 restructuring described in Item 1(a), 
the Company granted Harrison a license to use certain trademarks in 
consideration for specified license fees which have presently been deferred.


	Except as mentioned above, there are no patents, licenses, franchises or 
concessions held that are material to the business of the Registrant or its 
subsidiaries.

(v)  The business of the Registrant is not of a seasonal nature.

(vi)  Following industry practice, the Registrant and its subsidiaries 
grant payment terms to their customers ranging from 60 days to 150 days 
depending on the countries where the companies do business.

(viii)  The following amounts represent the backlog of orders believed to 
be firm as of the end of each year; all were expected to be filled within 
the following year:
<TABLE>
          					Irish Driver-Harris Co. Ltd.
 <S>                <C>
	December 31, 1997			$ 70,000
	December 31, 1998			  30,000
</TABLE>
(ix)  No material portion of the business of the Registrant and its 
subsidiaries is subject to renegotiation of profits or termination of 
contracts or subcontracts at the election of the U.S. government.

(x)  The Registrant's insulated wire and cable products are marketed 
primarily in Ireland, the U.K., the European continent, and the Mid and 
Far East.  Such products are essentially similar to those of its competitors 
of which there are many, some substantially larger than the Company.  The 
principal methods of competition are price, quality, and fast response to 
customers' orders.
<PAGE>
(xi)  The Registrant believes that the cost of research and development 
activities was not material during the past three fiscal years.  No 
employees were engaged in such activities on a full-time basis during that 
period.  All research and development projects are performed by engineering 
and production personnel in conjunction with other functions without 
separate accounting therefor.
 
      (xii) The number of persons employed by the Registrant and its 
subsidiaries at the end of the last fiscal year was 165.
 
(d)        Financial Information about Foreign and Domestic Operations 
and Export Sales

(i)  Information regarding foreign and domestic operations is provided 
in Notes 2 and 8 to the consolidated financial statements.
 
(ii)  The Registrant depends solely on foreign operations for the generation 
of earnings.  The insulated wire and cable operations are located in 
Ireland and the U.K.  These countries are considered to have relatively 
stable governments and minimum political risk; nonetheless there is 
exposure to fluctuations in currency exchange rates and normal business risk.


	(e)	Executive Officers of the Registrant   	
<TABLE>
 <S>                <C>  <S>
	Name		           		Age		Position
	Frank L. Driver IV	 38		President, Chief Executive Officer
	Lavinia Z. Emery		 54		Secretary and Assistant Treasurer
	Thomas J. Carey		 62		Chief Financial Officer
</TABLE>
	Officers are elected annually by the Board of Directors for one-year 
terms expiring in June.

	Mr. Frank L. Driver IV joined the Company in 1989 as Assistant Controller; 
in 1991 he was elected Vice President-Marketing and in 1993 he became Vice 
President-Finance.  In September 1994, he was elected President.  Prior to 
joining the Company, he was a senior financial analyst with General Motors 
Corp.  Mr. Driver is the nephew of Mr. David A. Driver, Chairman of the 
Company.

	Ms. Lavinia Z. Emery joined the Company in 1982 in an administrative 
capacity.  In 1985 she was elected Assistant Secretary and Assistant 
Treasurer.  In 1998 she was elected Secretary and Assistant Treasurer.
<PAGE>
	Mr. Thomas J. Carey was hired by the Company as a Consultant and Chief 
Financial Officer in 1995.  In 1992 through 1994, he was Chief Financial 
Officer of the Home News Company, New Brunswick,  NJ and prior to that a 
partner of Deloitte & Touche.




Item 2.		Properties

	The principal properties of the Registrant and its subsidiaries are two
 plants and related distribution centers in Ireland.  The main plant was 
constructed in 1990 and is deemed adequate for the enterprise.  Additional 
adjacent land was acquired in 1997 for expansion.  Both are owned by the 
Irish subsidiary and subject to liens by the lenders.  The second plant 
was acquired under a long-term Irish Development Authority financing plan 
in 1997 and has adequate room for expansion.

Item 3.		Legal Proceedings

	None of material nature.

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

	None in the fourth quarter of 1998.

PART II

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

	(a)	The Company's common stock is traded on the American Stock Exchange. 
The high and low sales prices for the stock were as follows:
<TABLE>
	
		               1998                     1997          
	Quarter	       High	     Low	      	High	     Low
<S>           <C>         <C>          <C>       <C>
First		       10 5/8      8 1/2        10        8 5/8
Second	       10 5/8     10            10 5/8    9 5/8
Third		       11   	      8 3/8		      13 1/4   10
Fourth	        9 1/8      2 3/4		      13 3/4    9 3/4
</TABLE>
(b)	The approximate number of common shareholders as of March 22, 1999 
was 390.  This figure represents the sum of the number of shareholders of 
record, plus an estimate of the number of individual shareholders whose 
shares are held collectively by stockbrokers.

	(c)	The Company did not pay cash dividends during 1998 and 1997.  The note 
payable to the Pension Benefit Guaranty Corporation (PBGC) prohibits the 
payment of cash dividends without permission of the PBGC (reference is made 
to Note 4 to the consolidated financial statements).

<PAGE>
Item 6.		Selected Financial Data
<TABLE>
									                                              Pro Forma
									                                              (Unaudited)
                				1998	    1997    	1996	    1995     	1994         1994
					(Amounts in thousands, except per share data)

Net Sales and 
   <S>            <C>       <C>     <C>       <C>         <C>        <C>
   Other Revenues	$40,529   $40,754 $41,322   $36,719     $29,060    $60,558

Net(Loss)Income    (2,080)    (565)   2,452     1,332       (490)      (976)

Total Assets       20,564    20,724  21,178    16,255          -      15,893

Long-term Debt	     2,142     2,524   2,023     1,907          -       2,734

Per Common Share:
  Basic Net (Loss) 
   Income         $(1.55)    $(.42)  $1.86    $1.03       $(.38)     $(.75)
		        ====     ====     ====     ===          ===       ===

Diluted Net (Loss)
   Income         $(1.55)   $(.42)   $1.86    $1.03       $(.38)       $(.75)
			  ====     ===      ===      ===          ===          ===

Basic Earnings Per Share
  Weighted Average Shares
  Outstanding	    1,344     1,339   1,317    1,295         1,294      1,294
			  ====    ====    ====      ====          ====      ====
Diluted Earnings Per Share
  Weighted Average Shares
  Outstanding	    1,355*   1,354*  1,321    1,296         1,294       1,294
			  ====    ====    ====      ====         =====        ====
</TABLE>
* Adjusted weighted average shares outstanding was not used to calculate 
diluted earnings per share since the effect on earnings per share would be 
antidilutive.

	During 1998, the Company adopted the provisions of Financial Accounting 
Standards Statement No. 131, "Disclosures about Segments of an Enterprise 
and Related Information".  This information is presented in Note 8 to the 
financial statements.

	During 1997, the Company adopted the provisions of Financial Accounting 
Standards Statement No. 128, "Earnings Per Share".  As a result all prior 
year share amounts have been recalculated to conform with Statement 128.

	In 1997, the Company sold its 50% interest in Quality Heat Treatment Pty. 
Ltd. a company in the furnace manufacturing and heat treating business, 
located in Australia, for a net profit of $128,000 ($.09 per share).
<PAGE>
Item 7.		Management's Discussion and Analysis of Financial Condition and 
Results of Operations

	In 1996, the Company's fifty percent owned company, Harrison, sold its 
foreign operations to Kanthal AB a Swedish company.  (See Note 1 of the 
financial statements.)  This transaction increased net income by $895,000 
($.68 per share).

	In 1994, the Company restructured its foreign electrical resistance wire 
operations and divested its U.S. operating company.  The pro forma amounts 
in Item 6,  Selected Financial Data, give effect to the restructure on 
March 18, 1994 and Alloys' divestiture as if both transactions occurred on 
January 1, 1994.

Overview and Financial Condition:
	The Company, directly and through its subsidiaries and affiliate, is 
engaged in the business of manufacturing insulated electrical wire and 
cable through its wholly owned subsidiary, Irish Driver-Harris Co. Ltd., 
located in Ireland and the U.K.

	In 1994, the Company restructured its operations whereby the Company 
transferred its overseas resistance operations to Harrison Alloys Inc. as 
well as its U.S. operating subsidiary in exchange for an increase to 50% 
of the Company's ownership of Harrison.  Although Harrison is required to 
pay to the Company license fees and commissions totaling $500,000 per year 
from 1994 to 2003, which is recorded in other income, no payments have been 
received since December 1996 and Harrison is presently restructuring its
operations. Income from Harrison will not be recorded until amounts are 
received.  No amounts were received in 1998 or 1997.

	Under the New Jersey Industrial Site Recovery Act certain clean-up 
procedures must be completed with respect to the New Jersey locations.  
Harrison has assumed all of the obligations and liabilities of the 
Registrant and Alloys under any federal and state environmental laws 
pursuant to the 1994 restructuring.

	The Company has a note payable to the Pension Benefit Guarantee Corporation 
("PBGC") which is due September 2000.  The PBGC has the right to convert 
the entire unpaid principal and accrued interest into common stock of the 
Company.  Until the note is paid in full, the Company may not pay cash 
dividends on its capital stock without permission from the PBGC.  See 
further discussion in Note 4 to the consolidated financial statements.

	In connection with the sale by Harrison of its foreign subsidiaries in 
February 1996, and repayment by Harrison of bank debt, guaranteed by the 
Company, with a portion of the proceeds, the Company (i) collected certain 
receivables from Harrison, (ii) repaid domestic bank debt and, (iii) was 
relieved of the Harrison debt guarantee obligation.

	In November 1996, the Company purchased the assets of a distribution 
company, Kestrel, in the U.K. for $1,342,000.  Kestrel incurred substantial 
losses in 1997 and 1998 and the facility was closed in August 1998.  The 
net assets of Kestrel were transferred to the Company's other U.K. 
distribution company Kingston Cable Distributors Ltd. at that time.  
Closure costs totaled approximately $117,000 and is recorded in cost of
 sales.
<PAGE>
	Capital expenditures during the year totaled approximately $272,000, 
including approximately $230,000 at the Company's Irish subsidiary.  Cash 
flow from short-term borrowings was sufficient to fund these capital 
expenditures.  At December 31, 1998, the Company's subsidiaries had 
approximately $6,704,000 of available bank lines of credit of which 
$4,677,000 was outstanding at December 31, 1998.  The Company had 
$362,000 in cash on hand at December 31, 1998.

	The ratio of current assets to current liabilities was 1.17 at the end of 
1998, compared with 1.36 at the end of 1997.   The decrease is attributable 
to the losses incurred in the current year.

	The Company believes it has adequate cash flow from operations to meet its 
ongoing obligations including debt repayments and capital commitments in 
Ireland.

Market Risks

Foreign Currency Fluctuations
	With operations in three different countries, the Company's operating 
results may be adversely affected by significant fluctuations in the 
relative values among the U.S. Dollar, Irish Punt and the British Pound 
Sterling.  The Company is periodically involved in hedging currency 
between the Irish Punt and the British Pound Sterling through the use of 
futures contracts which are relatively short term in nature.  The company 
historically has experienced minimal gains and losses on such foreign 
currency hedging.

Debt Instruments
	The Company's long term debt of $2,741,000, is primarily fixed rate debt 
of which $1,124,000 is U.S. denominated with the remaining balance primarily 
denominated in Irish Punt.  The Company's remaining debt of $4,677,000 is 
solely comprised of variable rate, short-term facilities denominated 
primarily in Irish Punt which does not subject the Company to significant 
interest rate risk as the borrowings are short term.  The Company does not 
believe any reasonable hypothetical interest rate change in the ensuing year 
would have a material impact on the Company's Statement of Operations.

Price Fluctuations and Availability of Raw Materials
	Copper is the principal raw material purchased by the Company, and the 
Company's sales may be affected by the market price of copper.  The 
Company generally does not hedge potential changes in copper prices.

	The Company also purchases insulating compounds, such as PVC, from 
various suppliers.  Although the Company has not experienced any shortages 
of these compounds, the inability of suppliers to supply such raw material 
could have a material adverse effect on the Company's business until a 
replacement supplier is found or substitute materials are approved for use.
 Although the Company has generally been able to pass on increases in the 
price of copper and other raw materials to its customers, there can be no
assurance that the Company will be able to do so in the future.  
Additionally, significant increases in the price of copper or other raw 
materials could have a negative effect on demand for the Company's products.
Similarly, significant increases in the price of copper, or shortage of 
such other raw materials, over time could have a material adverse effect on 
the Company's business.
<PAGE>
Competition
	The Company is subject to competition from a substantial number of 
international competitors, some of which have greater financial, engineering,
manufacturing and other resources than the Company.  The Company's 
competitors can be expected to continue to aggressively pursue increases 
in market share.  Although the Company believes that it has certain 
advantages over its competitors, realizing and maintaining such advantages 
will require continued investment by the Company in engineering, marketing 
and customer service and support.  There can be no assurance that the 
Company will have sufficient resources to continue to make such investments 
or that the Company will be successful in maintaining such advantages.

Impact of Year 2000
	Many computer systems currently record years in a two-digit format.  Such 
computer systems, if not modified, will be unable to properly recognize 
dates beyond the year 1999.  This inability to recognize the year 2000 is 
commonly referred to as the "Year 2000 Issue".

	The holding company in the United States has no third party issues and its 
internal systems are not complex and adequate alternatives for preparation 
of external reports are available at minimal cost and disruption.

	The Company's main operating subsidiary, located in Ireland, which 
performs all computer functions, is presently in the process of implementing 
its upgraded computer systems which will be Year 2000 compliant.  The 
purchase cost of the new software that will be capitalized and other 
related Year 2000 costs to be expensed as incurred are presently estimated 
to be approximately $140,000.  The project is expected to be completed in 
mid-1999.  As part of this process, a duplicate server will be placed into 
service to serve as back up should the main system fail.  Single user 
computers which are Year 2000 compliant will also be available to enable
the Company to function.

	As to third parties, i.e., vendors, suppliers and customers in Ireland, 
the United Kingdom and elsewhere, the subsidiaries' assessment is in process.
Based upon information available at this time, third parties of critical 
importance to the Company are in the process of becoming Year 2000 
compliant and the Company believes the issue will not have a material 
impact upon the financial position of the subsidiary and ultimately the 
Company.  However, there can be no assurance that presently unforeseen 
difficulties will not arise and actual results could differ materially.
<PAGE>
Results of Operations

Year ended December 31, 1998 compared to year ended December 31, 1997
Units shipped were up 14.2% for the year within manufacturing although net 
sales dollars increased only 2.2% due to pressure on sales prices 
resulting from aggressive competition within the cable industry in the U.K.,
the Company's primary market, and the foreign rate impact of the value of 
the Irish Punt relative to the U.S. Dollar for 1998 compared to 1997. 
Overall, net sales to customers decreased by less than one percent for the 
year ended December 31, 1998 compared to the prior year since there were 
reduced sales at the distriubtion level and 1997 included sales of 
$1,066,000 from the Australian subsidiary, sold in the third quarter of 
1997.  Correspondingly, the gross profit percentage decreased to 11.4% 
from 13.3% in 1997. The Company has taken steps to strengthen its 
distribution segment by closing one subsidiary, Kestrel, in August 1998 
and transferring its assets to a second distribution subsidiary, Kingston.
The Company has also refocused its efforts at Kingston by reducing staff 
and concentraing marketing efforts on specialty customers with higher
profit margins while de-emphasizing wholesale customers with poorer
margins.  Selling, general and administrative expenses rose as a 
percentage of net sales to 14.4% in 1998 compared to 14.2% in 1997.
This was attributable primarily to higher costs at Kestrel and Kingston. 
Interest expense increased in 1998 by 11% due to higher average borrowings 
in Ireland to meet ongoing obligations.

Income taxes for 1998 result from foreign taxable income at the Company's 
Irish subsidiary.  The Company has tax loss carry forwards of approximately 
$7,100,000 available to offset future U.S. taxable income, which expire 
between 1999 and 2010.  A valuation allowance of $2,708,000 and $2,560,000 
has been provided at December 31, 1998 and 1997, respectively.  These 
valuation allowances were established since it is not certain that the 
deferred tax assets, primarily the net operating loss carry forwards, will
be realized.  See further discussion in Notes 1 and 6 to the consolidated
financial statements.

Year ended December 31, 1997 compared to year ended December 31, 1996
	Although net sales to customers decreased by 11% in the last quarter 
compared to 1996, net sales increased slightly for the entire year.  
Units shipped for the year were up 3.0% in the last quarter and 8.7% for 
the year.  Revenue for 1997 included $1,066,000 for the Australian 
subsidiary compared to $3,508,000 for the full year of 1996.  The gross 
profit percentage dropped to 13.8% from 16.9% in 1996.  This was due 
primarily to lower selling prices resulting from aggressive price cutting 
within the cable industry and the impact of significant changes in the
relative values of the Irish Punt, UK Sterling and the U.S. Dollar, as
well as a one-time write down of inventory values at the UK distribution
company.  Selling, general and administrative expenses rose as a percentage 
of net sales to 14.0% in 1997 compared to 13.1% in 1996.  This was due 
primarily to start-up expenses at the new UK distribution company and the 
new manufacturing facility in Ireland.  Interest expense increased by 56.8% 
due to higher average borrowings in Ireland for capital spending compared 
to 1996. 
<PAGE>
	As a result of the UK Pound Sterling strengthening against the Irish Punt, 
the Company's Irish subsidiary recorded a foreign exchange gain of $374,000 
in 1997.  The Irish subsidiary transacts 75% of its business in Sterling.  
The Company disposed of its 50% interest in Quality Heat Treatment Pty. Ltd.,
 Australia, in September 1997, recording a net gain of $128,000 on the 
transaction.

	Income taxes for 1997 result from foreign taxable income at the Company's 
Irish subsidiary.  The Company has tax loss carry forwards of approximately 
$6,500,000 available to offset future U.S. taxable income, which expire 
between 1999 and 2011.  A valuation allowance of $2,560,000 has been 
provided at December 31, 1997.  This valuation allowance was established 
since it is not certain that the deferred tax assets, primarily the net 
operating loss carry forwards, will be realized.  See further discussion in
Notes 1 and 6 of the consolidated financial statements.

	The foregoing discussion contains certain forward-looking statements which 
involve risks and uncertainties.  The Company's actual results could differ 
materially from the results anticipated in such forward-looking statements.

Item 8.		Financial Statements and Supplementary Data

	This information is submitted in a separate section of this report.

Item 9.		Change in and Disagreements with Accountants on Accounting and 
Financial Disclosure

	None

PART III

Item 10.		Directors and Executive Officers of the Registrant

	The table listing this information with respect to directors of the Company,
 and the statement of compliance with Sec. 16(a) of the Exchange Act,
 included in the proxy statement anticipated to be filed on or about
 April 28, 1999, is herein incorporated by reference.  The information with
 respect to executive officers is included in Part I of this Form 10-K.

Item 11.		Executive Compensation

	The information with respect to officers and directors of the Company,
 included in the proxy statement anticipated to be filed on or about
 April 28, 1999, is herein incorporated by reference.		


Item 12.		Security ownership of Certain Beneficial Owners and Management

	The information required by this item, included in the proxy statement
 anticipated to be filed on or about April 28, 1999, is herein incorporated
 by reference.

Item 13.		Certain Relationships and Related Transactions

	The information required by this item, included in the proxy statement
 anticipated to be filed on or about April 28, 1999, is herein incorporated
 by reference.
<PAGE>
	PART IV



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

(a)  (1) and (2)		This portion of Item 14 is submitted in a separate
 section of this report.

(3)  Listing of Exhibits
		Exhibit 3.    Certificate of Incorporation and By-Laws
		Exhibit 10.   Material contracts
		Exhibit 21.   Subsidiaries of the Registrant
		Exhibit 27.   Financial Data Schedule

(b)    Reports on Form 8-K
		
		None filed in the fourth quarter of 1998.

	(c )    Exhibits
                                        										Incorporated
										                                         by Reference
										                                         to Sec Form
	Exhibit 3.	Articles of Incorporation and By-Laws	   8-K dated 
										                                         November 1, 1982

			Amendments thereto	                            			8-K dated
										                                          June 17, 1987

		Exhibit 10.	Material Contracts:

			Settlement Agreement with Pension               		8-K dated
			 Benefit Guaranty Corporation dated           	  December 22, 1993
			 December 22, 1993


			Amended and Restated Agreement between
				 Harrison Alloys Inc., Driver-Harris
				 Company, HAI Industries Inc., and
				 HAI Holding Company Inc., dated	               	8-K dated
				 March 18, 1994				                             April 7, 1994

				Note Modification Agreement, Loan and
				 Security Agreement Modification
				 Agreement, and Release of Guaranty
				 between Driver-Harris Alloys Inc.,
				 Harrison Alloys Inc., and Textron
				 Financial Corporation, all dated              	   8-K dated
				 February 25, 1994			                           April 7, 1994

		Exhibit 21.	Subsidiaries of the Registrant as of December 31, 1998

		SUBSIDIARIES OF THE REGISTRANT

		Name				                       		Jurisdiction of Incorporation
		Driver-Harris Alloys Inc.	       New Jersey (Inactive Corporation)
		Irish Driver-Harris Co. Ltd.			  Ireland
		Kingston Cable Distributors Ltd.		United Kingdom
		  (Subsidiary of Irish Driver-Harris Co. Ltd.)

		Exhibit 27.	Financial Statement Schedules

		This portion of Item 14 is submitted in a separate section of this report.
<PAGE>
SIGNATURES

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

                             								DRIVER-HARRIS COMPANY


March 29, 1999			            		/s/      Thomas J. Carey
----------------------------		------------------------------------------
Date							                   Thomas J. Carey
                       							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.


/s/    Ralph T. Bartlett        			/s/     David A. Driver
-------------------------------		------------------------------------
Ralph T. Bartlett				              	David A. Driver
Director					                       	Chairman
Date:    March 29,1999		       		Date:   March 29, 1999



/s/   H. L. Biggerstaff       				/s/    Frank L. Driver IV
-------------------------------		------------------------------------
H.L. Biggerstaff		              			Frank L. Driver IV
Director					                    	Director, President and Chief 
							                             Executive Officer                    
Date:    March 29, 1999				   
						                           	Date:    March 29, 1999


<PAGE>


Annual Report on Form 10-K Item 8,
Item 14(a) (1) and (2), (c) and (d)

List of Financial Statements and
Financial Statement Schedules

Certain Exhibits

Financial Statement Schedules



Driver-Harris Company and Subsidiaries

December 31, 1998

<PAGE>
Driver-Harris Company and Subsidiaries

Form 10-K Item 14(a) (1) and (2)

List of Financial Statements and Financial Statement Schedules


The following consolidated financial statements of Driver-Harris Company 
and Subsidiaries are included in Item 8:

	Consolidated Balance Sheets - December 31, 1998 and 1997	Page 20

	Consolidated Statements of Operations - Years ended December 31, 1998,
	1997 and 1996								Page 22

	Consolidated Statements of Stockholders' Equity - Years ended
	December 31, 1998, 1997 and 1996					Page 23

	Consolidated Statements of Cash Flows - Years ended December 31,  
	1998, 1997 and 1996							Page 24

	Notes to Consolidated Financial Statements			Page 25


The following consolidated financial statement schedules of Driver-Harris 
Company and Subsidiaries are included in Item 14(d):

	Schedule I - Condensed Financial Information of Registrant  Page  42

	Schedule II -  Valuation and Qualifying Accounts		Page  46


All other schedules for which provision is made in the applicable accounting 
regulation of the Securities and Exchange Commission are not required under 
the related instructions or are inapplicable, and therefore have been omitted.

<PAGE>

Report of Independent Auditors

Board of Directors
Driver-Harris Company


We have audited the accompanying consolidated balance sheets of Driver-Harris
 Company and subsidiaries as of December 31, 1998 and 1997, and the related 
consolidated statements of operations, stockholders' equity and cash flows 
for each of the three years in the period ended December 31, 1998.  Our 
audits also included the financial statement schedules listed at Item 14(a).
These financial statements and financial statement schedules are the 
responsibility of the Company's management.  Our responsibility is to 
express an opinion on these financial statements and schedules based on our 
audits.  We did not audit the financial statements of certain foreign
consolidated subsidiaries which statements reflect total assets constituting 
16% in 1998 and 23% in 1997, and total revenues constituting 19% in 1998, 
20% in 1997 and 21% in 1996 of the related consolidated totals.  Those 
statements were audited by other auditors whose reports have been furnished 
to us, and our opinion, insofar as it relates to data included for such


subsidiaries, is based solely on the reports of other auditors.

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 total 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 and
the reports of other auditors provide a reasonable basis for our opinion. 

In our opinion, based upon our audits and the reports of other auditors, 
the consolidated financial statements referred to above present fairly, 
in all material respects, the consolidated financial position of Driver-
Harris Company and subsidiaries at December 31, 1998 and 1997, and the 
consolidated results of their operations and their cash flows for each of 
the three years in the period ended December 31, 1998, in conformity with 
generally accepted accounting principles.  Also, in our opinion, the related
financial statement schedules, when considered in relation to the basic 
financial statements taken as a whole, present fairly, in all material 
respects, the information set forth herein.

MetroPark, New Jersey
March 26, 1999						/s/    ERNST & YOUNG LLP 
<PAGE>
AUDITORS' REPORT TO THE MEMBERS

of

KINGSTON CABLE DISTRIUBTORS LIMITED


We have audited the accompanying balance sheets of Kingston Cable 
Distributors Limited as of 31 December 1998 and 31 December 1997 and the 
related statements of profit and loss and cash flows for each of the three 
years in the period ended 31 December 1998.  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 audit.

Basis of Opinion
We conducted our audits in accordance with generally accepted auditing 
standards of the United States.  Those standards require that we plan and 
perform the audit to obtain reasonable assurance about whether the financial 
statements are free from material mis-statement.  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.

Opinion
In our opinion, the financial statements referred to above present fairly, 
in all material respects, the financial position of Kingston Cable 
Distributors Limited as of 31 December 1998 and 31 December 1997, and the 
results of its operations and its cash flows for each of the three years in 
the period ended 31 December 1998 in conformity with generally accepted 
accounting principles of the United States.



Date:    26 March 1999				/s/ 	James, Stanley & Co.
                       							Registered Auditors
				                       			Chartered Accountants
					                       		1733 Coventry Road
					                       		South Yardley
					                        	Birmingham
						                       	B26 1DT
<PAGE>
AUDITORS' REPORT TO THE MEMBERS

of

KESTREL CABLES DISTRIBUTION LIMITED





We have audited the accompanying balance sheets of Kestrel Cables 
Distribution Limited as of 31 December 1998 and 31 December 1997 and the 
related statements of profit and loss and cash flows for each of the three 
years in the period ended 31 December 1998.  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 audit.

Basis of Opinion
We conducted our audits in accordance with generally accepted auditing 
standards of the United States.  Those standards require that we plan and 
perform the audit to obtain reasonable assurance about whether the financial 
statements are free from material mis-statement.  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.

Opinion
In our opinion, the financial statements referred to above present fairly, 
in all material respects, the financial position of Kestrel Cables 
Distribution Limited as of 31 December 1998 and 31 December 1997, and the 
results of its operations and its cash flows for each of the three years in 
the period ended 31 December 1998 in conformity with generally accepted 
accounting principles of the United States.





Date:  26 March 1999					/s/	James, Stanley & Co.
                       							Registered Auditors
							                       Chartered Accountants
						                       	1733 Coventry Road
						                       	South Yardley
					                       		Birmingham
			                       				B26 1DT 
<PAGE>
Driver-Harris Company and Subsidiaries

Consolidated Balance Sheets

Dollar Amounts in Thousands
<TABLE>
	                                   								  December 31
Assets								                              1998    		1997
Current Assets:
 <S>                                    <C>          <C>
	Cash							                            $   362      $  848
	Receivables, less allowances of $601	
	    and $406					                        9,966	      9,325
	Inventories:
	    Materials                  					       585      		 536
	    In process					                        152 	       254
	    Finished					                        3,223       3,920
								                                -------     -------
								                                 	3,960 	     4,710
	Prepaid expenses		                   				1,054    	  	 513
									                                ------      ------
Total current assets					                15,342 	    15,396

Property, plant and equipment, at cost:
	Land and buildings				                  	3,644       3,480
	Machinery and equipment				             	3,739	      3,731
	Office equipment						                     352         242
								                                	------      ------
								                                 	7,735 	     7,453

	Less accumulated depreciation and
	  amortization					                     	2,513       2,125
							                                		------     -------
							                                 		5,222	     5,328
                                   						------   -------
								                                $20,564    $20,724
								                                 =====       =====
</TABLE>
See accompanying notes.

<PAGE>
Driver-Harris Company and Subsidiaries

Consolidated Balance Sheets (continued)

Dollar Amounts in Thousands
<TABLE>
							                                          		     December 31
Liabilities and stockholders' equity	                		1998    		1997
Current liabilities:
 <S>                                               <C>        <C>
	Short-term borrowing                       				   $ 4,677    $   4,179
	Current portion of long-term debt		                   599          515
	Accounts payable 					                              5,974       	5,176
	Accrued expenses					                               1,777       	1,293
	Income taxes payable				                               77 	        108
						                                           			------   --------
Total current liabilities			                        13,104       11,271

Long-term debt					                            	     2,142      		2,524
Deferred grants						  	                               781          796
Deferred foreign income taxes				                    	 184 	        147
Postretirement benefit liabilities			                  573          574
Other liabilities						                              	 111          149
							                                            		------     ------
								                                            16,895       15,461

Stockholders' equity:
	Common stock -- par value $0.83 1/3 per share:
	Authorized 3,000,000 shares; issued 1,424,928
	  shares at December 31, 1998 and December
	  31, 1997 (including 72,095 and 84,507
	  treasury shares at December 31, 1998
	  and 1997)					    	                               1,233        1,223
	Additional paid-in capital			                       2,282        2,228
	Retained earnings				                                 950        3,030
	Accumulated other comprehensive loss	                (796)      (1,218)
								                                              ------	   -------
								                                             3,669        5,263
Commitments and contingencies
							                                           --------      --------
							                                            $20,564      $20,724
								                                            =====     =====
</TABLE>
See accompanying notes.
<PAGE>
	
Driver-Harris Company and Subsidiaries

Consolidated Statements of Operations

Dollar Amounts in Thousands, Except per Share Data

<TABLE>
							                                          	Years ended December 31
							                                         	 1998	    1997      1996
Revenues:
    <S>                                       <C>        <C>        <C>
    Net sales					                            $40,389    $40,591    $40,295
    Other					                                 		 140        163      1,027
						                                        -------      -----    -------
						                                         40,529     40,754     41,322

Costs and expenses:
    Cost of sales				                          35,767     35,350     33,804
    Selling, general and administrative         5,867      5,770      5,343
						                                        -------    -------     ------
							                                        (1,105)      (366)     2,175

    Interest expense				                          722        649        414
    Foreign exchange(gain)loss and sundry         167       (374)       (21)
    Gain on sale of interest in Australia subsidiary        (128)
    Gain in connection with sale of foreign operations
        by related company					    		                                  (895)
							                                       ------     ------     -------
(Loss) income before income taxes		           (1,994)     (513)      2,677

Provision for income taxes 			                    86        52         225
						                                        ------	   -----      ------
Net (loss) income					                       $(2,080)   $ (565)    $ 2,452
							                                       =====      ====       =====

Basic net (loss) income per share        	   $(1.55)     $(.42)    $1.86

Diluted net (loss) income per share		        $(1.55)     $(.42)    $1.86
</TABLE>

See accompanying notes.
<PAGE>
Driver-Harris Company and Subsidiaries

Consolidated Statements of Stockholders' Equity 

For the three years ended December 31, 1998
<TABLE>
Dollar Amounts in Thousands
									                                                Accumulated
										                                                  Other		
			          		                                            Compre-
                                           										      hensive
					                         	Common  Paid-In   Retained  Income	
                 		            Stock    Capital  Earnings (Loss) Total

<S>                           <C>      <C>       <C>    <C>       <C>
Balance at January 1, 1996   	$ 1,187 	$ 1,997	$ 1,143	 $(1,883) 	$2,444
  Net income			                                  2,452	            2,452
  Adjustment from exchange rate
    changes			                                              293      293
  Adjustment in connection with 
    sale of foreign operations
    by related company		                                  1,694 	  1,694
Comprehensive income					                                          4,439
  Exercise of 782 treasury
    shares	                        1	       5   	                      6 
  Directors' compensation	         2       11                         13
  Exercise of 37,500 option
    shares	                       31   	  187		                      218
	                               ----------------------------------------
Balance at December 31, 1996	  1,221   	2,200 	3,595       104	    7,120
  Net loss			                                   (565)            	  (565)
  Adjustments from exchange rate changes		              (1,322)   (1,322)
Comprehensive loss			                                           		(1,887)
  Directors' and Officers' 
     compensation	                 2   	   28	                        30
	                             ------------------------------------------
Balance at December 31, 1997	  1,223   	2,228 3,030  	  (1,218)  	 5,263
  
  Net loss                               		  (2,080)             	(2,080)
  Adjustments from exchange rate changes		                 422	      422
Comprehensive loss				                                           	(1,658)
   Directors', Officers' and Employees'
     compensation	                 4	      35                  			    39
   7,062 shares purchased by 
     Officer                       6    	  19			                      25
     	                          ----------------------------------------
Balance at December 31, 1998 $ 1,233  $ 2,282 $ 950  	 $ (796)   	$3,669
                              		====================================			
</TABLE>
See accompanying notes.
<PAGE>
                    Driver-Harris Company and Subsidiaries
Consolidated Statements of Cash Flows
Dollar Amounts in Thousands
<TABLE>
	                                                Years ended December 31
	                                               1998     	1997	    1996
Operating activities
<S>                                          <C>         <C>     <C>
Net (loss) income	                           $(2,080)	$  (565)	$ 2,452
Adjustments to reconcile net (loss) income to
   net cash provided by (used in) operating
   activities:
        Depreciation and amortization	          567	     643	     676
        Provision for doubtful accounts	        272	      76	     111
        Loss (Gain) on sale of fixed assets      14	     (13) 	  (172)
        Gain on sale of foreign subsidiary 	            (128)
        Equity in related company			                           (1,561)
        Non-cash compensation	                   39	      30       19
        Deferred credit			                                       (968)
        Elimination of equity adjustment from 
           translation for foreign operations sold
           by related company			                                1,634
        Account with related company			                           253
        Receivables	                           (641)	 (1,837)	 (1,558)
        Inventories	                          1,090	   (520)     (235)
        Prepaid expenses	                      (525)	    340     (555)
        Accounts payable and accrued expenses   911       772	     (3)
 	                                       ----------------------------
Net cash provided by (used in) operating 
    activities	                                (353)	 (1,202)     93

Investing activities
Capital expenditures	                          (272)	 (2,191)	 (1,576)
Proceeds from sale of fixed assets	              37 	    552 	    234
Assets purchased through acquisition		                       	 (1,164)
Proceeds from sale of subsidiary		                       225
Other		                                                            48
	                                       -----------------------------
Net cash used in investing activities	        (235)	 (1,414)	 (2,458)

Financing activities
Change in short-term debt	                     329	   2,054 	  1,847
Change in deferred grants	                     (15)	    110      300
Proceeds from issuance of long-term debt	      118 	  1,322  	   313
Reduction of long-term debt	                  (587)	   (389)    (391)
Issuance of capital stock	                      25          		   215
                                       	----------------------------
Net cash provided by (used in) financing 
    activities	                                (130)	  3,097	  2,284

Effect of exchange rate changes on cash	        232	   (35)        4
	                                       ----------------------------
Net change in cash                         	   (486)	   446	     (77)
Cash at beginning of year	                      848	   402       479 
	                                       ----------------------------
Cash at end of year                         	$  362	$  848   	$  402
	                                           =======================
Supplemental disclosure of cash flow information
Cash paid during the year for:
     Interest                               	$  646	$  988	 $   727
     Income taxes	                               73	        	    41

Supplemental schedule of non-cash investing and financing activities
    Receivables offset against purchase price
        of acquisition	                                    		$  178
     Capital lease obligations incurred from machinery
         and equipment	                     $  221    $1,391	   705
</TABLE>
See accompanying notes.
<PAGE>
Driver-Harris Company and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 1998 

1.  Summary of Accounting Policies

Principles of Consolidation
The consolidated financial statements include the accounts of Driver-Harris 
Company (the "Company") and its wholly-owned subsidiary, Irish Driver-Harris 
Co. Ltd., ("IDH"), located in Ireland and the U.K. and for 1997, the 
operations of Quality Heat Treatment Pty. Ltd. through its disposition in 
September, 1997.  Intercompany accounts, transactions and profits have been 
eliminated in consolidation.

The Company, directly and through its subsidiaries, is engaged in the 
business of manufacturing and marketing non-ferrous metal products, 
principally electrical resistance wire and insulated electrical wire and 
cable.

Harrison Alloys Inc. ("Harrison"), (referred to herein as a "related
company") a fifty percent owned company, recorded on the equity method of 
accounting is carried at no value on the balance sheets at December 31, 1998 
and 1997.  The Company will not recognize any income from its investment in 
Harrison until Harrison's income exceeds Harrison's losses.

Inventories

Inventories are stated at the lower of cost or market.  Cost is determined 
by the first-in, first-out (FIFO) method for all inventories.

Property, Plant and Equipment

Depreciation has been provided principally by the straight-line method based 
upon estimated useful lives of the depreciable assets.

Deferred Grants

Deferred grants represent foreign government grants received by the Company's 
Irish subsidiary.  The grants received with respect to capital expenditures 
are treated as a deferred credit and are amortized to income over the 
expected useful life of the related asset.

Income Taxes

Deferred income tax assets and liabilities are computed annually for 
differences between the financial statement and tax basis of assets and 
liabilities that will result in taxable or deductible amounts in the future 
based on enacted tax laws and rates applicable to the periods in which the
<PAGE> 

differences are expected to affect taxable income.  Valuation allowances are 
established when necessary to reduce deferred tax assets to the amount 
expected to be realized.  Income tax expense is the tax payable or 
refundable for the period plus or minus the change during the period in 
deferred tax assets and liabilities.

Revenue Recognition

Sales revenues are recognized at the time products are shipped.

Earnings per Common Share

During 1997, the Company adopted the provision of Financial Accounting 
Standards Statement No. 128, "Earnings Per Share".  All earnings per share 
amounts have been restated to conform with this statement.

As required under the provisions of Statement 128, basic and diluted 
earnings per share are calculated as follows:
<TABLE>
                                            	1998    	1997     	1996

	Numerator:
 <S>                                     <C>           <C>     <C>
	Net (Loss) Income	                      $ (2,080)	$   (565)	$ 2,452

	Denominator:
		Basic earnings per share -
	weighted average shares	               1,344,204  	1,339,046 1,317,280
		Effect of dilutive shares -
		  stock options		                     	 10,539     14,824     3,237
						                                  --------    -------   -------
		Diluted earnings per share -
		  adjusted weighted average
		  shares			                         1,354,743*  1,353,870* 1,320,517

	Basic Earnings (loss) per share      $(1.55)    $ (.42)      $ 1.86

	Diluted Earnings (loss) per share    $(1.55)    $ (.42)      $ 1.86
</TABLE>
	* Adjusted weighted average shares not used since effect on earnings per 
share would be antidilutive.
<PAGE>
Employee Stock Options

As permitted under FASB Statement 123, "Accounting for Stock-Based 
Compensation" (FASB 123), the Company elects to follow Accounting Principles 
Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB 25), 
and related interpretations in accounting for its employee stock options.  
Under APB 25, because the exercise price of the Company's employee stock 
options equals or is greater than the market price of the underlining stock 
on the date of grant, no compensation expense is recognized.  Since there
were no stock options granted in 1998 and 1997, no disclosures required 
under FASB 123 are necessary.

Concentration of Credit Risk

The predominant portion of the Company's customers are engaged in the 
construction, appliance and electrical equipment industries in Ireland 
and Great Britain.  The Company grants credit to its customers on open 
account.  Three customers outstanding balances represent 29.5% of 
consolidated receivables at December 31, 1998 compared to two customers 
whose outstanding balances represent 22.2% of consolidated receivables at 
December 31, 1997.  The majority of accounts receivable, including these 
customers are insured against loss from bad debts.  These same customers 
represent 25.2% of consolidated revenues in 1998 and 17.3% in 1997.

Foreign Currency Translation

Assets and liabilities of foreign operations with a functional currency 
other than the U.S. dollar are translated into U.S. dollars at year-end 
exchange rates.  Revenues and expenses are translated at the average 
exchange rates in effect during the year.  Translation adjustments are 
recorded as a separate component of equity, accumulated other comprehensive 
income (loss).

Foreign Currency Options

To hedge against exposures to changes in foreign currency exchange rates on 
certain sales commitments and anticipated, but not yet committed sales, the 
Company enters into forward foreign currency contracts.  These contracts 
permit, but do not require, the Company to purchase specified amounts of 
British Pounds expected to be received from its export sales for pre-
established Irish Punt amounts at specified dates. The forward contracts 
are denominated in the same foreign currencies in which export sales are
expected to be denominated.  These contracts are designated and effective 
as hedges of probable quarterly export sales transactions during the next 
year, which otherwise would expose the Company, on the basis of its aggregate
net cash flows in respective currencies, to foreign currency risk.  The 
continued effectiveness of these contracts as hedges is assessed 
periodically by analyzing the correlation between the actual export sales 
which occur and the degree of offset which the contracts provide.
<PAGE>
The effects of movements in currency exchange rates on these instruments 
are recognized when the related operating revenue is recognized.  Realized 
gains and losses on forward foreign currency contracts are included in other 
assets and liabilities and recognized in earnings when the future sales 
occur or at the time a sale is no longer expected to occur.  Realized and 
unrealized gains and losses on contracts that are not designated as hedges, 
that fail to be effective as hedges, or that relate to sales that
are no longer probable of occurring are included in income as foreign
exchange gains or losses.

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.

Impairment of Long-Lived Assets

SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for 
Long-Lived Assets to be Disposed Of" (FASB 121), requires impairment 
losses to be recorded on long-lived assets used in operations when 
indicators of impairment are present and the undiscounted cash flows 
estimated to be generated by those assets are less than the assets' 
carrying amount.  This requirement had no effect on the financial 
statements in 1998 and 1997.

Comprehensive Income

As of January 1, 1998, the Company adopted Statement of Financial 
Accounting Standards No. 130, "Reporting Comprehensive Income (Loss)" 
(Statement 130).  Statement 130 establishes new rules for the reporting 
and display of comprehensive income and its components; however, the 
adoption of this Statement had no impact on the Company's financial 
position or results of operations.  Statement 130 requires foreign 
currency translation adjustments, which prior to adoption were reported 
separately in shareholders'equity, to be included in other comprehensive
income (loss).  The financial statements have been reclassified to conform
to the requirements of Statement 130. 

Segment Reporting

Effective January 1, 1998, the Company adopted Statement of Financial 
Accounting Standards No. 131, "Disclosures about Segments of an Enterprise 
and Related Information" (Statement 131). Statement 131 establishes 
standards for the way that public business enterprises report information 
about operating segments in annual financial statements and requires that 
those enterprises report selected information about operating segments in 
interim financial reports.  Statement 131 also establishes standards for 
related  disclosures about product and services, geographic areas, and 
major customers.  The adoption of Statement 131 did not affect results of 
operations or financial position, but did affect the disclosure of segment 
information. See Note 8.
<PAGE>

Pensions and Other Postretirement Benefits

Effective January 1, 1998, the Comany adopted Statement of Financial
Accounting Standards No. 132, "Disclosure about Pensions and Other
Postretirement Benefits" (Statement 132).  Statement 132 revises and
improves disclosure requirements of FASB Statements No. 87,
Employers' Accounting for Pensions", No. 88, "Employers' Accounting
for Settlements and Curtailments of Defined Benefit Pension Plans and for  
Termination 
Benefits", and No. 106, "Employers' Accounting for Postretirement Benefits 
Other Than Pensions".  The Statement does not change the recognition or 
measurement of pension or postretirement benefits, eliminates unnecessary 
disclosures and requires additional information.  See Note 5.

Impact of Recently Issued Accounting Standards

In June 1998, the Financial Accounting Standards Board issued SFAS No. 133, 
"Accounting for Derivative Instruments and Hedging Activities" 
(Statement 133).  Statement 133 requires all derivatives to be recorded on 
the balance sheet at fair value and establishes "special accounting" for 
the following three different types of hedges:  hedges of changes in the 
fair value of assets, liabilities or firm commitments (referred to as fair 
value hedges); hedges of the variable cash flows of forecasted transactions
(cash flow hedges); and hedges of foreign currency exposures of net 
investments in foreign operations.  Each of the three types of hedges 
requires accounting treatment and criteria that recognizes offsetting 
changes in value or cash flows of both the hedge and the hedged item in 
earnings in the same period.  Changes in the fair value of derivatives 
that do not meet the criteria of one of these three categories of hedges 
must be included in earnings in the period of the change.  The Company is 
required to adopt the provision of this statement in the year 2000.  
the Company is currently evaluating the impact of this statement on its
financial statements but does not expect a material effect therefrom.

Reclassification

Certain prior period amounts have been reclassified to conform with the
current year presentation.

2.  Foreign Operations

Net assets which are located outside the United States and are included
in the consolidated balance sheets are as follows (in thousands):

<TABLE>
                                                     December 31
                                                    1998       1997
Assets
   <S>                                            <C>         <C>
   Receivables, net                               $ 9,966     $ 9,325
   Inventories                                      3,960       4,710
   other current assets                             1,174         499
   Property, plant and equipment - net              5,222       5,327
                                                   ------------------
                                                   20,322      19,861
Liabilities
   Current liabilities                             12,969      11,114
   Long-tem debt                                    1,018       1,475
   Other long-term liabilities                        781         796
   Deferred income taxes                              184         147
   Sundry                                             111         149
                                                  -------------------
                                                   15,063      13,681
                                                  -------------------
   Net assets outside the United States          $  5,259    $  6,180
                                                    =================
</TABLE>
Net (loss) income of the Company's foreign subsidiaries included in the
accompanying finanical statements amounted to approximately $(1,659,000)
in 1998, $(259,000) in 1997 and $1,538,000 in 1996.

Because the Company plans to continue to finance foreign expansion and
operating requirements by reinvesting a substantial portion of the 
undistributed earnings of its foreign subsidiaries, United States
income taxes have not been provided on such earnings.  Unremitted
earnings of foreign subsidiaries at December 31, 1998 amounted to
approximately $5,707,000.
<PAGE>          
3.  Leases

Property, plant and equipment includes the following amounts related to
capital leases (in thousands):
<TABLE>
                                                 December 31
                                               1998         1997
       <S>                                    <C>         <C>
       Machinery and equipment                $ 1,505     $ 1,455
       Less accumulated amourtization             570         379
                                               ------------------
                                              $  935      $ 1,076
                                              ===================
</TABLE>
Amortization of the assets recorded under capital leases is included in
depreciation expense.

The future minimum rental commitments for all operating leases as of
December 31, 1998 are as follows (in thousands):

<TABLE>

              <C>                       <C>
              1999                      $120
              2000                       109
              2001                       109
              2002                       106
              2003                       106
              Thereafter                 695
                                       -----
                                      $1,245
                                       ====
</TABLE>

Total rent expense under operating leases for 1998, 1997 and 1996 was
$179,000, $193,000 and $272,000, respectively.

<PAGE>

4.  Long-Term Debt and Lines of Credit

Long-term debt is as follows (in thousands):
<TABLE>
                                                    December 31
                                                 1998         1997
  <S>                                           <C>          <C>
  Note payable to Pension Benefit Guaranty Corp. $ 1,124     $ 1,049
  Other mortgage loans                               913         943
  Capitalized lease obligations                      704         884
  Sundry                                               -         163
                                                 -------------------
                                                  2,741        3,039
  Less current portion                              599          515
                                                --------------------
                                                $ 2,142      $ 2,524
                                                ====================
</TABLE>
The Company's obligations approximate fair market value.

The note payable to the Pension Benefit Guaranty Corporation (PBGC) is
due September 30, 2000.  Interest accrues at the rate of 7% per year
compounded quarterly and is payable at maturity.  The note and accrued 
interest may be prepaid at the Company's option.  The PBGC has the right
to convert the entire unpaid principal and accrued interest into common
stock of the Company at a price of $7.875 per share, until maturity.  Until
the note is paidin full, the Company may not pay cash dividends on its
capital stock without permission from the PBGC.

The Other Mortgage loans, which are the liability of a subsidiary and are
denominated primarily in Irish Punt, bear interest at 10% per year, and
are due in monthly installments through 2000.  These loans and the
subsidiary's $5,874,000 general credit line are jointly collateralized
by all of its assets with a book value of $20,322,000.  Under the terms of
the loans, there are certain restrictios which limit the payment of
dividends and management fees paid by the subsidiary to the Company.

Maturities of long-term debt at December 31, 1998 are as follows (in
thousands):
<TABLE>
                                 Capitalized
                               		  Leases         Other
                  <C>               <C>         <C>
		                1999             	$  247     	$   352
	                	2000	                185	       1,304
		                2001	                152          175
		                2002	                114	         148
		                2003             	     6	          58
		                Thereafter	            -	           -
	                              		----------------------
			                                 $  704      	$2,037
			                                  ================== 
</TABLE>
<PAGE>
At December 31, 1998, the Company and its subsidiaries had available short-
term lines of credit in the aggregate amount of approximately $6,704,000 
(which includes the $5,874,000 general credit line) of which $4,677,000 was 
in use and is recorded as short-term borrowings on the balance sheet.

The weighted average interest rate on the short-term borrowings of the 
Company and its subsidiaries was 9.3%, 7.2% and 10.4% at December 31, 1998, 
1997 and 1996, respectively.

5.  Postretirement Benefits - Pensions and Health Care

Pension

The Company's only defined benefit pension plans are those of a foreign 
subsidiary.  These cover substantially all of the foreign subsidiary's 
employees, who must contribute to the plan cost.  Benefits are based on 
employees' year of service and final compensation.  The subsidiary makes 
contributions to the plans in amounts that are intended to provide for 
current service and to fund past service liability.

The following tables provide a reconciliation of the changes in the 
pension plans' benefit obligations and fair value of assets over the 
two year period ending December 31, 1998 and a statement of the funded 
status as of December 31 of both years (in thousands):

<TABLE>
		                                                Pension Benefits
                                			                 December 31	
			                                              1998         1997            
Reconciliation of benefit obligation 
    <S>                                         <C>       <C>
    Obligation at January 1                    	$ 1,719	  $ 1,470
        Service cost		                              181	      120
        Interest cost		                             143	      118
        Participant contributions	                   41	       58
        Actuarial (gain) loss	                     (251)	      (47)
        Benefit payments	                          (309)	       -
        Foreign currency exchange rate changes	      74         -
			                                            ------------------
    Obligation at December 31	                    1,598	    1,719

Reconciliation of fair value of plan assets
     Fair value of plan assets at January 1	      1,617	   1,241
        Actual return on plan assets	               144	     230
        Employer contributions	                      61       88
        Participant contributions                    41       58
        Benefit payments	                          (309)       -
        Foreign currency exchange rate changes	      74        -
		                                           	------------------
    Fair value of plan assets invested in pooled separate
        account of an insurance company at
        December 31	                             1,628	   1,617

Reconciliation of Funded status
    Funded status at December 31	                  30	    (102)
        Unrecognized transition obligation	        74	     220
        Unrecognized prior service cost	         (112)	   (114)
        		                                 	--------------------
        Prepaid (accrued) benefit cost	            (8)       4
			                                         ====================

    Prepaid benefit cost                    	      73	     58

    Accrued benefit liability	                    (81)	   (54)
			                                          -------------------
        Net (liability) asset recognized	          (8)	     4
                                          			===================
</TABLE>
<PAGE>

Net pension expense for the Company's defined benefit pension plans for 1998,
1997 and 1996 included the following components (in thousands):
<TABLE>
                                                			December 31
                                        			  1998       1997       1996
Service cost for benefits earned during
    <S>                                     <C>       <C>       <C>
    the year                                $ 227  	  $  126	   $   122
Interest cost on projected benefit 
    obligation	                               140        124	       111
Actual net gains on plan assets	             (141) 	    (243)      (128)	
Net amortization		                             38	       143         44
			                                         ---------------------------
			                                           264 	     150	      149
Less employee contributions	                   41	       38	       37
			                                         ---------------------------
Net pension expense		                      $  223  	$   112	  $   112
		                                             	=====================
</TABLE>
The assumptions used in computing the preceding information at December 31, 
1998, 1997 and 1996 are:  an assumed discount rate of 8%, an assumed rate of 
compensation increase of 6% and an expected rate of return on plan assets 
of 8%.

The Company also has a supplemental pension plan which provides benefits to 
the estate of the former Chairman.  The net liability for such benefits at 
December 31, 1998 was approximately $423,000 and is reflected in the balance 
sheet in postretirement benefit liabilities.

Health Care and Life Insurance

Effective June 30, 1998, the Company terminated its postretirement health 
care and life insurance benefits program for U.S. employees.

Accumulated postretirement benefits aggregating $261,000 of which $150,000 
was accrued through June 30, were eliminated.  Postretirement benefit costs 
charged to expense for the six months ended June 30, 1998 amounted to 
$10,500.

The Company will use the accrued amount of $150,000 to pay supplemental 
medical insurance premiums to U.S. employees and surviving spouses who had 
15 years or more service at June 30, 1998 when they reach the age of 65 
until this accrued amount is exhausted.
<PAGE>
Postretirement benefit costs for 1997, and 1996 included the following 
components (in thousands):
<TABLE>
                                                 			  1997       1996
<S>                                              <C>          <C>
Service cost for benefits earned during the year	$      5	    $      5
Interest cost on accumulated postretirement benefit
     obligation		                                      18	          16
Amortization of transition obligation	                 13 	         13
			                                                  -----------------
	                                                	$    36	   $     34
		                                                     	============
</TABLE>
The following assumptions were used at December 31, 1997 and 1996:  a 
discount rate of 7.25% and a 1996 assumed health care cost trend rate of 5%.

6.  Income Taxes

Income tax expense is composed of the following (in thousands):
<TABLE>
		                         1998  	1997  1996
	Foreign:
  <S>                     <C>   <C>    <C>
		Current                 $  49	$  79  $ 215
		Deferred                   37	  (27)    10
		                        ---------------------
		                       $   86	$  52  $ 225
		                          ==================
</TABLE>
Pre-tax (loss) income attributable to domestic and foreign operations is as 
follows (in thousands):
<TABLE>
		                        1998     	1997	   1996
  <S>                 <C>         <C>      <C>
		United States       $   (421)   $ (322)  $   898
		Foreign               (1,573)	    (191)    1,779
		                        ------------------------	
		                     $(1,994)   $ (513)   $2,677
			                         ===================
</TABLE>
 
<PAGE>
Following is a reconciliation of income tax expense (credit) to the amount 
based on the U.S. statutory rate of 35% (1998, 1997 and 1996) (in thousands):
<TABLE>
                       		                        1998	    1997 	  1996
<S>                                           <C>      <C>       <C>
Income taxes based on U.S. statutory rate     $ (698)  $ (180)   $  937
Non-taxable income:
     Increase (reduction) of valuation
	 allowances	                                    148    	 120      (30)
     Gain in connection with sale of foreign
             operations by related company		                     	(339)
     Taxes of foreign subsidiaries at rates 
             different than U.S. 
             statutory rate                      636     	119     (373)
     Other (net)	   	                                      (7)      30
		                                               ----------------------
		                                            $   86    $  52	   $ 225
 		                                                =================
</TABLE>
The components of deferred tax assets and liabilities at December 31, 1998 
and 1997, were as follows (in thousands):
<TABLE>
	                                   1998                 1997     
	                             Assets	Liabilities	   Assets	Liabilities
 <S>                         <C>      <C>         <C>         <C>
	Inventories                	$   57	              $    64
	Depreciation		                       $   283		               $   218
	Accrued expenses	              191              		   225
	Tax loss carry forwards	     2,510		               2,285
	Tax credits	                    49                    57
	Sundry
		                           ------------------	    -------------------
		                            2,807	      283	      2,631	       218
	Valuation allowance	         2,708              		 2,560
                            		------------------	   -------------------
	Total                      	$   99	   $  283    $     71	  $   218
	                                	============	      ==============
</TABLE>
At December 31, 1998, the Company had approximately $7,100,000 of loss carry 
forwards available to offset future U.S. taxable income.  Such carry
 forwards expire beginning in 1999.  A valuation allowance of $2,708,000 
and $2,560,000 has been provided at December 31, 1998 and 1997, respectively.
These valuation allowances were established since it is not certain that the 
deferred tax assets, primarily the net operating loss carry forwards, will 
be realized.
<PAGE>
7.  Employee Stock Options

The 1983 Driver-Harris Employee Incentive Stock Option Plan which expired in 
1993 provided for the grant of stock options at 100% of market value on date 
of grant which are intended to qualify as "incentive stock options" under 
Section 422 of the Internal Revenue Code.  Under this plan, 45,000 shares of 
stock are reserved for issuance at December 31, 1998 and 1997.  The following
table summarizes the activity in the Plan:
<TABLE>
                                       		  Number
                                        		of Shares    	Price Per Share
<S>                                       <C>          <C>   <S><C>
Outstanding January 1, 1996	              82,500      	$4.00 to $8.50
	Exercised in 1996	                       37,500      	 4.00 to 6.875
		                                       --------
	Outstanding December 31, 
	   1998, 1997 and 1996	                  45,000      	$5.25 to $8.50
 						                                    =====
</TABLE>
The outstanding options at December 31, 1998, which are all fully vested, 
expire between 2000 and 2002.

During 1998, the Company issued 5,350 shares of stock to non-executive 
Directors, officers and employees as compensation and bonus.  Total 
compensation expense recorded in conjunction with the issuance of these 
shares was $39,000.

8.  Industry Segments and Geographic Areas

The Company classified its revenues based upon the location (i.e. 
manufacture or purchase for resale-distribution) of the facility and its 
function.  Such revenues are regularly reviewed by the Directors and 
management and decisions are made on such a basis.

The operating expenses and resultant net profit (loss) and the assets are 
similarly reviewed and decisions made based upon whether they relate to 
manufacturing or purchase for resale (i.e. distribution).

<PAGE>
<TABLE>
Year ended December 31, 1998:
			Reportable Segments             								 Distri-   	Heat
				                 Parent  Manufacturing  bution    Treating   
            			    Co. (U.S.)   (Ireland)     (U.K.)  (Australia)   Total
Revenues					           
 <S>                 <C>       <C>         <C>      <C>            <C>
 External revenues		         	$  32,837	   $7,552                  $40,389
 Inter-segment revenues			        3,379       143                    3,522
 Other revenues	     $    50         90                                140
 Elimination of inter
   -segment revenue              (3,379)    (143)                    3,522
                   				---------------------------------------------------
Consolidated revenues     50	    32,927    7,552                    40,529

Net Profit (Loss)	      (303)      106   (1,883)                    (2,080)
Assets
 Total assets		        1,694    20,423    4,104                     26,221
 Elimination of 
     investment         (623)                                        (623)      
 Elimination of inter-company 
receivables             (829)  (3,289)    (733)                    (4,851)
 Elimination of inter-company
      inventory    	             (100)     (83)                      (183)
       			                -----------------------------------------------
				                     242	  17,034    3,288                     20,564
Other Significant items
 Depreciation expense      1      485       65                        551
 Interest expense		       77      569       76                        722
 Expenditures for assets          231       41                        272

Year ended December 31, 1997:					                          
Revenues
 External revenues           $ 30,894    $ 8,390       $ 1,066    $40,350
 Inter-segment revenues			      4,275         38                    4,313
 Other revenues	     $   332       63          9                      404
 Elimination of inter-segment 
      revenue	                 (4,275)      (38)                   (4,313)
Consolidated revenues	   332   30,957      8,399        1,066      40,754

Net Profit (Loss)	      (306)     482       (744)           3        (565)

Assets
 Total assets          2,315   19,994      4,435	                  26,744
 Elimination of 
    investment          (623)    (289)             	                 (912)
 Elimination of
    inter-company 
    receivables         (829)  (4,074)      (13)             	     (4,916)
 Elimination of
    inter-company
    inventory           (192)		                     	                (192)
                         863   15,439      4,422	                  20,724   
Other Significant Items
 Depreciation expenses     1      511         91         24           627
 Interest expense         17      482         80         70           649
 Expenditures for 
     assets                     2,137         50          4         2,191                                                           

Year ended December 31, 1996:
Revenues
 External revenues             31,770      5,204      3,321       40,295
 Inter-segment revenues         2,723                              2,723
 Other revenues          612      228                   187        1,027
 Elimination of inter-
   segment revenue             (2,723)                            (2,723)
Consolidated revenues	   612   31,998     5,204       3,508       41,322

Net Profit (Loss)	       914    1,651      (181)         68        2,452

Other Significant Items
 Depreciation expenses	    1      384        42         115          542
 Interest expenses	       69      237        48          60          414
 Expenditures for
    assets                      1,436        53          87        1,576
</TABLE>
<PAGE>
9.  Financial Instruments

Off Balance Sheet Risk

The Company enters into forward exchange contracts to hedge certain firm 
sales commitments denominated in foreign currencies and to hedge certain 
anticipated but not yet committed sales expected to be denominated in 
foreign currencies.  The purpose of the Company's foreign currency hedging 
activities is to protect the Company from the risk that the eventual cash 
flows resulting from the sale of products to international customers will 
be adversely affected by changes in exchange rates.  At December 31, 1998,
the Company had forward exchange contracts, all having maturities of less 
than six months, to exchange British Pound currencies for Irish Punt in 
the amount of (3.5 million British Pounds.

Gross deferred realized gains and losses from hedging firm sales commitments 
and anticipated but not yet committed sales transactions were a $5,000 loss 
at December 31, 1998.

The Company is exposed to credit loss in the event of nonperformance by 
counterparties on foreign exchange contracts, but the Company does not 
anticipate nonperformance by any of these counterparties.  The amount of 
such exposure is generally the unrealized gains in such contracts.
<PAGE>

Driver-Harris Company and Subsidiaries

Schedule I - Condensed Financial Information of Registrant

Condensed Balance Sheets
<TABLE>
Dollar Amounts in Thousands
	                                                 December 31
	                                                1998   	  1997
Assets
Current assets:
       <S>                                   <C>       <C>
 Cash      	                                 $    218	 $    532
	Accounts receivable from subsidiaries            829       829
		                                               -------	 -------
Total current assets	                           1,047 	   1,361

Investment in subsidiaries	                     4,430 	   5,667
Other assets	                                      24        15
		                                              -------	 -------
	                                           	$  5,501 	 $ 7,043
		                                               =====	 =====

Liabilities and stockholders' equity
Current liabilities:
	Accounts payable	                           $    25   	$    17
	Accrued expenses	                               110   	    140
		                                             -----	    ------
Total current liabilities	                       135   	    157

Long-term debt	                                1,124   	  1,049
Postretirement benefit liabilities	              573   	    574
		                                             -----   	  -----
Total liabilities	                             1,832  	   1,780

Stockholders' equity
	Common stock	                                 1,233   	  1,223
	Additional paid-in capital	                   2,282   	  2,228
	Retained earnings 	                             950   	  3,030
	Accumulated other comprehensive loss	          (796)	   (1,218) 
		                                             ------ 	 ------
		                                             3,669	     5,263
Commitments (note 1)
	                                           	  -------	 ------
		                                           $ 5,501   	$ 7,043
		                                             =====	     =====
</TABLE>
<PAGE>
Driver-Harris Company and Subsidiaries

Schedule I - Condensed Financial Information of Registrant

Condensed Statements of Operation

Dollar Amounts in Thousands
<TABLE>
                                            	Years Ended December 31
                                            	1998    	1997  	1996
<S>                                         <C>     <C>      <C>
Fees from subsidiaries	                     $ 220   $ 220    $  220
Fees from related company			                                    500
Other income	                                  50    	 54	       75
	                                            ----------------------
	                                             270    	274    	  795

Selling, general and administrative 
    expenses	                                 614    	638	      707
Interest and financing expenses	               77    	 70    	   69
Gain on sale of interest in Australia subsidiary	    (128)
Gain in connection with sale of foreign operations
     by related company		                                      (895)
	                                            ----------------------
(Loss) income before equity in net income, (loss)
     of subsidiaries and income taxes       (421)    (306)      914

Equity in net (loss) income of
    subsidiaries                          (1,659)    (259)   	1,538
                                             	---------------------
(Loss) income before income taxes         (2,080)    (565)   	2,452

Income taxes
                                             	---------------------
Net (loss) income                        $(2,080)  $ (565)   $2,452
                                               	=====================
</TABLE>
<PAGE>
Driver-Harris Company and Subsidiaries

Schedule I - Condensed Financial Information of Registrant

Condensed Statements of Cash Flow

Dollar Amounts in Thousands
<TABLE>
	                                              Years Ended December 31
	                                              1998  	   1997	   1996
Operating activities
<S>                                         <C>       <C>    <C>
Net (loss) income	                          $ (2,080)	$  (565)$ 2,452
Adjustments to reconcile net (loss) income to net
     cash used in operating activities:
       Undistributed net income (loss) of
             subsidiaries	                     1,659	     259	 (1,538)
	Provision for doubtful accounts		                                114
	Non-cash compensation	                           39	      30      19
	Increase (reduction) in retirement 
             benefit liability	                   (1)	    295      74
	Receivables from subsidiaries		                          103    (338)
	Accounts payable and accrued expenses	          (22)     (52)    (73)
	Deferred credit		                                               (968)
	Equity in related company	                                  	 (1,561)
	Elimination of equity adjustment from 
            translation for foreign operations
            sold by related company		 	                         1,634
	Account with related company	                                    253
	Sundry	                                         (9)        6	    (14)
	                                           	-------------------------
Net cash provided by (used in) operating 
       activities	                             (414)        76      54

Financing activities
Increase in long-term debt	                      75    	    70      66
Issuance of capital stock	                       25	          	    215
Sundry		       	                                                     3
		                                            -------------------------
Net cash provided by financing activities	      100    	    70	    284
		                                            -------------------------
Net change in cash	                            (314)   	   146	    338
Cash at beginning of year	                      532	       386      48
		                                            -------------------------
Cash at end of year	                         $  218    	$  532	 $  386
		                                              =====================
Supplemental disclosure of cash flow information
Cash paid during the year for:
     Interest                               	$     1	   $    -	 $    4
		                                               =====================
</TABLE>
<PAGE>
Driver-Harris Company and Subsidiaries

Schedule I - Condensed Financial Information of Registrant

Notes to Condensed Financial Statements


1.  Basis of Presentation

In the parent company only (Driver-Harris Company - U.S. Corporate Holding 
Company) financial statements, the Company's investment in subsidiary 
(Irish Driver-Harris Co. Ltd.) is stated at cost plus equity in 
undistributed earnings since the date of acquisition.  The Company's 
share of net income of its unconsolidated subsidiaries is included in 
consolidated income using the equity method.  The Driver-Harris Company - 
U.S. Corporate Holding Company financial statements should be read in 
conjunction with the Company's consolidated financial statements.
<PAGE>
Driver-Harris Company and Subsidiaries

Schedule II - Valuation and Qualifying Accounts

Dollar Amounts in Thousands
<TABLE>
  Col. A        Col. B           Col. C         Col. D       Col. E 
 	                             Additions
	                                     (1)	
	               Balance at	    Charged to	              	 Balance
	               Beginning	     Costs and   Deductions     at End
Description     of Period	      Expenses    Describe	    of Period
Year ended December 31, 1998:
 Deduction from
 related asset:
 Tax valuation
   <S>            <C>          <C>           <C>           <C>
   allowance      $ 2,560      $   148(2)                		$ 2,708
 Allowances for
   doubtful trade 
   accounts           406          272       $  (77)(1)        601
                      ====================================================

Year ended December 31, 1997:
 Deduction from 
 related asset:
 Tax valuation 
   allowance      $ 2,440  	   $   120(2)		                $ 2,560
 Allowances for
   doubtful trade
   accounts           408	          76	      $   78(1)      	  406
                      ===================================================

Year ended December 31, 1996:
 Deduction from
 related asset:
 Tax valuation
    allowance      $ 2,470 	  	              $   30(2)     $ 2,440
 Allowances for
    doubtful trade
    accounts           278	  $   111	           (19)(1)       408
	              ===================================================
</TABLE>
(1)  Accounts charged off during the year and adjustments due to currency
 fluctuations.
(2)  The change in valuation allowance is principally due to the change
 in deferred tax assets.
		
<PAGE>