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

                                    FORM 10-K
         [X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                  OF THE SECURITIES EXCHANGE ACT OF 1934

                  FOR THE FISCAL YEAR ENDED JUNE 30, 1996

                                       or

         [  ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                  OF THE SECURITIES EXCHANGE ACT OF 1934

                  For the transition period from            to

                             Commission File Number
                                     0-27262

                           SPRECKELS INDUSTRIES, INC.
             (Exact name of Registrant as specified in its charter)

              DELAWARE                                       94-3050406
     (State or other jurisdiction of                      (I.R.S. Employer
       incorporation of organization)                     Identification No.)

       6805 MORRISON BOULEVARD, SUITE 450, CHARLOTTE, NORTH CAROLINA 28211
               (Address of principal executive offices) (Zip Code)

        Registrant's telephone number, including area code (704) 367-4220
                                -----------------

        SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: None

           SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:

                                                    Name of each exchange
             Title of each class                      on which registered

             Class A Common Stock                  Nasdaq National Market
             par value $.01 per share, with 
             common stock purchase rights






<PAGE>



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

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

         The aggregate market value of the 6,055,438 shares of voting stock of
the Registrant held by non-affiliates of the Registrant as of October 11, 1996,
was $152,355,741.

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

         Indicate by check mark whether the Registrant has filed all documents
and reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a Court. Yes X No______

         The number of shares outstanding of each of the Registrant's classes of
common stock are as follows:

                                                    SHARES OUTSTANDING AS OF
         TITLE OF EACH CLASS                                OCTOBER 9, 1996
         -------------------                        -----------------------

         Class A Common Stock                                6,0487,033
         par value $.01 per share,
         with common stock purchase rights

                      DOCUMENTS INCORPORATED BY REFERENCE:

                                      None



                                      (ii)



<PAGE>



                                TABLE OF CONTENTS


PART I                                                               PAGE NO.

         Item 1.   Business                                             1
         Item 2.   Properties                                           9
         Item 3.   Legal Proceedings                                    10
         Item 4.   Submission of Matters to a Vote
                     of Security Holders                                10

PART II

         Item 5.   Market for Registrant's Common
                     Equity and Related Stockholder Matters             11
         Item 6.   Selected Financial Data                              11
         Item 7.   Management's Discussion and Analysis
                     of Financial Condition and Results of
                     Operations                                         13
         Item 8.   Financial Statements and Supplementary
                     Data                                               20
         Item 9.   Changes in and Disagreements with
                    Accountants on Accounting and
                    Financial Disclosure                                51

PART III

         Item 10. Directors and Executive Officers of the
                     Registrant                                         51
         Item 11. Executive Compensation                                54
         Item 12. Security Ownership of Certain Beneficial
                    Owners and Management                               61
         Item 13. Certain Relationships and Related
                     Transactions                                       63

PART IV

         Item 14. Exhibits, Financial Statement Schedules and
                     Reports on Form 8-K                                64








                                      (iii)


<PAGE>



                                     PART I

ITEM 1.  BUSINESS

         Spreckels Industries, Inc., now known as Yale International, Inc. (the
"Company"), through its subsidiaries produces a wide range of industrial
products, including hoists, scissor lifts, mechanical jacks, rotating joints,
actuators and circuit protection devices. (See Note 1 of the Notes to the
Consolidated Financial Statements contained in Item 8). Its principal
subsidiary, Duff-Norton Company, Inc. ("Duff-Norton"), has been in operation
since 1883.

         The Company was organized in Delaware in May, 1987 by its then senior
management and Prudential-Bache Interfunding, Inc. In July, 1987 the Company
acquired a portion of its current business, certain other industrial businesses,
and the Spreckels Sugar business (composed of Spreckels Sugar Company, Inc.
("Spreckels Sugar") and Limestone Products Company, Inc. ("Limestone Products")
(together the "Sweetener Segment"), from Amstar Corporation in a leveraged
buyout. In December, 1988 the Company purchased all of the stock of Yale
Industrial Products, Inc., a manufacturer of hoists and lifting equipment.

         In October, 1992, the Company commenced a case under Chapter 11 of the
Bankruptcy Code. The Company's Plan of Reorganization (the "Plan") became
effective on September 2, 1993. (See Note 3 of the Notes to the Consolidated
Financial Statements contained in Item 8). In fiscal years 1994 and 1995, the
Company sold the stock of certain of its industrial products subsidiaries,
including Carbidie Corporation ("Carbidie"), (see Note 9 of the Notes to the
Consolidated Financial Statements contained in Item 8).

         On April 19, 1996, the Company sold all of the stock of Spreckels Sugar
and Limestone Products, to Holly Sugar Corporation ("Holly"), (see Note 2 of the
Notes to the Consolidated Financial Statements contained in Item 8). The sale
consisted of substantially all of the assets of the Sweetener Segment, other
than two sugar processing facilities located in Spreckels and Manteca,
California, Spreckels Water Company and certain farm properties. These remaining
properties were valued at their net realizable value and were included in the
Consolidated Financial Statements of the Company as "Net Assets of Discontinued
Operations Held for Sale". The real estate properties were transferred to
Spreckels Land Company, Inc. (the "Land Company"), and together with certain
properties held by the Land Company represent over 1,000 acres of real estate
and such real estate is currently offered for sale.

         On August 24, 1996, subsequent to the fiscal year ended June 30, 1996,
the Company entered into an Agreement and Plan of Merger (the "Merger
Agreement") among the Company, Columbus McKinnon Corporation ("Columbus
McKinnon") and L. Acquisition Corporation, a wholly owned subsidiary of Columbus
McKinnon (the "Purchaser"). See the "Merger Agreement" below.

         The Company produces a wide range of products and is composed of the
following companies:




                                       -1-

<PAGE>



DUFF-NORTON COMPANY, INC. Duff-Norton Company, Inc. and its subsidiaries, which
include Yale Industrial Products GmbH (Germany), and Yale Industrial Products
Ltd. (U.K.), (together, "Duff-Norton") design, manufacture and market mechanical
and electro-mechanical actuators, mechanical jacks, rotating joints, electric
and manual hoists and other lifting and positioning equipment and components.
Duff-Norton's American Lifts division also manufactures hydraulic scissor-lifts
and other engineered lifting products.

         The electric and manual hoists manufactured by Duff-Norton serve both
the industrial and commercial markets. The Yale(R) and Coffing(R) hoist products
are used in a number of industries, including the heavy manufacturing,
industrial construction, chemical, railroad, utility, shipping and mining
industries. In the commercial market, the Duff-Lynx(R), Little Mule(TM) and Shop
King hoists are used by the light manufacturing, commercial construction,
agriculture and automotive industries. The Little Mule(TM) hoists are also used
by the utility industry. American Lifts' hydraulic scissor-lifts are used
primarily by the automotive, general manufacturing and freight handling
industries for process automation or to improve factory ergonomics.

         Mechanical and electro-mechanical actuators are linear motion devices
used to position loads in a variety of industries, principally the steel, paper
and aerospace industries. Actuators are used by steel and paper mills to
position rollers, among other applications, and by the aerospace industry in the
positioning of communications satellite antennas and the testing and
transportation of large rockets. Mechanical jacks are heavy-duty lifting
devices, whose uses include the repair and maintenance of railroad tracks,
locomotives and other industrial machinery. Rotating joints are piping devices
which introduce heating or cooling liquids into the interiors of rotating drums
in industrial processes. Major customers for this product include the paper,
textiles, rubber, plastics, printing and machine tool industries.

         Duff-Norton sells its products to distributors, original equipment
manufacturers and end-users in the United States and abroad. In addition, a
European licensee manufactures, markets and distributes certain Duff-Norton
metric actuators. During the past several years, Duff-Norton has expanded its
overseas operations through the acquisition by its subsidiary, Yale Industrial
Products GmbH, of Manutention Connection, S.A.R.L. in France and the
establishment of Yale Industrial Products GmbH in Austria. These actions have
significantly increased hoist distribution operations in those countries.
Hangzhou Lila Lifting & Lashing Co. Ltd., a subsidiary of Yale Industrial
Products GmbH, was also formed to manufacture textile strapping and slings in
China for distribution in Europe and Asia. Duff-Norton has also recently entered
into joint venture agreements to provide for the manufacturing and distribution
of its products in China and Egypt. Foreign sales comprised approximately 16% of
total sales for the past year.

         The raw materials used by Duff-Norton come from a number of sources.
Certain finished components, such as electric motors, bearings, graphite parts
and ball screws, as well as certain hoist and trolley components, are purchased
from single sources. However, it is believed that the loss of any single
supplier for these goods would have no material adverse effect on operations.

         Competition in Duff-Norton's markets is intense and comes from a large
number of domestic and international firms. The basis of competition varies with
Duff-Norton's product lines, but is based primarily on product quality, delivery
and price.

                                       -2-

<PAGE>



MECHANICAL PRODUCTS GROUP. Mechanical Products, Inc. and Minitec Corporation
(together, the "Mechanical Products Group"), design, manufacture and market
small, lightweight circuit protective devices for both the aircraft/aerospace
and commercial markets. The Mechanical Products Group primarily serves the
aircraft industry, producing circuit breakers for original equipment
manufacturers of both commercial and military aircraft. In the commercial
sector, the Mechanical Products Group sells circuit breakers to original
equipment manufacturers, electrical distributors and hardware outlets for
medical equipment, motor vehicles, plug strip and other electrical equipment
applications. Most aircraft circuit breakers are built to comply with customer
or military specifications while most commercial circuit breakers are built to
comply with the specifications of safety related agencies.

         The Mechanical Products Group's products are marketed and sold by
direct salespeople and through a network of manufacturers' representatives and
distributors in the United States and abroad. The Mechanical Products Group has
two offshore licensees.

         The raw materials, components and parts used for the production of the
Mechanical Products Group's circuit breakers are available through normal
industry sources. Although a number of suppliers are single source suppliers
because of the specialized tooling required for the products, the Company
believes that the loss of any single supplier would not have a material adverse
effect on the business of the Mechanical Products Group. The loss of a bimetal
supplier, however, would result in time consuming and expensive commercial
product requalifications.

         The Company believes that the Mechanical Products Group's principal
competitor in the aircraft circuit breaker market is Texas Instruments
Corporation. The Company believes that the loss of a major aircraft original
equipment manufacturer as a customer would have a material adverse effect on the
business of the Mechanical Products Group. Competition in certain markets in the
commercial circuit breaker market includes several manufacturers from Hong Kong,
Taiwan and Korea.

         For information on the Company's operations in different geographic
areas, see Note 19 of the Notes to Consolidated Financial Statements contained
in Item 8.

CARBIDIE CORPORATION. Carbidie Corporation ("Carbidie") a manufacturer of
custom-made tungsten carbide preforms which are used for their strength and
durability in the tool and die industry, was a wholly-owned subsidiary of the
Company until November 4, 1994 when the Company sold all of the stock of
Carbidie to Greenfield Industries, Inc. for cash consideration of $22,500,000.

DISCONTINUED OPERATIONS--As described above, the Company sold all of the issued
and outstanding capital stock of Spreckels Sugar and Limestone Products, on
April 19, 1996. In connection with the sales, the Company retained two sugar
processing facilities in Spreckels and Manteca, California, production equipment
located at Cool, California and certain farm properties. In addition, the
Company retained the financial responsibility for all costs associated with the
closure and demolition of the two retained sugar processing facilities, as well
as certain employee related liabilities including medical benefits for those
employees who had retired as of December 31, 1995.

         The real estate retained has been valued at its net realizable value
and included in the Company's Consolidated Financial Statements as "Net Assets
of Discontinued Operations Held for

                                       -3-

<PAGE>



Sale." The affected real estate and real estate previously held by the Land
Company represents over 1,000 acres. All real estate is currently being offered
for sale.

MERGER AGREEMENT--The Merger Agreement provided for the commencement of a tender
offer for all of the outstanding shares of the common stock of the Company and
all of the outstanding warrants to purchase the common stock of the Company (the
"Offer") as soon as reasonably practicable, but in no event later than five
business days after the public announcement by the Company of the execution of
the Merger Agreement. In the Offer, stockholders who tender their shares will
receive $24.00 per share in cash and warrant holders who tender their warrants
will receive for each warrant an amount in cash equal to the excess of the
$24.00 per share offer price over the exercise price of the warrant. The
obligation of Purchaser to accept for payment shares and warrants tendered is
subject only to (i) the Minimum Condition (as defined below under "Conditions of
the Offer") and (ii) the satisfaction or waiver of the other conditions
described below under "Conditions of the Offer." Under the Merger Agreement, the
Purchaser expressly reserves the right, in its sole discretion, to waive any
condition to the Offer (other than the Minimum Condition) and to increase the
per share amount payable pursuant to the Offer or make any other changes in the
terms and conditions of the Offer (provided that, without the written consent of
the Company, no change may be made which decreases the per share amount payable
in the Offer, changes the form of consideration payable in the Offer (other than
by adding consideration), reduces the maximum number of shares or warrants to be
purchased in the Offer or imposes conditions to the Offer in addition to those
set forth in "Conditions of the Offer" below). The Merger Agreement provides
that, subject to the terms and conditions of the Merger Agreement and the Offer,
including but not limited to the conditions to the Offer, unless the Company
otherwise consents in writing, Purchaser will accept for payment and pay for
shares and warrants validly tendered and not properly withdrawn promptly
following the expiration of the Offer, provided that Purchaser may extend the
Offer up to the tenth business day after the later of (i) the tenth business day
after the initial expiration date of the Offer and (ii) the date on which all
such conditions shall first have been satisfied or waived.

         The Merger Agreement provides that upon the terms and subject to the
conditions thereof, and in accordance with the General Corporation Law of the
State of Delaware ("Delaware Law"), at the effective time of the merger (the
"Effective Time"), the Purchaser will be merged with and into the Company (the
"Merger"). As a result of the Merger, the separate corporate existence of
Purchaser will cease and the Company will continue as the surviving corporation
of the Merger.

         The Merger Agreement also provides that immediately prior to the
Effective Time, each employee or director stock option and any related stock
appreciation right (together, an "Employee Option"), whether or not then
exercisable, will be cancelled by the Company, and each holder of a cancelled
Employee Option will be entitled to receive at the Effective Time or as soon as
practicable thereafter (or, if later, with respect to any Employee Option, the
date six months and one day following the grant of such Employee Option) from
the Company in consideration for the cancellation of such Employee Option an
amount in cash equal to the product of (i) the number of shares previously
subject to such Employee Option and (ii) the excess, if any, of the merger
consideration over the exercise price per share previously subject to such
Employee Option.




                                       -4-

<PAGE>



         The Merger Agreement also provides that the directors of Purchaser
immediately prior to the Effective Time will be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Certificate of
Incorporation and By-Laws of the Surviving Corporation, and the officers of the
Company immediately prior to the Effective Time will be the initial officers of
the Surviving Corporation, in each case until their respective successors are
duly elected or appointed (as the case may be) and qualified.

         Pursuant to the Merger Agreement, the Company, acting through its Board
of Directors, will, if required in accordance with applicable law and the
Company's Certificate of Incorporation and ByLaws, (i) duly call, give notice
of, convene and hold a special meeting of its stockholders as soon as
practicable following consummation of the Offer for the purpose of considering
and taking action on the Merger Agreement and the transactions contemplated
thereby (the "Stockholders Meeting") and (ii) subject to its fiduciary duties
under applicable law, exercised after consultation with independent legal
counsel, (A) include in the Proxy Statement the recommendation of the Board of
Directors that the stockholders of the Company vote in favor of the approval of
the Merger Agreement and the transactions contemplated thereby and the written
opinion of the financial advisor that the consideration to be received by the
stockholders of the Company pursuant to the Offer and the Merger is fair to such
stockholders from a financial point of view and (B) use its reasonable efforts
to obtain the necessary approval of the Merger Agreement and the transactions
contemplated thereby by its stockholders. At the Stockholders Meeting, the
Purchaser will cause all shares then owned by it and its subsidiaries to be
voted in favor of approval of the Merger Agreement and the transactions
contemplated thereby.

         The Merger Agreement provides that in the event that Purchaser acquires
at least 90% of the outstanding shares, the Company agrees, at the request of
Purchaser, subject to the conditions to the Merger set forth below in
"Conditions to the Merger", to take all necessary and appropriate action to
cause the Merger to become effective as soon as reasonably practicable after
such acquisition, without a meeting of the Company's stockholders, in accordance
with Section 253 of Delaware Law.

CONDITIONS OF THE OFFER--Under the terms of the Merger Agreement, Purchaser will
not be required to accept for payment or pay for any shares tendered pursuant to
the Offer, and may postpone the acceptance for payment or, subject to the
restriction referred to above, payment for any shares tendered pursuant to the
Offer, and may amend or terminate the Offer (whether or not any shares have
theretofore been purchased or paid for) if, prior to the expiration of the
Offer, (i) a number of shares of Common Stock which, together with any shares
owned by Columbus McKinnon or Purchaser, constitutes at least 51% of the voting
power (determined on a fully-diluted basis, including the exercise in full of
all options and warrants outstanding, other than Warrants validly tendered and
accepted for payment pursuant to the Offer), on the date of purchase, of all the
securities of the Company entitled to vote generally in the election of
directors or in a merger shall not have been validly tendered and available for
acceptance pursuant to the Offer (the "Minimum Condition"), (ii) Purchaser is
not, in its reasonable discretion, satisfied that (x) the Rights will not become
exercisable upon consummation of the Offer, (y) upon consummation of the Offer,
the restrictions contained in Section 203 of Delaware Law will not apply to the
Merger or (z) no supermajority vote will be required by the Company's
Certificate of Incorporation to approve the Merger or, after consummation of the
Offer, Purchaser will otherwise possess sufficient voting power to effect the
Merger without the affirmative vote of any person other than Purchaser or (iii)
at any time on or after

                                       -5-

<PAGE>



August 24, 1996 and prior to the acceptance for payment of shares, any of the
following conditions occurs or has occurred or Purchaser makes a good faith
determination, which, in the reasonable judgment of Purchaser with respect to
each and every matter referred to below, makes it inadvisable to proceed with
the Offer or with such acceptance for payment of or payment for shares or to
proceed with the Merger:

         (a) there shall have been any action or proceeding brought by any
governmental authority before any federal or state court, or any order or
preliminary or permanent injunction entered in any action or proceeding before
any federal or state court or governmental, administrative or regulatory
authority or agency, located or having jurisdiction within the United States, or
any other action taken, proposed or threatened, or statute, rule, regulation,
legislation, interpretation, judgment or order proposed, sought, enacted,
entered, enforced, promulgated, amended, issued or deemed applicable to
Purchaser, the Company or any subsidiary or affiliate of Purchaser or the
Company or the Offer or the Merger, by any legislative body, court, government
or governmental, administrative or regulatory authority or agency located or
having jurisdiction within the United States, which could reasonably be expected
to have the effect of: (i) making illegal, or otherwise directly or indirectly
restraining or prohibiting or making materially more costly, the making of the
Offer, the acceptance for payment of, payment for, or ownership, directly or
indirectly, of some of or all the Shares by Parent or Purchaser, the
consummation of any of the transactions contemplated by the Merger Agreement or
materially delaying the Merger; (ii) prohibiting or materially limiting the
ownership or operation by the Company or any of its subsidiaries, or by Parent,
Purchaser or any of Parent's subsidiaries of all or any material portion of the
business or assets of the Company or any of its material subsidiaries or Parent
or any of its subsidiaries, or compelling Purchaser, Parent or any of Parent's
subsidiaries to dispose of or hold separate all or any material portion of the
business or assets of the Company or any of its material subsidiaries or Parent
or any of its subsidiaries, as a result of the transactions contemplated by the
Offer or the Merger Agreement; (iii) imposing or confirming limitations on the
ability of Purchaser, Parent or any of Parent's subsidiaries effectively to
acquire or hold or to exercise full rights of ownership of Shares, including,
without limitation, the right to vote any Shares acquired or owned by Parent or
Purchaser or any of Parent's subsidiaries on all matters properly presented to
the stockholders of the Company, including, without limitation, the adoption and
approval of the Merger Agreement and the Merger or the right to vote any shares
of capital stock of any subsidiary (other than immaterial subsidiaries) directly
or indirectly owned by the Company; or (iv) requiring divestiture by Parent or
Purchaser, directly or indirectly, of any Shares;

         (b) there shall have occurred (i) any general suspension of trading in,
or limitation on prices for, securities on any national securities exchange or
in the over-the-counter market in the United States, (ii) any extraordinary or
material adverse change in the market price of the Shares or in the United
States securities or financial markets generally, including, without limitation,
a decline of at least 20% in either the Dow Jones Average of Industrial Stocks
or the Standard & Poor's 500 index from the date of the Merger Agreement, (iii)
any material adverse change or any condition, event or development involving a
prospective material adverse change in United States or other material
international currency exchange rates or a suspension of, or limitation on, the
markets therefor, (iv) a declaration of a banking moratorium or any suspension
of payments in respect of banks in the United States, or (v) a commencement of a
war or armed hostilities or other national or international calamity directly or
indirectly involving the United States which would have a Material Adverse
Effect or materially adversely affect (or materially delay) the consummation of
the Offer;

                                       -6-

<PAGE>



         (c) (i) it shall have been publicly disclosed or Purchaser shall have
otherwise learned that beneficial ownership (determined for the purposes of this
Section as set forth in Rule 13d-3 promulgated under the Exchange Act) of 15% or
more of the outstanding Shares has been acquired by any corporation (including
the Company or any of its subsidiaries or affiliates), partnership, person or
other entity or group (as defined in Section 13(d)(3) of the Exchange Act),
other than Parent or any of its affiliates and other than any Grandfathered
Person (as presently defined) so long as such person remains a Grandfathered
Person (as presently defined) or (ii) (A) the Board of Directors of the Company
or any committee thereof shall have withdrawn or modified in a manner adverse to
Parent or Purchaser the approval or recommendation of the Offer, the Merger or
the Merger Agreement, or approved or recommended any takeover proposal or any
other acquisition of Shares other than the Offer and the Merger, (B) any such
corporation, partnership, person or other entity or group shall have entered
into a definitive agreement or an agreement in principle with the Company with
respect to a tender offer or exchange offer for any Shares or a merger,
consolidation or other business combination with or involving the Company or any
of its subsidiaries or (C) the Board of Directors of the Company or any
committee thereof shall have resolved to do any of the foregoing;

         (d) any of the representations and warranties of the Company set forth
in the Merger Agreement that are qualified as to materiality shall not be true
and correct or any such representations and warranties that are not so qualified
shall not be true and correct in any material respect, in each case as if such
representations and warranties were made at the time of such determination;

         (e) the Company shall have failed to perform in any material respect
any obligation or to comply in any material respect with any agreement or
covenant of the Company to be performed or complied with by it under the Merger
Agreement;

         (f) the Merger Agreement shall have been terminated in accordance with
its terms or the Offer shall have been amended or terminated with the consent of
the Company;

         (g) any waiting periods under the HSR Act applicable to the purchase of
Shares pursuant to the Offer shall not have expired or been terminated, or any
material approval, permit, authorization, consent or waiting period of any
domestic, foreign or supranational governmental, administrative or regulatory
agency (federal, state, local, provincial or otherwise) located or having
jurisdiction within the United States or any country or economic region in which
either the Company or Parent, directly or indirectly, has material assets or
operations, shall not have been obtained or satisfied; or

         (h) the Company and Purchaser (or any affiliate of Purchaser) shall
have entered into an agreement (which by its terms supersedes the Merger
Agreement) providing for the acquisition of the Company by Purchaser or any
affiliate of Purchaser by merger or other similar business combination, or by
purchase of shares of capital stock or assets of the Company, or the Company and
Purchaser shall have entered into any other agreement pursuant to which it is
agreed that the Offer will be terminated.

CONDITIONS OF THE MERGER--Under the Merger Agreement, the respective obligations
of each party to effect the Merger are subject to the satisfaction at or prior
to the Effective Time of the following conditions: (a) if required by Delaware
Law, the Merger Agreement shall have been approved by the affirmative vote of
the stockholders of the Company by the requisite vote in accordance with the

                                       -7-

<PAGE>



Company's Certificate of Incorporation and Delaware Law (which the Company has
represented shall be solely the affirmative vote of a majority of the
outstanding shares); (b) no statute, rule, regulation, executive order, decree,
ruling, injunction or other order (whether temporary, preliminary or permanent)
shall have been enacted, entered, promulgated or enforced by any United States
or state court or governmental authority which prohibits, restrains, enjoins or
restricts the consummation of the Merger; (c) any waiting period applicable to
the Merger under the Hart-Scott-Rodino Act shall have terminated or expired; and
(d) Purchaser shall have purchased shares pursuant to the Offer in a number
sufficient to satisfy the Minimum Condition.

PATENTS AND TRADEMARKS--The Company has a number of patents and trademarks. The
Company believes that name recognition and the Company's trademarks are
important to a number of the Company's products.

EMPLOYEES--As of June 30, 1996, the Company had 1,363 employees, of which 573
were represented by unions. The following is a summary of the Company's union
contracts:

     Company                   Description

Duff-Norton Company, Inc.      United Steel Workers of America
 (Forrest City, Arkansas)      Local 5681
                               Contract expires May 6, 2001
                               Covers approximately 191 employees

Duff-Norton Company, Inc.      United Lift Workers
American Lifts Division        Contract expires May 14, 2001
 (Greensburg, Indiana)         Covers approximately 71 employees

Duff-Norton Company, Inc.      United Steel Workers of America
 (Charlotte, NC)               Local 1811
                               Contract expires September 26, 1999
                               Covers approximately 155 employees

Mechanical Products, Inc.      United Auto Workers of America
(Jackson, Michigan)            Local 1330
                               Contract expires April 7, 1997
                               Covers approximately 125 employees

ENVIRONMENTAL MATTERS--The Company's operations are subject to regulation by
various federal, state and local environmental agencies. Statutes, regulations
and permits and other authorizations impose requirements on the Company and its
operations concerning air emissions and waste water discharges, waste management
and disposal and other environmental matters.

         The Company's subsidiary, Mechanical Products, Inc. discovered in 1987
that groundwater and sediments beneath its Jackson, Michigan plant contain
certain organic chemical compounds in concentrations above those permitted by
applicable law. Mechanical Products has conducted an extensive investigation of
the site and has entered into an Administrative Order by Consent with the

                                       -8-

<PAGE>



State of Michigan Department of Natural Resources which provides for further
investigation and the development and implementation of a plan for remedial
action. Since 1991, Mechanical Products has been engaged in efforts to remove
and prevent further intrusion of such compounds into the groundwater, including
removal of affected sediments. Although no assurances can be given, management
believes that the remaining cost to the Company of continuing remedial efforts
at the Jackson plant will not have a material adverse effect on the Company's
business, financial condition or results of operations.

ITEM 2.  PROPERTIES

         The Company's corporate headquarters is located in leased office space
in Charlotte, North Carolina. The following is a list of the Company's other
principal properties and facilities:

                          NATURE OF                                    TERMS OF
ENTITY                    FACILITY           LOCATION                  OCCUPANCY
Duff-Norton Company,      Office and Plant   Charlotte, NC             Leased
 Inc.                     Office and Plant   Wadesboro, NC             Owned
                          Office and Plant   Forrest City, AR          Leased
                          Office and Plant   Greensburg, IN            Owned
Yale Industrial Products  Distribution       Telford, England          Leased
 Ltd. (UK)                 Facilities
Yale Industrial Products  Office and Plant   Velbert, Germany          Leased
 (GmbH)
Yale Industrial Products  Distribution       Vosendorf, Austria        Leased
  GmbH                      Facilities
Manutention Connection    Office and Plant   Vierzon, France           Owned
Hangzhou Lila Lifting     Office and Plant   People's Republic         Leased
  & Lashing                                    of China
Duff-Norton Asia Pacific  Office             Singapore, Republic       Leased
 Pte. Ltd.                                    of Singapore
Mechanical Products, Inc. Office and Plant   Jackson, MI               Owned
Minitec Corporation       Office and Plant   Hollywood, MD             Owned

DISCONTINUED OPERATIONS

                          Sugar Processing   Manteca, CA               Owned
                                             Spreckels, CA             Owned

         Duff-Norton's manufacturing facilities have an aggregate of
approximately 837,000 square feet of area, including storage and office space.
The Company's other industrial manufacturing facilities have an aggregate of
approximately 100,000 square feet of area, including storage and office space.

         The Company also owns certain non-operating real estate in California,
which is currently being offered for sale.

         The Company believes that its facilities are adequate for its present
needs.


                                       -9-

<PAGE>



ITEM 3.  LEGAL PROCEEDINGS

         Certain of the Company's subsidiaries are regularly engaged in product
liability and other litigation arising in the ordinary course of their business.
Except for certain risks discussed below, the Company is not aware of any legal
proceedings which have been brought against it or any of its subsidiaries which,
if adversely determined, would be material to the business of the Company and
its subsidiaries taken as a whole.

         The Company has been advised that a customer has alleged that one of
the Company's products was the cause of a fire which occurred in January, 1995
at a manufacturing facility, resulting in losses in excess of the Company's
policy limits. No litigation or other formal proceedings against the Company
have commenced and, at the present time, it is unclear what role, if any, the
Company's product played in the fire. However, it is the opinion of management
that there was no manufacturing defect and that any claim, if filed and
eventually supported, would in all likelihood be settled within the Company's
policy limits, (see also Note 18 of the Notes to the Consolidated Financial
Statements, Commitments and Contingencies).

         On September 17, 1996, the Company filed a legal action (the "Action")
against Holly in the U.S. District Court for the Northern District of California
based on a dispute with Holly arising out of the agreement (the "Stock Purchase
Agreement") by which the Company sold to Holly the stock of Spreckels Sugar and
Limestone Products. The complaint alleges claims for breach of contract, money
had and received, and declaratory relief and seeks to recover damages in excess
of $3.7 million against Holly based on the subsequent adjustment provisions of
the Stock Purchase Agreement. Prior to the filing of the Action, Holly has
asserted claims against the Company of approximately $6 million, alleging that a
refund of a portion of the purchase consideration that it had paid to the
Company should be refunded under such adjustment provisions of the Stock
Purchase Agreement. The Company is not in a position to predict the outcome of
the Action at this time.

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

                  None

                                      -10-

<PAGE>



                                     PART II

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

MARKET INFORMATION. The Company's Class A Common Stock is traded on the Nasdaq
National Market under the symbol YALE. (Until April 24, 1996, the Company's
stock traded under the symbol SPKL). See Note 1 of the Notes to Consolidated
Financial Statements.

         The following table sets forth the range of high and low closing prices
on the Nasdaq National Market for the Class A Common Stock for the periods
indicated. Prices represent the closing sale prices as reported by the Nasdaq
Stock Market.

                                        FISCAL YEARS ENDED JUNE 30

                                                  PRICE
                                               HIGH       LOW
                  1996
                    First Quarter............ $ 9.75    $7.75
                    Second Quarter........... $ 14.25   $9.00
                    Third Quarter............ $ 15.50   $13.50
                    Fourth Quarter........... $ 17.00   $14.75
                  1995
                    First Quarter............ $ 8.75    $7.125
                    Second Quarter........... $ 10.00   $7.875
                    Third Quarter............ $ 10.25   $8.375
                    Fourth Quarter........... $ 10.50   $8.125

HOLDERS.  The Company had approximately 301 stockholders of record on August 24,
1996.

DIVIDENDS. The Company has not paid any dividends on its common stock and is
subject to certain restrictions on the payment of such dividends under the terms
of the indenture relating to the Company's 11.5% Senior Secured Notes Due 2000
and under the terms of its revolving credit agreement unless certain financial
requirements are met (See Note 4 of the Notes to the Consolidated Financial
Statements).

ITEM 6.  SELECTED FINANCIAL DATA


         The following data is qualified in its entirety by the financial
statements of the Company and other information contained elsewhere in this
document. The financial data as of June 30, 1996 and for the three years ended
June 30, 1996, has been derived from the audited financial statements of the
Company contained elsewhere in this document. The financial data as of and for
the years ended June 30, 1993 and 1992 are unaudited. The following financial
data should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the Consolidated Financial
Statements and notes thereto contained in Item No. 8.

                                      -11-

<PAGE>



                             SELECTED FINANCIAL DATA
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>


                                                   SUCCESSOR COMPANY*                  PREDECESSOR COMPANY
                                                                    ELEVEN        ONE
                                                                     MONTHS      MONTH
                                                                     ENDED       ENDED             UNAUDITED
                                            YEAR ENDED JUNE 30,      JUNE 30,  JULY 31,       YEAR ENDED JUNE 30,
                                            1996         1995         1994       1993          1993            1992
<S>                                       <C>       <C>            <C>        <C>           <C>          <C>

SUMMARY OF OPERATIONS:
Net Sales                                $  186,967    $ 180,580   $  161,004  $ 13,466      $ 162,709   $    158,606
Gross profit                                 55,111       51,238       45,886     4,443         44,961         40,216
Operating income from continuing operations  19,128       15,383       14,255     1,245         13,773          6,994
Income (loss) before discontinued
  operations, fresh-start adjustments,
 cumulative effect of changes in
 accounting principle and extraordinary item  6,868        4,339       3,266     (1,136)      (22,121)         (5,443)
Loss from discontinued operations           (58,922)      (6,479)       (796)      (138)       (5,504)        (13,784)
Fresh-start reporting                                                            16,046
Cumulative effect of changes in
 accounting principle                                                            (6,710)
Extraordinary item, debt forgiveness                                             26,388
Net (loss) income                         $ (52,054)    $ (2,140)   $  2,470   $ 34,450     $(27,625)      $ (19,227)
FINANCIAL DATA:
Total assets                              $ 160,539     $222,403    $249,574   $223,338     $ 190,626      $ 200,995
Long-term obligations                     $  70,000     $ 80,616    $ 79,589   $ 81,486     $     656      $  88,767
Stockholders' equity (deficit)            $  19,958       72,509    $ 72,951   $ 71,000     $ (28,539)     $    (281)
EARNINGS PER SHARE:
Income (loss) before discontinued
 operations, fresh-start adjustments,
 cumulative effect of changes in accounting
 principle and extraordinary item:
     Primary                              $    1.06     $   0.72    $    0.54   $ (0.22)     $  (4.38)      $   (1.09)
     Fully Diluted                        $    1.02     $   0.72    $    0.54   $ (0.22)     $  (4.38)      $   (1.09)
Discontinued operations:
    Primary                               $   (7.47)    $  (1.08)   $  (0.13)   $ (0.03)     $  (1.09)      $   (2.75)
    Fully Diluted                         $   (7.47)    $  (1.08)   $  (0.13)   $ (0.03)     $  (1.09)      $   (2.75)
Fresh-start reporting                                                           $  3.18
Cumulative effect of changes in
 accounting principle                                                           $ (1.33)
Extraordinary item, debt forgiveness                                            $  5.23
Net (loss) income per share:
     Primary                              $   (6.41)    $  (0.36)   $   0.41    $   6.83     $  (5.47)      $   (3.84)
     Fully Diluted                        $   (6.45)    $  (0.36)   $   0.41    $   6.83     $  (5.47)      $   (3.84)
</TABLE>

-----------

*        On August 1, 1993, the Company implemented the accounting for entities
         emerging from Chapter 11 reorganization including the application of
         fresh-start reporting set forth by the American Institute of Certified
         Public Accountants, Statement of Position 90-7, "Financial Reporting by
         Entities in Reorganization under the Bankruptcy Code." Since
         fresh-start reporting has been included in the financial statements for
         the eleven months ended June 30, 1994, the financial statements are not
         comparable between periods (see Note 3, Notes to the Consolidated
         Financial Statements).



                                      -12-

<PAGE>



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

         In October 1992, the Company filed a voluntary petition for
reorganization under Chapter 11 of Title 11 of the United States Code. The
Company's subsidiaries did not file similar petitions and were not debtors in
any insolvency proceedings. On August 4, 1993 (the "Confirmation Date"), the
Bankruptcy Court entered an order confirming a plan of reorganization (the
"Plan"), which became effective September 2, 1993. The effects of the Plan were
recorded as of July 31, 1993, the fiscal month end closest to the Confirmation
Date.

         The following discussion includes comments and data relating to the
Company's results of operations and financial condition for the fiscal years
ended June 30, 1996 and 1995, the eleven-month period ended June 30, 1994, and
the one-month period ended July 31, 1993. The accompanying financial statements
reflect the application, as of July 31, 1993, of fresh-start reporting as set
forth by the American Institute of Certified Public Accountants, Statement of
Position 90-7, "Financial Reporting by Entities in Reorganization Under the
Bankruptcy Code." Also, effective July 1, 1993, the Company adopted Statement of
Financial Accounting Standards No. 106, "Employers' Accounting for
Postretirement Benefits other than Pensions: ("SFAS No. 106"), and Statement of
Financial Standards No. 109, "Accounting for Income Taxes: ("SFAS No. 109").
Accordingly, in some instances, the results of operations and financial
condition of the Company are not comparable between periods due to the effects
of the Plan, fresh-start reporting and adoption of the new accounting
principles.

RESULTS OF OPERATIONS--The Company is a manufacturer of mechanical and
electro-mechanical actuators, mechanical jacks, rotating joints, electric and
manual hoists and other lifting and positioning equipment and components. The
Company has nine manufacturing facilities located in five countries producing
products under the brand names of Yale(TM), Duff-Norton(TM), Coffing(TM), and
Little Mule(TM).

DISCONTINUED OPERATIONS--As described in Item 1 above, on November 13, 1995, the
Company announced its intention to sell the Sweetener Segment and sold such
Segment to Holly on April 19, 1996 (see Note 2 of the Notes to the Consolidated
Financial Statements). Prior to the sale of the Sweetener Segment, the Company
operated in two distinct business segments, 1) its current business operations
as described above which was previously referred to as the Company's "Industrial
Products Segment," and 2) the Sweetener Segment, which principal business was
the refining and distribution of sugar.

         During the second quarter ended December 31, 1995, the Company
reclassified its Sweetener Segment as discontinued operations and recognized a
loss on disposal of discontinued operations of $56.7 million, which included an
income tax benefit of $30.6 million, pursuant to standards set forth by the
Accounting Principles Board ("APB") Opinion No. 30, "Reporting the Results of
Operations and Reporting the Effects of Disposal of a Segment of a Business".

         Included in the $56.7 million loss on the disposal of discontinued
operations were expenses of $11.8 million in estimated costs for shut down and
disposal costs, which included $2.6 million in costs to operate the Sweetener
Segment until sale, $1.6 million in factory demolition costs, $2.6

                                      -13-

<PAGE>



million for environmental costs and $5.0 million in costs for commissions,
professional fees and certain severance benefits related to sweetener personnel.

         Net sales, operating costs, expenses, interest and income taxes for the
years ended June 30, 1996 and 1995, the eleven-month period ended June 30, 1994
and the one-month period ended July 31, 1993, have been reclassified and
disclosed as "loss from the operation of discontinued sugar operations, net of
income taxes." As a result, this discussion is not comparable to previous
discussions of the Company's operations (see Notes 2 and 3 to the Notes to the
Consolidated Financial Statements for further discussion).

         The Company recognized losses from the operation of discontinued
sweetener operations of $2.3 million for the year ended June 30, 1996, $6.5
million for the year ended June 30, 1995, $0.8 million for the eleven-month
period ended June 30, 1994 and $2.9 million for the one-month period ended July
31, 1993, which included income tax benefits of $1.2 million, $5.7 million, $0.4
million and $0.0 million, respectively.

SALE OF DISCONTINUED OPERATIONS--The sale of the Sweetener Segment to Holly
consisted of substantially all of the assets of the Sweetener Segment, other
than two sugar processing facilities located in Spreckels and Manteca,
California, and associated production equipment which was previously used at
these production facilities, Spreckels Water Company, and certain farm
properties. These remaining properties were valued at their net realizable value
and were included in the Consolidated Financial Statements of the Company as
"Net assets of Discontinued Operations Held for Sale" on the Company's balance
sheet.

         The sale was effected pursuant to a Stock Purchase Agreement between
the Company and Holly and provided for the transfer of the remaining assets and
substantially all liabilities, in consideration of payment of approximately
$28.0 million plus the assumption of $16.0 million of debt. The sales price was
based upon the net working capital of the Sweetener Segment at December 31,
1995, plus $3.0 million, and is subject to certain adjustments. In addition, the
Agreement required Holly to reimburse the Company for the net cash outflow of
the Sweetener Segment incurred from January 1, 1996 through the date of close,
which was $16.7 million. The Company and Holly have been unable to reach
agreement on a final settlement and as a result the Company filed legal action
against Holly. (See Item No. 3, "Legal Proceedings" for further discussion). The
Company also retained $5.6 million in medical benefits for those employees who
had retired from the Sweetener Segment as of December 31, 1995, and was included
in the $15.6 million post-retirement benefit obligation disclosed in the
Company's balance sheet at June 30, 1996.

CONTINUING OPERATIONS--The Company sold all of the outstanding stock of Carbidie
Corporation on November 4, 1994 and of National Carbide Die on June 30, 1994
(together, "Divested Companies"). See Note 9 of the Notes to the Consolidated
Financial Statements for additional discussion. The following table removes the
results of operations for Divested Companies for the periods described and is
presented to accompany management's discussion of ongoing operations:

                                      -14-

<PAGE>



RESULTS OF OPERATIONS FOR ONGOING OPERATIONS:
(dollars in thousands)

<TABLE>
<CAPTION>


TWELVE MONTHS ENDED JUNE 30                                    1996                1995               1994
----------------------------------------------------------------------------------------------------------
<S>                                                    <C>               <C>             <C> 

NET SALES:
Reported amount                                              $186,967          $180,580         $174,470
Less divested Companies                                             0             7,244           25,707
                                                        -------------    --------------   --------------
     Ongoing operations                                      $186,967          $173,336         $148,763
                                                        =============    ==============   ==============
COST OF PRODUCTS SOLD:
Reported amount                                              $131,856          $129,342         $124,141
Less divested Companies                                             0             4,956           18,054
                                                        -------------    --------------   --------------
     Ongoing operations                                      $131,856          $124,386         $106,087
                                                        =============    ==============   ==============
SELLING, GENERAL AND ADMINISTRATIVE:
Reported amount                                               $35,983           $35,855          $34,829
Less divested Companies                                             0               859            3,302
                                                        -------------    --------------   --------------
     Ongoing operations                                       $35,983           $34,996          $31,527
                                                        =============    ==============   ==============
OPERATING INCOME FROM CONTINUING
OPERATIONS:
Reported amount                                               $19,128           $15,383          $15,500
Less divested Companies                                             0             1,429            4,351
                                                        -------------    --------------   --------------
     Ongoing operations                                       $19,128           $13,954          $11,149
                                                        =============    ==============   ==============
</TABLE>

RESULTS OF OPERATIONS FOR ONGOING OPERATIONS:

(Dollars in thousands)                      1996            1995          1994
--------------------------------------------------------------------------------
NET SALES:
Domestic                                 $    155,857  $   146,432$    128,177
International                                  31,110       26,904      20,586
                                           ----------    ---------  ----------
Ongoing operations                       $    186,967  $   173,336$    148,763
                                              =======      =======    ========
COST OF PRODUCTS SOLD:
Domestic                                 $    113,832  $   108,675$     93,968
International                                  18,024       15,711      12,119
                                           ----------    ---------  ----------
     Ongoing operations                  $    131,856  $   124,386$    106,087
                                             ========      =======    ========
SELLING, GENERAL AND ADMINISTRATIVE:
Domestic                                 $     27,908  $    27,893 $    26,396
International                                   8,075        7,103       5,131
                                          -----------   ----------  -----------
     Ongoing operations                  $     35,983  $    34,996 $    31,527
                                           ==========     ========   ==========
OPERATING INCOME FROM CONTINUING
 OPERATIONS:
Domestic                                 $     14,117  $     9,864 $     7,813
International                                   5,011        4,090       3,336
                                          -----------  -----------   ----------
     Ongoing operations                  $     19,128  $    13,954 $    11,149
                                            =========      =======    =========

                                      -15-

<PAGE>



NET SALES --The Company's worldwide sales from ongoing operations for the year
ended June 30, 1996 totaled $187 million, an increase of $13.6 million, or 7.9%
from the year ended June 30, 1995. This increase was a result of increased
market demand for hoists and actuators coupled with selected price increases.
Overall, the Company's rate of growth in fiscal 1996 was significantly lower
than its rate of growth achieved at the end of its fiscal year ended June 30,
1995. In fiscal year 1995, sales from ongoing operations increased by $24.6
million, or 16.5% from the twelve months ended June 30, 1994. The Company
believes that the slowdown in its rate of growth experienced this year compared
to its prior year, was a reflection of the overall sluggishness of the worldwide
economy. However, the Company has experienced a $38.2 million, or 25.7% increase
in sales over the two-year period ended June 30, 1996. This increase was caused
by a number of factors, including program changes introduced in early 1995,
which included "Selective Distribution" and "Target Marketing" programs, and an
overall shift in strategy to a product management focus.

         Net sales from the Company's domestic owned subsidiary companies
amounted to $155.9 million, or 83.4% of total sales during the year ended June
30, 1996. Domestic net sales increased $9.4 million, or 6.4% from the year ended
June 30, 1995. The increase in domestic sales during fiscal year 1996 was at a
much slower rate than the growth performance achieved during the prior year. In
fiscal year 1995, sales from ongoing domestic operations increased by $18.3
million, or 14.2%, from the twelve months ended June 30, 1994.

         Sales from the Company's foreign operations represented 16.6%, 15.5%
and 13.8% of total net sales in Fiscal Years 1996, 1995 and 1994, respectively.
Sales from the Company's foreign subsidiaries increased $4.2 million to $31.1
million during fiscal year 1996, which represented a 15.6% increase over year
ended June 30, 1995, and 30.9% of the Company's total increase in sales. These
results were related to significant market share gains in Europe, especially in
France and Germany.

COST OF PRODUCTS SOLD--Total cost of products sold from ongoing operations was
$131.9 million for the year ended June 30, 1996, an increase of $7.5 million, or
6.0% from the year ended June 30, 1995. The increase in cost of sales was less
than the increase of $18.3 million experienced for the year ended June 30, 1995.
The increase in costs in both years was primarily related to the total increase
in sales.

         Cost of products sold as a percent of net sales declined from 71.8% in
1995 to 70.5% in fiscal year 1996. This decline has resulted in an overall
improvement in gross margins from 28.2% in fiscal 1995 to 29.5% in fiscal year
1996 and was primarily related to favorable foreign currency costs related to
the acquisition of certain purchased products as well as favorable results
achieved from the Company's productivity programs such as its focused factory
and work cells. In the year ended June 30, 1995, cost of products sold as a
percent of sales from ongoing operations increased by 0.5% from the twelve
months ended June 30, 1994, which was primarily related to increases in
materials costs from certain foreign suppliers.






                                      -16-

<PAGE>



         Cost of products sold as a percent of domestic sales for the Company's
domestic ongoing operations represented 73.0%, 74.2% and 73.3% in fiscal years
1996, 1995 and for the twelve months ended June 30, 1994, respectively. Cost of
products sold as a percent of foreign sales for the Company's foreign operations
represented 57.9%, 58.4% and 58.9% in fiscal years 1996, 1995 and from the
twelve months ended June 30, 1994, respectively.

SELLING, GENERAL AND ADMINISTRATIVE--Selling, general and administrative
expenses ("SG&A") from continuing operations increased $1.0 million, or 2.8% to
$36.0 million for the year ended June 30, 1996, from the $35.0 million reported
during the year ended June 30, 1995. However, when adjusted for $1.1 million of
restructuring costs (see Note 20 of the Notes to the Consolidated Financial
Statements) incurred during fiscal 1995, SG&A expenses increased by $2.1
million, or 6.2% from fiscal 1995 to fiscal 1996. This increase was incurred at
both the Company's domestic ($1.1 million) and international ($1.0 million)
operations. Fiscal 1995 SG&A expenses of continuing operations increased by $3.5
million, or 11.1% over 1994. However, when adjusted for the restructuring costs
noted above, SG&A increased by $2.3 million, or 7.4% from the $31.5 million
reported for the twelve-month period ended June 30, 1994. The overall increase
in SG&A expenses in both years was also related to increases in marketing
expenses in order to meet increased sales levels as well as expanding the
Company's international presence.

OPERATING INCOME FROM CONTINUING OPERATIONS--The Company had operating income
from continuing operations of $19.1 million, or 10.2% of net sales in fiscal
1996, an increase of $5.2 million, or 37.1% from the year ended June 30, 1995.
Operating earnings from ongoing operations from the Company's domestic
operations increased $4.3 million, or 43.1% for the year ended June 30, 1996
compared to fiscal 1995. Operating earnings from ongoing operations from the
Company's international operations increased $0.9 million, or 22.5% for the year
ended June 30, 1996 compared to fiscal year 1995.

OTHER ITEMS--Interest expense, net, decreased by $0.1 from the $8.1 million from
year ended June 30, 1995 to $8.0 million for the year ended June 30, 1996. This
decrease was a result of interest income received from the Company's short term
investments.

EARNINGS PER SHARE--The Company uses the Modified Treasury Stock Method of
computing earnings per share in accordance with Accounting Principles Board
Opinion No. 15, ""Earnings per Share" (see Note 17 of the Notes to the
Consolidated Financial Statements).

         At June 30, 1995 and at June 30, 1994, the market price per share was
such that warrants and stock options did not have a dilutive effect resulting in
an earnings per share computation based upon the actual shares outstanding of
6,000,000 shares. However, the market price of the Company's stock significantly
increased during the period ended June 30, 1996 and consequently, the number of
shares from the assumed exercise of outstanding warrants has increased resulting
in a significant dilutive impact on the per share computation.






                                      -17-

<PAGE>



FINANCIAL CONDITION AND LIQUIDITY

GENERAL--The Company's principal ongoing sources of liquidity are cash from
operations, cash on hand and its revolving credit facility (see Note 8 of the
Notes to the Consolidated Financial Statements). On April 19, 1996, the Company
received approximately $35.0 million in cash ($28.0 million in proceeds and $7.0
million in reimbursement of net cash outflow) from the sale of its Sweetener
Segment (see discussion on the sale of discontinued operations above), and such
proceeds were used to discharge the Company's outstanding borrowings on its
revolving line of credit. At June 30, 1996, the Company had no outstanding
borrowings against its revolving line of credit, except for letters of credit
outstanding of $2.5 million, resulting in an available amount of $22.5 million
(see Note 8 of the Notes to the Consolidated Financial Statements). The Company
had cash at June 30, 1996 of $10.2 million which represents an increase of $7.8
million over the year ended June 30, 1995.

         Cash provided from operating activities are, at any time, affected by a
number of factors and amounted to $15.7 million for the fiscal year ended June
30, 1996, which represents an increase of $13.3 million over the $2.4 million
provided by continuing operations for the year ended June 30, 1995. The increase
in cash provided from operating activities from continuing operations in fiscal
year 1996 resulted primarily from improved profit performance of $2.6 million to
$6.9 million from the $4.3 million in income from continuing operations reported
in fiscal 1995. Working capital (adjusted for "Net Assets of Discontinued
Operations Held for Sale") increased by $3.8 million. This increase was
primarily related to a decrease of $3.7 million in inventory and a $2.1 million
increase in other current liabilities which was partially offset by $1.7 million
increase in accounts receivable. The decrease in inventory was related to
certain inventory management programs implemented by the Company during fiscal
year 1996 and the increase in accounts receivable was related to the increase in
sales of $6.4 million achieved this year compared to the fiscal year ended June
30, 1995.

         Increases and decreases in cash flows from investing activities for the
year ended June 30, 1996 related primarily to cash receipts from the net
proceeds from the sale of discontinued operations ($28.0 million of Sweetener
Segment sale and $1.3 million of real estate sales), and the purchase of $4.9
million in capital equipment. Cash flows from financing activities were
primarily related to the paydown of the Company's revolving line of credit.

CAPITAL EXPENDITURES--Total capital expenditures for the years ended June 30,
1996 and 1995 and the twelve-month period ended June 30, 1994 amounted to $4.9
million, $5.3 million and $3.5 million, respectively. These expenditures were
primarily used for equipment replacements.

CHANGE IN ACCOUNTING PRINCIPLES--The Company adopted Statement of Financial
Accounting Standards No. 106, ("SFAS 106"), "Employers' Accounting for
Postretirement Benefits Other than Pensions," on July 1, 1993. SFAS 106 requires
the Company to recognize the cost of providing health care and other benefits to
retirees over the term of employee service, which represented a change from the
Company's previous method of recognizing these costs when paid. The Company
elected to recognize the cumulative effect of the change in accounting for
postretirement benefits in the amount of $8.6 million on July 31, 1993. The
effect of this change was an increase in recorded annual expense of $1.9 million
over cash payments of $1.1 million.


                                      -18-

<PAGE>



         The Company adopted Statement of Financial Accounting Standards No.
109, ("SFAS 109"), "Accounting for Income Taxes" on July 1, 1993. This statement
requires that deferred tax liabilities and assets be recognized based on the
difference between the tax basis of assets and liabilities and their financial
reporting amounts measured by using presently enacted current and/or future tax
laws and rates. Deferred taxes increased by approximately $19.7 million due to
the reversal of recording of the Company's leveraged buyout in 1987 and the
reversal of the purchase of Yale Industrial Products, Inc. in 1988.

         In March 1995, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 121, ("SFAS 121"), "Accounting
for Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of." This statement requires that long-lived assets be reported at the lower of
carrying amount or fair value. The Company plans to adopt SFAS 121 in fiscal
1997 and believes that such adoption will not have a significant impact on its
financial position or results of operations.

         In October 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 123, ("SFAS 123"), "Accounting
for Stock-Based Compensation." SFAS 123 defines a fair value based method of
accounting for an employee stock option or similar equity instrument and
encourages all entities to adopt that method of accounting for all employee
stock compensation plans. However, SFAS 123 also allows an entity to continue to
measure compensation cost using the intrinsic value based method of accounting
prescribed by APB No 25, "Accounting for Stock Issued to Employees", provided it
makes pro forma disclosures of net income and earnings per share as if SFAS 123
had been applied. The Company plans to continue to account for employee stock
options under the provisions of APB 25 and will include appropriate disclosures.

AGREEMENT OF MERGER--On August 24, 1996, subsequent to the fiscal year ended
June 30, 1996, the Company entered into the Merger Agreement. Shortly
thereafter, Columbus McKinnon commenced a tender offer for all of the
outstanding shares of the common stock of the Company. In the tender offer,
stockholders who tender their shares will receive $24.00 per share in cash and
warrant holders who tender their warrants will receive for each warrant an
amount in cash equal to the excess of the $24.00 per share tender offer price
over the exercise price of the warrant.

         The Board of Directors of the Company has approved the merger and
recommended to each stockholder and warrant holder to tender their shares and
warrants. Consummation of the merger is subject to regulatory approval. The
Company and Columbus McKinnon have filed for approval of the merger with the
Federal Trade Commission ("FTC") and the FTC has requested additional
information relating to such merger. See Note 21 of the Notes to the
Consolidated Financial Statements and Item No. 1, "Business" for additional
information on the Merger.

                                      -19-

<PAGE>



ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

             TABLE OF CONTENTS TO CONSOLIDATED FINANCIAL STATEMENTS
                           SPRECKELS INDUSTRIES, INC.

                                                                       PAGE

Report of Independent Public Accountants                              21, 22

Consolidated Balance Sheets as of June 30, 1996 and 1995              23

Consolidated Statements of Operations for the years                   24, 25
 ended June 30, 1996 and 1995, the eleven-month period
 ended June 30, 1994, and the one-month period ended
 July 31, 1993.

Consolidated Statements of Stockholders' Equity                       26
 for the years ended June 30, 1996 and 1995, the eleven-
 month period ended June 30, 1994, and the one-month
 period ended July 31, 1993.

Consolidated Statements of Cash Flows for the years                   27, 28
 ended June 30, 1996 and 1995, the eleven-month period
 ended June 30, 1994, and the one-month period ended
 July 31, 1993.

Notes to Consolidated Financial Statements                            29

Financial Statement Schedules                                         77

                                      -20-

<PAGE>



                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

SUCCESSOR COMPANY

To the Board of Directors of Spreckels Industries, Inc.:

We have audited the accompanying consolidated balance sheets of Spreckels
Industries, Inc., (a Delaware corporation) and subsidiaries (the "Company") as
of June 30, 1996 and 1995, and the related consolidated statements of
operations, stockholders' equity and cash flows for the years ended June 30,
1996 and 1995, and for the eleven-month period ended June 30, 1994. These
financial statements and the schedules referred to below 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 conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of the Company as of
June 30, 1996 and 1995, and the results of its operations and its cash flows for
the years ended June 30, 1996 and 1995, and for the eleven-month period ended
June 30, 1994, in conformity with generally accepted accounting principles.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedules listed in Item 14(a) 2 are
presented for purposes of complying with the Securities and Exchange
Commission's rules and are not a required part of the basic financial
statements. These schedules have been subjected to the auditing procedures
applied in our audits of the basic financial statements and, in our opinion, are
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.



Charlotte, North Carolina,
August 24, 1996.


                                      -21-

<PAGE>



                        REPORT OF INDEPENDENT ACCOUNTANTS

PREDECESSOR COMPANY

To the Board of Directors of Spreckels Industries, Inc.:

We have audited the accompanying consolidated statements of operations,
stockholders' equity (deficit) and cash flows of Spreckels Industries, Inc. (a
Delaware corporaton) and subsidiaries (the "Company') for the one-month period
ended July 31, 1993. These financial statements and the schedules referred to
below are the responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements and schedules based on our
audit.

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

In our opinion, the consolidated financial statements referred to above present
farly, in all material respects, the results of the Company's operations and its
cash flows for the one-month period ended July 31, 1993, in conformity with
generally accepted accounting principles.

Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The schedules listed in Item 14(a) 2 are presented
for purposes of complying with the Securities and Exchange Commission's rules
and are not a required part of the basic financial statements. These schedules
have been subjected to the auditing procedures applied in our audit of the basic
financial statements and, in our opinion, are fairly stated in all material
respects in relation to the basic financial statements taken as a whole.

As discussed in Notes 11 and 13, the Company adopted Statements of Financial
Accounting Standards Nos. 106 and 109 effective July 1, 1993.


Charlotte, North Carolina
August 24, 1996.





                                      -22-

<PAGE>



                           SPRECKELS INDUSTRIES, INC.
                           CONSOLIDATED BALANCE SHEETS

(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>

                                                             JUNE 30,          JUNE 30,
CURRENT ASSETS:                                                 1996              1995
                                                           --------------     --------
<S>                                                      <C>                <C>   

  Cash and cash equivalents                                 $  10,222         $  2,439
  Accounts receivable, net of allowance for
    doubtful accounts of $1,011 and $1,160
    respectively                                               30,654           28,949
  Inventories                                                  38,746           42,525
  Net assets of discontinued operations
    held for sale                                              11,224           78,382
  Other current assets                                          9,720           10,100
                                                            ------------     ----------
    Total current assets                                      100,566          162,395
  Property, plant and equipment, net                           25,480           23,133
  Excess reorganization value, net                             28,382           30,098
  Other assets                                                  6,111            6,777
                                                          -------------     ------------
    Total assets                                            $ 160,539        $ 222,403
                                                            ==========        =========

LIABILITIES AND STOCKHOLDERS' EQUITY:

CURRENT LIABILITIES:
  Accounts payable                                          $  15,305         $  16,236
  Accrued payroll costs                                         4,203             3,633
  Accrued interest                                              1,364             1,827
  Other current liabilities                                    16,295            13,941
                                                          -----------         -----------
    Total current liabilities                                  37,167            35,637

  Long-term debt                                               70,000            80,616
  Post-retirement benefit obligation                           15,573            16,103
  Other noncurrent liabilities                                 17,841            17,538
                                                          -----------         -----------
    Total liabilities                                         140,581           149,894

COMMITMENTS AND CONTINGENCIES (Notes 10 and 18)

STOCKHOLDERS' EQUITY:
  Common stock $0.01 par value authorized 15,000,000 
    Class A shares; 6,055,438
    and 5,999,900 shares issued
    and outstanding                                                61                60
  Common stock $0.01 par value authorized 15,000,000
    Class B shares; 0 and 100 shares issued and outstanding       ---               ---
  Additional paid-in capital                                   71,510            70,940
  (Accumulated deficit) retained earnings                    (51,724)               330
  Treasury stock                                                  (2)               (1)
  Accumulated benefit obligation in
    excess of plan assets                                        (244)            (154)
  Foreign currency translation adjustment                         357            1,334
                                                        -------------       ------------
    Total stockholders' equity                                 19,958            72,509
                                                          -----------        -----------
    Total liabilities and stockholders' equity              $ 160,539        $  222,403
                                                            ==========        ===========




</TABLE>





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

                                      -23-

<PAGE>



                           SPRECKELS INDUSTRIES, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                  (dollars in thousands, except per share data)

<TABLE>
<CAPTION>


                                                          SUCCESSOR COMPANY                PREDECESSOR COMPANY
                                                                            11-MONTHS            ONE MONTH
                                                                               ENDED               ENDED
                                                     YEAR ENDED JUNE 30,      JUNE 30,            JUY 31,
                                                      1996           1995         1994               1993
<S>                                                <C>         <C>         <C>                 <C> 

Net sales                                          $ 186,967    $ 180,580    $ 161,004         $  13,466
  Cost of products sold                              131,856      129,342      115,118             9,023
                                                   ----------   ----------   -----------       ------------
  Gross profit                                        55,111       51,238       45,886             4,443
Operating expenses:
  Selling, general and administrative expenses        34,267       32,931       29,304             3,198
  Restructuring costs                                    ---        1,122          ---               ---
  Amortization of excess reorganization value          1,716        1,802        2,327               ---
                                                   ------------ ------------ -------------     -----------------
  Operating income from continuing operations         19,128       15,383       14,255             1,245
  Interest expense, net                                8,011        8,146        7,379             1,826
  Reorganization items                                   ---          ---          ---               555
                                                   ------------ ----------- ---------------    -----------------
  Income (loss) from continuing operations
    before provision for income taxes                 11,117        7,237        6,876            (1,136)
  Provision (benefit) for income taxes                 4,249        2,898         3,610                ---
                                                   ------------ ------------ -------------     ----------------
  Income (loss) from continuing operations before 
    discontinued operations, fresh-start 
    adjustments, cumulative effect of changes
    in accounting principle and extraordinary item     6,868        4,339        3,266            (1,136)
Discontinued operations:
  Loss from the operation of discontinued
    sugar operations, net of income tax benefit of
     $1,246, $5,637, $414 and $0.0, respectively      (2,263)      (6,479)        (796)             (138)
  Loss on disposal of sugar business including
    provision for $11,840 for operating losses
    during phaseout period (net of income tax
    benefit of $30,642)                              (56,659)         ---           ---               ---
                                                  ------------ ------------ -------------    --------------
Loss from discontinued operations                    (58,922)      (6,479)        (796)              (138)
Fresh-start reporting adjustments, net of tax            ---          ---          ---             16,046
  Cumulative effect of changes in accounting
    principle, net of tax                                ---          ---          ---             (6,710)
  Extraordinary item, debt forgiveness , net of tax      ---          ---          ---             26,388
                                                   ----------- ------------ -------------    --------------

  Net (loss) income                                $  (52,054) $    (2,140)$       2,470     $     34,450
                                                   =========== ============ =============     ===========

  Earnings (loss) per share:
  Primary earnings (loss) per share:
  Income (loss) from continuing operations
    before discontinued operations, fresh-
    start adjustments, cumulative effect
    of changes in accounting principle
    and extraordinary item                         $    1.06    $    0.72    $    0.54         $  (0.22)
  Discontinued operations                              (7.47)       (1.08)       (0.13)           (0.03)
  Fresh-start reporting                                  ---          ---          ---             3.18
  Cumulative effect of charges in
    accounting principle                                 ---          ---          ---            (1.33)
  Extraordinary item                                     ---          ---          ---             5.23
                                                   ----------- ------------ ------------     -------------
    Net (loss) income                              $    (6.41)  $   (0.36)   $    0.41         $   6.83
                                                   =========== ============ =============    =============

</TABLE>


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




                                      -24-

<PAGE>



                           SPRECKELS INDUSTRIES, INC.
               CONSOLIDATED STATEMENTS OF OPERATIONS - (CONTINUED)
                  (dollars in thousands, except per share data)

<TABLE>
<CAPTION>


                                                        SUCCESSOR COMPANY             PREDECESSOR COMPANY

                                                                            11-MONTHS        ONE MONTH
                                                                               ENDED            ENDED
                                                     YEAR ENDED JUNE 30,      JUNE 30,         JULY 31,
                                                      1996        1995        1994              1993
<S>                                                <C>       <C>         <C>              <C>   

Fully diluted earnings (loss) per share:
  Income (loss) from continuing operations before
    discontinued operations, fresh-start adjustments,
    cumulative effect of changes in accounting
    principle and extraordinary item                $  1.02  $      .72     $    .54      $      (0.22)
  Discontinued operations                             (7.47)     (1.08)        (.13)             (0.03)
  Fresh-start reporting                                  --          --           --              3.18
  Cumulative effect of charges in
    accounting principle                                 --          --           --             (1.33)
  Extraordinary item                                     --          --           --              5.23
                                                ------------- -----------  -------------   -----------
    Net (loss) income                               $ (6.45) $    (.36)          .41     $        6.83
                                                ------------- ===========  =============   ===========

  Weighted average shares outstanding              7,893,000   6,000,000    6,000,000        5,045,951



</TABLE>


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

                                      -25-

<PAGE>



                           SPRECKELS INDUSTRIES, INC.
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                        (dollars and shares in thousands)
                                                                         
<TABLE>
<CAPTION>
                                                                                          Accumulated  
                                                                                            Benefit
                                       Class A          Class B                 Foreign Obligation (Accumulated
                                      Common Stock    Common Shares  Additional Currency  In Excess   Deficit)   Total 
                                    ---------------  --------------- Paid-in  Translation of Plan   Retained  Treasury Stockholders'
                                    Shares   Amount  Shares  Amount  Capital  Adjustment  Assets    Earnings    Stock    Equity
                                    ------   ------  ------  ------   ------- ---------- --------- ----------- --------- -----------
<S>                                <C>      <C>      <C>     <C>      <C>     <C>        <C>       <C>         <C>       <C>

Predecessor Company:
Balances at June 30, 1993            3,568  $    35   1,478   $    15 $  12,281  $  (132)  $ ---    $(38,334)   $ (2,404)$ (28,539)
   Income (loss) before fresh-
     start adjustment and cumulative
     effect of changes in
     accounting principle              ---      ---      ---      ---       ---       ---    ---      (1,136)        ---    (1,136)
   Cumulative effect of changes
     in accounting principle           ---      ---      ---      ---       ---       ---    ---      (6,710)        ---    (6,710)
   Loss from discontinued operations   ---      ---      ---      ---       ---       ---    ---        (138)        ---      (138)
   Translation loss                    ---      ---      ---      ---       ---      (213)   ---         ---         ---      (213)
                                    ------  -------  -------  ------- ----------  -------- -------- ----------- ---------  ---------
Balances at July 31, 1993            3,568       35    1,478       15    12,281      (345)   ---     (46,318)     (2,404)  (36,736)
                                    ------  -------  -------  -------   -------   ------- --------  ---------   ---------  ---------
   Debt conversion                   5,520       55      ---      ---    65,247       ---    ---       26,388         ---   91,690
   Exchange of old equity for
     new equity                     (3,088)     (30)  (1,478)     (15)       45       ---    ---         ---          ---      ---
   Fresh-start reporting
     adjustments                       ---      ---      ---      ---    (6,633)      345    ---       19,930       2,404   16.046
                                    ------  -------  -------- -------  --------  -------- --------  ----------  ---------  ---------

Successor Company:
Balances at August 1, 1993            6,000      60      ---      ---    70,940       ---    ---         ---          ---   71,000
                                    ------- -------  -------- -------   -------  -------- ------    ---------- ----------  ---------
   Net income                          ---      ---      ---      ---       ---       ---    ---        2,470         ---    2,470
      Repurchase of common stock       ---      ---      ---      ---       ---       ---    ---         ---          (1)       (1)
   Accumulated benefit obligation
     in excess of plan assets          ---      ---      ---      ---       ---       ---   (904)        ---          ---     (904)
   Translation gain                    ---      ---      ---      ---       ---       386    ---         ---          ---      386
                                    ------- -------  -------- -------   ------- --------- -------   ---------- ----------  ---------
Balances at June 30, 1994             6,000      60      ---      ---    70,940       386   (904)       2,470        (1)    72,951
                                    ------- -------  -------- -------   -------  -------- -------   ---------- ----------  ---------
   Net loss                            ---      ---      ---      ---       ---       ---   ---        (2,140)        ---  (2,140)
   Accumulated benefit obligation
     in excess of plan assets          ---      ---      ---      ---       ---       ---   750          ---         ---      750
   Translation gain                    ---      ---      ---      ---       ---       948   ---          ---         ---      948
                                    ------- ------- --------  -------   -------  -------- -------   --------- ----------  ---------
Balances at June 30, 1995             6,000      60      ---      ---    70,940     1,334  (154)         330         (1)    72,509
                                    ------- ------- --------  -------   -------   ------- ------    --------- ----------  ---------
   Net loss                            ---      ---      ---      ---       ---       ---   ---      (52,054)        ---  (52,054)
   Repurchase of common stock          ---      ---      ---      ---       ---       ---   ---          ---         (1)       (1)
   Exercise of warrants                 29        1      ---      ---       320       ---   ---          ---         ---      321
   Exercise of stock options            26      ---      ---      ---       250       ---   ---          ---         ---      250
   Accumulated benefit obligation
     in excess of plan assets          ---      ---      ---      ---       ---       ---    (90)         ---         ---     (90)
   Translation loss                    ---      ---      ---      ---       ---      (977)  ---          ---         ---     (977)
                                    ------- ------- --------  --------  -------  -------- -------   ----------- --------- -------
Balances at June 30, 1996            6,055  $    61 $    ---  $   ---    71,510  $   357  $ (244)    $(51,724)   $   (2)   19,958
                                    ------- ------- --------  --------  -------   ------- -------   ----------- --------- -------

</TABLE>

                                                    -26-

<PAGE>



                           SPRECKELS INDUSTRIES, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (dollars in thousands)

<TABLE>
<CAPTION>

                                                                                               PREDECESSOR
                                                                   SUCCESSOR COMPANY           COMPANY
                                                                                  11-MONTHS   ONE MONTH
                                                                                    ENDED      ENDED
                                                              YEAR ENDED JUNE 30,  JUNE 30,    JULY 31,
                                                              1996        1995       1994       1993
                                                           ----------  ----------  ---------  ---------
<S>                                                        <C>        <C>        <C>          <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net (loss) income                                         $(52,054)   $ (2,140)   $  2,470    $ 34,450
  Adjustments to reconcile net (loss) income
    to net cash provided by (used in)
      continuing operating activities:
      Reorganization items                                      --          --          --           555
      Depreciation and amortization                            4,630       4,589       5,955         458
      Deferred income tax                                      1,112      (1,316)         90        --
      Loss from discontinued operations                       58,922       6,479         796         138
      Loss on the sale of fixed assets                            76          19        --          --
      Fresh-start adjustments                                   --          --          --       (16,046)
      Gain on debt forgiveness                                  --          --          --       (26,388)
      Cumulative effect of changes in accounting
        principle                                               --          --          --         6,710
  Net changes in operating assets and liabilities:
      Increase in receivables                                 (1,705)     (1,452)     (2,323)       (540)
      Decrease (increase) in inventories                       3,779      (6,974)     (4,716)     (2,214)
      (Increase) decrease in other current assets               (220)        269         730        --
      (Increase) decrease in other noncurrent assets            (127)      1,959        --          --
      (Decrease) increase in accounts payable and
        accrued expenses                                        (824)      2,495     (10,336)     (3,590)
      Increase (decrease) in other current liabilities         2,144       3,321      (2,871)     (3,557)
      Decrease in postretirement benefit obligation             (530)     (1,113)       --          --
      Increase (decrease) in other noncurrent obligations        496      (3,720)     19,764        --
                                                            --------    --------    --------    --------
       Net cash provided by (used in)
             continuing operating activities                  15,699       2,416       9,559     (10,024)
  Discontinued operations --Net cash (used in)
    provided by discontinued operations                      (22,144)    (19,465)    (10,531)     56,865
                                                            --------    --------    --------    --------
  Net cash (used in) provided by
    operating activities                                      (6,445)    (17,049)       (972)     46,841
                                                            --------    --------    --------    --------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Net proceeds from sale of discontinued operations           29,312        --          --          --
  Net proceeds from divestiture                                 --        21,800        --
  Capital expenditures                                        (4,930)     (5,314)     (2,940)       (537)
  Proceeds from sale of fixed assets                              10          39        --            29
  Investment in joint ventures                                  (136)       (370)       --          --
  Other                                                         --          --          --         1,074
                                                                                    --------    --------
    Net cash provided by (used in)
      investing activities                                    24,256      16,155      (2,940)        566
                                                            --------    --------    --------    --------




</TABLE>


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


                                      -27-

<PAGE>



                           SPRECKELS INDUSTRIES, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  (dollars in thousands, except per share data)

<TABLE>
<CAPTION>

                                                                                                  PREDECESSOR
                                                                       SUCCESSOR COMPANY            COMPANY
                                                                                      11-MONTHS    ONE MONTH
                                                                                        ENDED        ENDED
                                                                 YEAR ENDED JUNE 30,  JUNE 30,       JULY 31,
                                                               1996        1995        1994           1993
                                                            ----------   ----------  ---------     --------- 
<S>                                                          <C>        <C>           <C>       <C>

CASH FLOWS FROM FINANCING ACTIVITIES:
  Net (payments) borrowings under capital
    lease obligations                                         $   (193)   $    193    $   --      $   --
  Increase (decrease) in short-term debt                           210         (30)       --          --
  Decrease in liabilities subject to compromise                   --          --          --       (92,503)
  Repayments of revolver borrowings                            (33,162)     (8,511)       --       (30,009)
  Repayment of long-term debt                                     --          --          --       (40,006)
  Issuance of senior notes                                        --          --          --        70,000
  Net revolver borrowings (payments)                            22,546      10,616      (2,520)     11,036
  Proceeds from the exercise of stock options
    and warrants                                                   571        --          --          --
                                                              --------    --------    --------
      Net cash (used in) provided by financing
        activities                                             (10,028)      2,268      (2,520)    (81,482)
                                                              --------    --------    --------    --------
  Net increase (decrease) in cash and cash equivalents           7,783      1,374      (6,432)    (34,075)
  Cash and cash equivalents, beginning of period                 2,439       1,065       7,497      41,572
                                                              --------    --------    --------    --------
  Cash and cash equivalents, end of period                    $ 10,222    $  2,439    $  1,065    $  7,497
                                                              ========    ========    ========    ========

SUPPLEMENTAL DISCLOSURE AND CASH FLOW
 INFORMATION: - Cash paid during the year for:
    Interest                                                  $  8,050    $  8,050    $  7,487    $  8,853
    Taxes                                                     $  1,460    $    945    $    749    $   --
                                                              ========    ========    ========    ========



</TABLE>


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


                                      -28-

<PAGE>


                           SPRECKELS INDUSTRIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.       OPERATIONS

         Yale International, Inc. (the "Company") is a manufacturer and
distributor of material handling and industrial component products. The Company
has 9 manufacturing facilities located in five countries, producing products
under the brand names of Yale(TM), Duff-Norton(TM), Coffing(TM) and Little
Mule(TM). The Company sells its products to original equipment manufacturers,
distributors and end-users in the United States and abroad.

         On April 22, 1996, the Board of Directors announced the change of the
Company's name from Spreckels Industries, Inc. to Yale International, Inc. and
on April 24, 1996, the Company's stock began trading on the Nasdaq National
Market under the symbol "YALE". The Company's stock formerly traded under the
symbol "SPKL". The Board of Directors of the Company will seek stockholders'
ratification for its name change at its next annual meeting. Prior to that time,
the legal name of the Company will continue to be Spreckels Industries, Inc.,
although the Company will operate as Yale International, Inc.

2.       DISCONTINUED OPERATIONS

         On November 13, 1995 (the "Measurement Date"), the Company announced
its intention to sell the operations of its Spreckels Sugar Company, Inc. and
Limestone Products, Inc., subsidiaries (collectively, the "Sweetener Segment").
The Sweetener Segment produced refined beet sugar and certain sweetener products
and sold its products to retail and industrial end-users. This business segment
has been accounted for as discontinued operations in accordance with Accounting
Principles Board Opinion No. 30, "Reporting the Results of Operations and
Reporting the Effects of Disposal of a Segment of a Business." Accordingly, the
assets and liabilities of the discontinued Sweetener Segment have been
classified in the accompanying consolidated balance sheets as "net assets of
discontinued operations held for sale." In addition, the results of operations
of the Sweetener Segment for the periods ended June 30, 1996, June 30, 1995, the
eleven-month period ended June 30, 1994, and the one-month period ended July 31,
1993, have been segregated in the accompanying consolidated statements of
operations.

         The Company recorded a $56.7 million loss on the disposal of the
Sweetener Segment in the second quarter of fiscal 1996, which included $11.8
million for estimated operating and shut-down costs to be incurred between the
Measurement Date and the estimated disposal date.

         On April 19, 1996, the Company completed the sale of all of the issued
and outstanding capital stock of Spreckels Sugar Company, Inc. and Limestone
Products Company, Inc. In connection with the sale, the Company retained two
sugar processing facilities located in Spreckels and Manteca, California,
production equipment located at Cool, California, and certain farm properties,
which are being held for sale. In addition, the Company retained the financial
responsibility for all costs associated with the closure and demolition of the
two retained sugar processing facilities, as well as certain employee-related
liabilities, including medical benefits for those employees who had retired as
of December 31, 1995.



                                      -29-

<PAGE>


                           SPRECKELS INDUSTRIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2.       DISCONTINUED OPERATIONS - CONTINUED

         The terms of the sale provided for the payment of approximately $28.0
million in cash plus the assumption of $16 million of debt, and was based upon
the net working capital of the Sweetener Segment at December 31, 1995, plus $3.0
million, subject to certain adjustments which were still under negotiation as of
August 24, 1996.

         Sales from discontinued operations were $109.1 million, $175.8 million,
$188.6 million and $16.0 million, for the period from July 1, 1995, to November
13, 1995, the year ended June 30, 1995, the 11-month period ended June 30, 1994,
and the one-month period ended July 31, 1993, respectively.

         The components of net assets of discontinued operations held for sale
on the consolidated balance sheets at June 30, 1996 and 1995, are as follows (in
thousands):

                                                1996        1995
Accounts Receivable                           $   --     $ 11,452
Inventory                                         --       59,032
Property, plant and equipment, net              14,918     95,565
Other assets                                     3,500     11,837
                                              --------  ----------
      Total assets                              18,418    177,886
                                              --------  ----------

Accounts payable and accrued expenses             --       14,325
CCC loans payable                                 --       35,265
Deferred taxes                                    --       28,413
Accrued plant shut-down costs                    6,255       --
Other liabilities                                  939     21,501
                                              --------  ----------
      Total liabilities                          7,194     99,504
                                              --------  ----------
Net assets of discontinued operations
  held for sale                               $ 11,224   $ 78,382
                                              ========  ==========

    Interest expense charged to discontinued operations amounted to $1.6
million, $2.3 million $2.6 million and $0.0 million, for the years ended June
30, 1996 and 1995, the 11-month period ended June 30 1994, and the one-month
period ended July 31, 1993, respectively. Interest has been charged to
discontinued operations based on indebtedness from borrowings directly related
to the Sweetener Segment, which primarily consisted of Commodity Credit
Corporation (CCC) borrowings.

         As a result of the Company's decision to discontinue the operations of
its Sweetener Segment, a pension curtailment gain of $1.0 million was
recognized, resulting in a net periodic pension benefit of $0.7 million credited
to discontinued operations for the year ended June 30, 1996. Net periodic
pension cost charged to discontinued operations amounted to $0.9 million, $1.2
million and $0.1 million for the fiscal year ended June 30, 1995, the 11-month
period ended June 30, 1994, and the one-month period ended July 31, 1993,
respectively.



                                      -30-

<PAGE>


                           SPRECKELS INDUSTRIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2.       DISCONTINUED OPERATIONS - CONTINUED

         Accrued pension cost for discontinued operations at June 30, 1995, was
$2.4 million, and is included in "Net Assets of Discontinued Operations Held for
Sale" in the accompanying consolidated balance sheets.

         Accrued postretirement benefit cost for discontinued operations at June
30, 1995, was $5.6 million, and is included in net assets of discontinued
operations held for sale in the accompanying consolidated balance sheet.
Postretirement benefit expense charged to discontinued operations amounted to
$203,000 and $288,000 for the fiscal years ended June 30, 1996 and 1995,
respectively, and $894,000, and $82,000 for the 11-month period ended June 30,
1994, and the one-month period ended July 31, 1993, respectively..

         Discontinued operations include management's estimates of the amounts
expected to be realized on the sale of the Sweetener Segment. The amounts the
Company will ultimately realize could differ materially in the near term from
the amounts assumed in arriving at the loss on disposal of the discontinued
operations.

3.  REORGANIZATION PROCEEDINGS

         In October 1992, the Company filed a voluntary petition for
reorganization under Chapter 11 of Title 11 of the United States Bankruptcy
Code. The Company's subsidiaries did not file similar petitions and were not
debtors in any insolvency proceeding. On August 4, 1993 (the "Confirmation
Date"), the Bankruptcy Court entered an order confirming the Plan of
Reorganization (the "Plan"), which became effective on September 2, 1993 (the
"Effective Date"). The effects of the Plan have been recorded as of July 31,
1993, the fiscal month-end closest to the Confirmation Date.

         The Company has implemented the accounting for entities emerging from
Chapter 11 reorganization, including the application of "fresh-start" reporting,
set forth by the American Institute of Certified Public Accountants' Statement
of Position 90-7 ("SOP 90-7"), "Financial Reporting by Entities in
Reorganization Under the Bankruptcy Code". The ongoing impact of the adoption of
fresh-start reporting is reflected in the accompanying consolidated financial
statements.

         The following occurred under the Plan as of the Effective Date:

         - The Company restructured certain senior indebtedness in the aggregate
principal amount of approximately $103.4 million. Such indebtedness was
satisfied by issuance of the Company's 11.5% Senior Secured Notes due 2000 in
the aggregate principal amount of $70.0 million (the "Senior Secured Notes") and
by the establishment of and drawing under a revolving credit facility extended
by the senior secured creditors.

         - All of the indebtedness owed to the holders of the Company's 14.25%
Senior Subordinated Notes due 1998 (the "Old Senior Subordinated Notes"),
totaling $55.0 million in principal amount



                                      -31-

<PAGE>


                           SPRECKELS INDUSTRIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3.       REORGANIZATION PROCEEDINGS - CONTINUED

and all of the indebtedness owed to the holder of two junior subordinated notes
due July 31, 1995 (the "Old Junior Subordinated Notes"), totaling approximately
$16.9 million in principal amount was converted to equity by the issuance of
4,500,000 shares of the Company's Class A Common Stock to the holders of the Old
Senior Subordinated Notes and issuance of 1,020,000 shares of the Company's
Class A Common Stock, plus warrants to purchase up to 900,000 shares of the
Company's Class A Common Stock at a price equal to $9.17 per share to the holder
of the Old Junior Subordinated Notes (see Note 16).

         - All of the equity interests (capital stock, warrants and options) in
the Company prior to the effectiveness of the Plan were canceled and 479,900
shares of Class A Common Stock, plus 100 shares of Class B Common Stock, plus
warrants to purchase up to 1,950,000 shares of the Company's Class A Common
Stock at various prices, were issued to the holders of such equity interests
(see Notes 15 and 16). In addition, the Company adopted a new management stock
option plan covering 564,894 shares of the Company's Class A Common Stock (see
Notes 15 and 16).

         Under fresh-start reporting, reorganization value of the entity was
allocated to the reorganized Company's assets on the basis of the fair market
values as of July 31, 1993. The portion of reorganization value not attributable
to specific tangible or identifiable intangible assets of the reorganized entity
was reflected as excess reorganization value. Revaluation of assets and
liabilities pursuant to the adoption of fresh-start reporting included (in
thousands):

                  Eliminate inventory LIFO layers             $       (6,576)
                  Write-up assets to appraised values                  43,693
                  Write-up of other assets                              1,368
                  Adjust liabilities to net fair value                (13,070)
                  Tax impact of fresh-start accounting                 (9,369)
                                                                 ------------
                           Total fresh-start adjustments      $        16,046
                                                                  ===========

         Under fresh-start reporting, the final consolidated balance sheet as of
July 31, 1993 (Predecessor Company), after adjustment resulting from the
effectiveness of the Plan, became the opening balance sheet on August 1, 1993,
of the reorganized successor company. Since fresh-start reporting was included
in the financial statements for the years ended June 30, 1996 and 1995 and for
the eleven-month period ended June 30, 1994, the consolidated financial
statements as of and for the period subsequent to that date are not comparable
to any such statements as of any prior date or for any prior period.

4.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION--The financial statements include the consolidated
accounts of the Company. All significant intercompany transactions and accounts
have been eliminated in consolidation.



                                      -32-

<PAGE>


                           SPRECKELS INDUSTRIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

CASH AND CASH EQUIVALENTS--Cash and cash equivalents consist of cash on hand and
in banks and highly liquid investments with original maturities of three months
or less.

REVENUE RECOGNITION AND CONCENTRATION OF CREDIT RISK--Revenue is recognized as
products are shipped or when risk of loss has passed. The Company performs
ongoing credit evaluations of its customers' financial condition, but generally
does not require collateral to support customer receivables. The Company
establishes an allowance for doubtful accounts based upon factors surrounding
the credit risk of specific customers, historical trends and other factors.

FAIR VALUE OF FINANCIAL INSTRUMENTS--The book value of cash and cash
equivalents, accounts receivable, accounts payable, accrued liabilities and
outstanding borrowings under the Company's revolving line of credit approximates
the fair value due to the short-term nature of these instruments.

         Based on borrowing rates currently available to the Company for debt
with similar terms and average maturities, the fair value of the Senior Secured
Notes (see Note 8) was $72.7 million at June 30, 1996, and $73.9 million at June
30, 1995. Fair value was determined by reference to quotations available in
markets where the issue is traded. The Senior Secured Notes are redeemable by
the Company, at prices explained in Note 8, which are less than the quoted
market prices used in determining the fair value.

PROPERTY, PLANT AND EQUIPMENT--Property, plant and equipment are depreciated
using the straight-line method over their estimated useful lives, ranging from
15 to 30 years for building and structures and from 7 to 18 years for machinery
and equipment. Expenditures for repairs and maintenance are charged against
income as incurred.

EXCESS REORGANIZATION VALUE--Excess reorganization value represents the
unamortized excess of the Company's value for reorganization purposes over the
fair value of its tangible and identifiable intangible net assets as of the date
of reorganization (see Note 3). The Company amortizes its excess reorganization
value over a 20-year period and expensed $1.7 million and $1.8 million for the
years ended June 30, 1996 and 1995, respectively, and $2.3 million for the
11-month period ended June 30, 1994. Accumulated amortization at June 30, 1996
and 1995, amounted to $5.3 million and $3.6 million, respectively.

RESEARCH AND DEVELOPMENT--Research and development costs are charged to expense
as incurred and amounted to $2.3 million and $1.3 million for the years ended
June 30, 1996 and 1995, respectively, $0.7 million for the eleven-month period
ended June 30, 1994 and $0.1 million for the one-month period ended July 31,
1993. These amounts are included in selling, general and administrative expenses
in the accompanying consolidated statements of operations.






                                      -33-

<PAGE>


                           SPRECKELS INDUSTRIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

INCOME TAXES--Deferred income taxes are determined in accordance with Statement
of Financial Accounting Standards, No. 109 "Accounting for Income Taxes," ("SFAS
109"), whereby deferred tax assets are recognized for deductible temporary
differences and operating loss carryforwards and deferred tax liabilities are
recognized for taxable temporary differences. Temporary differences are the
differences between the reported amounts of assets and liabilities and their tax
bases. Deferred tax assets are reduced by a valuation allowance when, in the
opinion of management, it is more likely than not that some portion or all of
the deferred tax assets will not be realized.

         Deferred tax assets and liabilities on the accompanying consolidated
balance sheets are classified in accordance with SFAS 109, which generally
requires classification be based on the related asset or liability. Deferred
taxes not related to a specific asset or liability are classified based on the
estimated period of reversal.

EARNINGS PER SHARE--Weighted average shares for earnings (loss) per share
purposes include common stock equivalents, as calculated under the modified
treasury stock method (see Note 17).

FOREIGN CURRENCY TRANSLATION--Assets and liabilities of subsidiaries outside the
United States are translated into U.S. dollars at the exchange rates in effect
at the end of the period. Revenue and expense accounts are translated at a
weighted average of exchange rates which were in effect during the year.
Translation adjustments that arise from translating a foreign subsidiary's
financial statements from local currency to U.S. dollars are accumulated in a
separate component of stockholders' equity. Transaction gains and losses that
arise from exchange rate changes on transactions denominated in a foreign
currency are included in results of operations as incurred.

FOREIGN EXCHANGE CONTRACTS--The Company operates internationally, giving rise to
exposure to market risks from changes in foreign exchange rates. The Company
does not hold or issue financial instruments for speculative trading purposes.

         Forward exchange contracts are utilized by the Company to hedge firm
and anticipated purchases denominated in foreign currencies (principally in
Japanese yen). The terms of the foreign exchange contracts do not exceed six
months. The purpose of the Company's foreign currency hedging activity is to
protect the Company from the risk that the future cash outflows resulting from
purchases from foreign suppliers will be adversely affected by changes in
exchange rates. Gains and losses from these transactions are recognized when the
obligation to pay foreign suppliers is incurred.

         At June 30, 1996, the Company had forward purchase commitments of 177
million Japanese yen at contract rates ranging between 102 and 104 yen to the
U.S. dollar.

PERVASIVENESS OF ESTIMATES--The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make certain estimates and assumptions.




                                      -34-

<PAGE>


                           SPRECKELS INDUSTRIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

These estimates and assumptions affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the date
of the financial statements, as well as the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from these
estimates.

NEW ACCOUNTING PRONOUNCEMENT--In March 1995, the Financial Accounting Standards
Board issued Statement of Financial Accounting Standards No. 121, ("SFAS 121"),
"Accounting for Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of." This statement requires that long-lived assets be reported at the
lower of carrying amount or fair value. The Company plans to adopt SFAS 121 in
1997 and believes that the adoption of this new accounting standard will not
have a significant impact on its financial position or results of operations.

DIVIDENDS--The Company has not paid any dividends on its common stock. The
Company is subject to certain restrictions on the payment of dividends under the
terms of its Senior Secured Notes and its revolving credit agreement (see Note
8).

RECLASSIFICATIONS--Certain prior year amounts have been reclassified to conform
to the current year presentation.

5.  INVENTORIES

         Substantially all inventories are valued at the lower of cost or market
using the last-in, first-out ("LIFO") method. Inventories consist of the
following at June 30, 1996 and 1995 (in thousands):

                                                       1996           1995
                                                   -----------      --------
                           Raw materials           $     4,480    $     4,750
                           Work in progress             11,955         14,626
                           Finished goods               23,312         23,380
                                                    ----------     ----------
                                                        39,747         42,756
                           Less-LIFO reserve             1,001            231
                                                   -----------     ----------
                                                   $    38,746    $    42,525
                                                   = =========    ===========










                                      -35-

<PAGE>


                           SPRECKELS INDUSTRIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

6.       PROPERTY, PLANT AND EQUIPMENT

         Property, plant and equipment consists of the following at June 30,
1996 and 1995 (in thousands):

                                                    1996           1995
                                               -------------      --------
            Land                               $         835   $        835
            Buildings and structures                   4,982          4,144
            Machinery and equipment                   24,718         20,916
            Leasehold improvements                     1,563          1,418
                                                ------------    -----------
                                                      32,098         27,313
              Less-Accumulated depreciation            6,618          4,180
                                                ------------   ------------
                                                $     25,480   $     23,133
                                                = ==========   = ==========

7.       OTHER CURRENT LIABILITIES

         Other current liabilities consists of the following at June 30, 1996
and 1995 (in thousands):

                                                    1996           1995
                                                -----------    --------
         Accrued taxes                         $     6,189    $     5,442
         Product liability                           3,984          2,816
         Workers' compensation liability             1,547          2,326
         Other                                       4,575          3,357
                                                ----------    -----------
                  Total                        $    16,295    $    13,941
                                               ===========    = =========

8.  DEBT

     Long-term debt consists of the following at June 30, 1996 and 1995 (in
thousands):

                                                       1996             1995
                                                    ----------        --------
                  Senior Secured Notes              $    70,000     $  70,000
                  Credit Agreement - Revolving
                    loan due June 30, 1997,
                    at prime plus 0.75%                    ---          10,616
                                                    -----------     ----------
                           Total                    $    70,000     $   80,616
                                                    ===========     ==========

         The Senior Secured Notes bear interest at 11.5%, payable semi-annually,
are due September 1, 2000, and are guaranteed by each of the Company's directly
held subsidiaries. Upon the change of control of the Company, each holder of
Senior Secured Notes may require the Company to repurchase such holder's notes
at 101% or, if on or after September 1, 1998, 100% of the principal amount
thereof, plus accrued interest to the date of repurchase.



                                      -36-

<PAGE>


                           SPRECKELS INDUSTRIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8.  DEBT - CONTINUED

         On July 22, 1994, the Company entered into a secured revolving credit
agreement (the "Credit Agreement") with Harris Trust and Savings Bank. The
Credit Agreement, as amended, provides for maximum borrowings of $25.0 million,
including a $6.0 million sublimit for letters of credit, through June 30, 1997.
The Credit Agreement is secured by accounts receivable, inventories and bank
deposits of Duff-Norton Company, Inc., the Company's principal operating
subsidiary. Interest rates under the Credit Agreement are at prime plus 0.75%
for domestic loans and LIBOR plus 2.25% for Eurodollar loans. The prime rate
under the Credit Agreement was 8.25% and 9.0% at June 30, 1996 and 1995,
respectively.

         The terms and conditions of the Credit Agreement and the Senior Secured
Notes impose restrictions that affect, among other things, the ability of the
Company to (i) incur additional indebtedness (including indebtedness incurred by
means of guarantees); (ii) create liens on assets, (iii) sell assets; (iv)
engage in mergers or consolidations; (v) make investments and capital
expenditures; (vi) pay dividends; and (vii) engage in certain transactions with
affiliates and subsidiaries. The Company is also required to comply with certain
specified financial ratios and tests, including the maintenance of certain
interest coverage ratios and minimum net worth levels.

         As of June 30, 1996, as a result of the sale of Spreckels Sugar
Company, Inc., the Company was in violation of certain covenants related to the
Credit Agreement; however, the Company received a waiver subsequent to year end.
There were no outstanding borrowings under the Credit Agreement as of June 30,
1996.

         As of June 30, 1996 and 1995, the Company had letters of credit
outstanding of $2.5 million and $1.7 million, respectively.

9.       DIVESTITURES

         On November 4, 1994, the Company sold all of the stock of its wholly
owned subsidiary, Carbidie Corporation ("Carbidie"). Carbidie manufactured
custom-made tungsten carbide preforms, which are used for their strength and
durability in the tool and die industry. Carbidie was sold for $22.5 million and
net proceeds amounted to $21.8 million. The sale of Carbidie resulted in no gain
or loss.

         On June 30, 1994, the Company sold all of the stock of its wholly owned
subsidiary, National Carbide Die ("NCD"). NCD manufactured precision quality
tools, dies and component parts, primarily from die steel and carbide tungsten.
NCD was sold for $2.1 million, its book value. Accordingly, no gain or loss was
recorded on the transaction. The Company received a cash payment of $1.8 million
in July 1994 plus a promissory note maturing in 2001 for the remainder of the
purchase price.



                                      -37-

<PAGE>


                           SPRECKELS INDUSTRIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

10.  LEASE COMMITMENTS

         The Company leases office space, production facilities, warehouses,
transportation and other equipment under operating leases extending for varying
periods of time. Rental expense amounted to $2.9 million and $2.7 million for
the years ended June 30, 1996 and 1995, respectively, $2.1 million for the
eleven-month period ended June 30, 1994, and $0.2 million for the one-month
period ended July 31, 1993.

         At June 30, 1996, remaining lease commitments are as follows (in
thousands):

                                              OPERATING      CAPITAL
             1997                            $     2,592    $       52
             1998                                  1,951            52
             1999                                  1,501            52
             2000                                  1,362            52
             2001                                  1,311            52
             Thereafter                           12,753           381
                                              ----------       --------
             Total minimum lease payments    $    21,470           641
                                              ==========
             Less-interest portion                                 295
                                                               --------
             Present value of net minimum
               capital lease payments                       $      346
                                                              =========

11.  INCOME TAXES

         The Company adopted SFAS No. 109 on July 1, 1993. The cumulative effect
on prior years of this change in accounting principle increased net income by
$1.9 million, or $0.38 per share, and is included in cumulative effect of
changes in accounting principles in the Consolidated Statements of Operations
for the period ended July 31, 1993.

         Domestic and foreign components of income from continuing operations,
before income taxes, are summarized as follows (in thousands):

                                                                     PREDECESSOR
                                           SUCCESSOR COMPANY           COMPANY
                                                         11-MONTH     ONE-MONTH
                                                           PERIOD      PERIOD
                                                           ENDED       ENDED
                                    YEAR ENDED JUNE 30,    JUNE 30,    JULY 31,
                                      1996        1995        1994      1993
Income (loss) before income taxes:
         Domestic                  $   6,153   $   3,221  $    3,867  $ (1,350)
         Foreign                       4,964       4,016       3,009        214
                                   ---------   ---------  ----------  ---------
                  Total            $  11,117   $   7,237  $    6,876  $ (1,136)
                                   =========   =========  ==========  =========

                                      -38-

<PAGE>


                           SPRECKELS INDUSTRIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

11.  INCOME TAXES - CONTINUED

         The provision for income taxes applicable to continuing operations are
summarized as follows (in thousands):

<TABLE>
<CAPTION>


                                                                                 PREDECESSOR
                                                        SUCCESSOR COMPANY           COMPANY
                                                                       11-MONTH    ONE-MONTH
                                                                        PERIOD        PERIOD
                                                                         ENDED       ENDED
                                                YEAR ENDED JUNE 30,    JUNE 30,    JULY 31,
                                                  1996        1995        1994        1993
<S>                                            <C>          <C>        <C>        <C> 

         Income before income taxes:
                Current:
                  Federal                    $       555   $   2,087 $    2,248   $      (70)
                  State                              615         314        338          (35)
                  Foreign                          1,967       1,813        934          105
                                              ----------   --------- ----------   ----------
                  Total current                    3,137       4,214      3,520          ---
                 Deferred provision (benefit)      1,112      (1,316)        90          ---
                                             -----------    -------- ----------   ----------
                        Total tax provision  $     4,249   $   2,898 $    3,610   $      ---
                                             ===========   ========= ==========  ===========
</TABLE>

         The reconciliation between the statutory federal tax expense and
recorded tax expense is as follows (in thousands):

<TABLE>
<CAPTION>

                                                                              PREDECESSOR
                                                 SUCCESSOR COMPANY               COMPANY
                                                                   11-MONTH   ONE-MONTH
                                                                    PERIOD        PERIOD
                                                                     ENDED         ENDED
                                              YEAR ENDED JUNE 30,   JUNE 30,      JULY 31,
                                              1996        1995        1994           1993
<S>                                          <C>        <C>       <C>        <C>    

 Statutory federal income tax expense       $   3,891  $  2,533   $  2,407   $      (386)
 State income taxes, net of federal benefit       400       204        220            56
 Excess reorganization value amortization         601       631        815           ---
 Tax on foreign income distributed                512       577        246           ---
 Foreign income taxed at different rates          230       407       (119)          32
 Operating loss carryforward utilized          (1,484)      ---        ---           ---
 Reduction of taxes provided in prior years       ---    (1,505)       ---           ---
 Reorganization items                             ---       ---        ---           420
 Other items                                       99        51         41          (122)
                                            ---------- ---------  ---------      --------
                 Total tax expense          $   4,249  $  2,898   $  3,610   $       ---
                                              ========  =======   =========   ============


</TABLE>


                                      -39-

<PAGE>


                           SPRECKELS INDUSTRIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

11.  INCOME TAXES - CONTINUED

         The Company had previously provided for taxes related to a dispute with
taxing authorities which was favorably resolved in 1995.

         Temporary differences and carryforwards which give rise to deferred tax
assets and liabilities included in the accompanying consolidated balance sheets
at June 30, 1996 and 1995, are as follows (in thousands):

                                                         1996        1995
                                                     ----------- --------
         Deferred tax assets
           Postretirement health benefit accrual    $    5,957   $   6,159
           Insurance reserves                            3,245       3,303
           Real property lease valuation reserves        1,836       2,099
           Vacation accrual                                619         579
           Other                                         1,326       1,603
                                                    ----------   ---------
                  Total deferred tax assets             12,983      13,743
                                                     ---------   ---------
         Deferred tax liabilities
           Inventory                                     3,242       3,052
           Property, plant and equipment                 4,579       4,634
           Other                                         2,468       2,251
                                                    ----------    --------
                  Total deferred tax liabilities        10,289       9,937
                                                     ---------    --------
                  Net deferred tax asset            $    2,694    $  3,806
                                                    ==========    ========

         At June 30, 1996, the Company had net operating loss carryforwards of
$1.2 million which expire between 2008 and 2010, and alternative minimum tax
credits of $1.5 million which do not expire.

12.      RETIREMENT PLANS

         The Company has a number of noncontributory defined benefit pension
plans. These plans provide pension benefits based on years of service, with some
plans providing benefits based on compensation at the date benefits are earned
and others based on compensation for a period immediately prior to retirement.
Plan assets include U.S. government securities, federal agency obligations,
corporate debt instruments, common stock, other fixed income securities and cash
equivalents. The Company's funding policy is to contribute annually the minimum
amount required by the Employee Retirement Income Security Act.

         Net periodic pension cost components charged to continuing operations
and related assumptions are as follows (in thousands):




                                      -40-

<PAGE>


                           SPRECKELS INDUSTRIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

12.      RETIREMENT PLANS - CONTINUED

<TABLE>
<CAPTION>

                                                                                     PREDECESSOR
                                                       SUCCESSOR COMPANY              COMPANY
                                                                          11-MONTH    ONE-MONTH
                                                                            PERIOD     PERIOD
                                                                            ENDED      ENDED
                                                   YEAR ENDED JUNE 30,      JUNE 30,   JULY 31,
                                                     1996        1995        1994       1993
        <S>                                      <C>        <C>         <C>         <C>   

         Service cost - Benefits earned during
           the period                              $   1,606  $  1,559   $   1,532    $   125

         Interest cost on projected benefit
           obligation                                  3,105     3,056       2,762        255

         Actual return on assets                      (5,153)   (4,919)     (2,819)      (256)
         Curtailment                                     ---    (1,129)        ---        ---
         Settlement                                     (263)      300         ---        ---
         Net amortization and deferral                 2,050     2,007         ---        ---
                                                    --------   -------    ----------  --------
                                                   $   1,345  $    874   $   1,475    $    124
                                                    ========  ========      =======   ========
         Discount rates                                   8%        8%           8%          8%
         Rates of increase in compensation levels       4-5%      4-5%         4-5%        4-5%
         Expected long-term rates of return on
           assets                                         9%        9%           9%          9%

</TABLE>

         The following table sets forth the plans' funded status and amounts
recorded in the accompanying consolidated balance sheets at June 30, 1996 and
1995 (in thousands):

<TABLE>
<CAPTION>


                                                           1996                   1995
                                               ------------------------  -----------------------
                                               PLAN ASSETS   PROJECTED    PLAN ASSETS   PROJECTED
                                                 EXCEEDS      BENEFITS      EXCEED      BENEFITS
                                               PROJECTED   EXCEED PLAN     PROJECTED   EXCEED PLAN
                                                BENEFITS        ASSETS      BENEFITS     ASSETS
         <S>                                 <C>          <C>           <C>          <C>   

         Actuarial present value of
           benefit obligations
               Vested benefit obligation       $ (6,290)   $ (26,757)    $   (10,092)   $ (22,250)
                                               =========    =========     ==========    ==========
                Accumulated benefit
                 obligation                    $  (6,826)   $(28,320)    $   (10,763)   $ (23,357)
                                               =========    =========     ==========    ==========
               Projected benefit
                 obligation                    $  (6,826)   $(35,473)    $   (11,588)   $ (29,566)
               Plan assets at fair value           9,468      29,252          13,620       23,253
                                               ---------    ----------    -----------  -----------
               Plan assets in excess of (less
                 than) projected benefit
                 obligation                        2,642      (6,221)          2,032       (6,313)

</TABLE>

                                      -41-

<PAGE>


                           SPRECKELS INDUSTRIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

12.      RETIREMENT PLANS - CONTINUED

<TABLE>
<CAPTION>


                                                   1996                      1995
                                         -----------------------   ----------------------
                                         PLAN ASSETS   PROJECTED   PLAN ASSETS  PROJECTED
                                           EXCEEDS      BENEFITS     EXCEED     BENEFITS
                                         PROJECTED    EXCEED PLAN   PROJECTED  EXCEED PLAN
                                          BENEFITS       ASSETS     BENEFITS      ASSETS
             <S>                       <C>          <C>           <C>          <C>   

               Unrecognized net gain         (609)       (1,187)       (203)        (220)
               Prior service cost              ---          669         ---            78
               Accumulated benefit
                 obligation in excess of
                 plan assets                   ---         (244)        ---         (154)
                                         -----------   ----------- -----------  -----------
               Prepaid (accrued) pension
                 cost                    $   2,033     $ (6,983)   $  1,829      $(6,609)
                                          ==========   ==========  ==========  ============
</TABLE>

         As of June 30, 1996 and 1995, the benefit plans' accumulated benefit
obligation exceeded plan assets by $244,000 and $154,000, respectively. As
required by SFAS No. 87, "Employers' Accounting for Pensions," the Company has
adjusted its pension liability by this amount and reflected the corresponding
offset as a reduction of stockholders' equity.

13.  POSTRETIREMENT BENEFIT OBLIGATION

         The Company sponsors defined benefit postretirement health care plans
that provide medical and life insurance coverage to retirees and their
dependents. The Company pays the majority of the medical costs for retirees and
their spouses who are under age 65. For retirees and dependents of retirees who
retired prior to January 1, 1989, and are age 65 and over, the Company
contributes 100% toward the American Association of Retired Persons ("AARP")
premium frozen at the 1992 level. For retirees and dependents of retirees who
retired after January 1, 1989, the Company contributes $35 per month toward the
AARP premium. The life insurance plan is noncontributory.

         On July 1, 1993, the Company adopted SFAS NO. 106. SFAS 106 requires
the Company to recognize the cost of providing health care and other benefits to
retirees over the term of employee service, which was a change from the
Company's previous method of recognizing these costs when paid. The adoption of
this pronouncement resulted in a charge to net income of $8.6 million, which is
included in the amount shown as cumulative effect of changes in accounting
principles, net of tax, in the Consolidated Statement of Operations for the
period ended July 31, 1993.

         The following table sets forth the plans' combined accumulated
postretirement health benefit obligation shown on the accompanying consolidated
balance sheets at June 30, 1996 and 1995 (in thousands):



                                      -42-

<PAGE>


                           SPRECKELS INDUSTRIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

13.      POSTRETIREMENT BENEFIT OBLIGATIONS - CONTINUED

                                                         1996          1995
                                                      ----------    --------
                  Actives not fully eligible          $    4,341   $   3,598
                  Actives fully eligible                   2,083       2,289
                  Retirees and dependents                 10,552      10,688
                                                       ---------    ---------
                  Accumulated postretirement
                    benefit obligation                    16,976      16,575
                    Less - Unrecognized net loss          (1,403)       (472)
                                                       ----------   ---------
                  Accrued postretirement benefit cost  $  15,573    $ 16,103
                                                       =========    =========

         The Company's postretirement health benefit plans are not funded. Net
periodic postretirement benefit cost includes the following components (in
thousands):

<TABLE>
<CAPTION>


                                                                             PREDECESSOR
                                                    SUCCESSOR COMPANY          COMPANY
                                                                   11-MONTH    ONE-MONTH
                                                                     PERIOD    PERIOD
                                                                     ENDED      ENDED
                                                YEAR ENDED JUNE 30, JUNE 30,   JULY 31,
                                                  1996      1995     1994       1993
        <S>                                   <C>       <C>      <C>         <C>    

         Service cost - Benefits attributed to
           service during the period            $    374  $   360  $   442     $    40

         Interest cost on accumulated post-
           retirement obligation                   1,229    1,305    1,375         125
                                                 -------   ------    -----     ---------

         Postretirement benefit expense         $  1,603  $ 1,665  $ 1,817     $   165
                                                 =======   ======   ======     =========

</TABLE>

         For measurement purposes, an 8% and 12% annual rate of increase in the
per capita cost of postretirement medical benefits was assumed in 1996 and 1995,
respectively, for retirees who are younger than age 65; the rate was assumed to
decrease gradually to 5.5% and 6.5% by 2000 for 1996 and 1995, respectively, and
remain at that level thereafter. The discount rate used in determining the
accumulated postretirement benefit obligation was 8.0% for 1996 and 1995.

14.      EMPLOYEE BENEFIT AND INCENTIVE PLANS

         The Company sponsors two 401(k) defined contribution plans in which
U.S. employees are eligible to participate. The Company's contributions under
the plans are funded with a trustee and are determined based upon the amount of
employee contributions and are contingent on each of the Company's business
segments achieving certain profitability and cash flow targets. The total amount



                                      -43-

<PAGE>


                           SPRECKELS INDUSTRIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

14.      EMPLOYEE BENEFIT AND INCENTIVE PLANS - CONTINUED

contributed by the Company for the years ended June 30, 1996 and 1995, the
11-month period ended June 30, 1994 amounted to $0.7 million, $0.7 million, $1.3
million, respectively. The Company did not make any contributions during the
one-month ended July 31, 1993.

         At June 30, 1996, the Company's 401(k) plans and its Employee Stock
Ownership Plan ("ESOP") held 421,742 shares of the Company's Class A Common
Stock.

15.  CAPITAL STOCK

STOCKHOLDER RIGHTS AGREEMENT--On November 11, 1995, the Board of Directors
adopted a Stockholder Rights Agreement under which a dividend distribution was
declared of one-half right for each outstanding share of the Company's Class A
Common Stock. Except as set forth below, each right entitles the holder to
purchase from the Company one share of Common Stock at a price of $45 per share,
subject to adjustment.

         The rights are not currently exercisable, but would become exercisable
if certain events occurred related to a person or group ("Acquiring Person")
acquiring or attempting to acquire 15% or more of the Company's common stock.
Once a person or group has acquired 15% or more of such stock, except for
certain permitted offers, each holder of a right (other than the Acquiring
Person) would be entitled to purchase one share of Class A Common Stock at $1.00
per share.

         The Board of Directors, at its option, may at any time after a person
becomes an Acquiring Person (but not after the acquisition by such person of 50%
or more of the outstanding common stock) exchange all or part of the then
outstanding and exercisable rights for shares of common stock at an exchange
ratio of one share of common stock for each right.

         The Company may redeem the rights in whole, but not in part, at a price
of $0.001 per right at any time prior to the earlier of (i) a person or group
becoming an Acquiring Person or (ii) the expiration of the rights (which will
occur no later than November 23, 2005).

STOCKHOLDERS OF RECORD--As of August 24, 1996, there were 301 stockholders of
record of the Company's Class A Common Stock.

CLASS B COMMON STOCK--All of the Company's Class B Common Stock was converted to
Class A Common Stock in fiscal 1996 upon sale of the shares by the original
holder.








                                      -44-

<PAGE>


                           SPRECKELS INDUSTRIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

16.      STOCK OPTIONS AND WARRANTS - CONTINUED

OPTIONS--The Company has a New Management Stock Option Plan ("the Option Plan")
covering a maximum of 564,894 shares of the Company's Class A Common Stock for
issuance to key employees and directors of the Company. Options granted under
the Option Plan vest over periods of three to four years and are exercisable at
prices and other terms as determined by the Board of Directors.

         Under the option agreements, all options granted become exercisable as
of the date of a change in control, as defined.

         The Company's New Management Stock Option Plan (the "Management Plan")
provided for the issuance of nonqualified stock options to key employees and
directors of the Company. Under the terms of the Management Plan, options to
purchase up to 376,596 shares of Class A Common Stock were issued at an exercise
price of $.01 per share and were exercisable in increments of one-third on June
30, 1994, 1995 and 1996, provided that the Company's EBITDA (earnings before
interest, taxes, depreciation and amortization) exceeded certain targets. In any
year where EBITDA targets were not met, the right to exercise such options was
forfeited and the forfeited shares were then made available for future stock
option grants under the Option Plan. The Company did not meet the EBITDA target
in 1996, 1995 or 1994 and, as a result, all option shares granted under the
Management Plan have been forfeited as of June 30, 1996.

         Stock option activity under the Option Plan at share prices ranging
from $8.125 to $15.25 for the year ended June 30, 1996, and at share prices
ranging from $8.25 to $8.88 for the year ended June 30, 1995, was as follows:

                                                        1996          1995
                                                       --------    ---------
                  Authorized
                      Beginning balance                   66,208     340,163
                      Canceled                            36,533      53,663
                      Forfeited from Management Plan     125,532     125,532
                      Granted                          (179,065)    (453,150)
                                                       ---------    ---------
                           Shares available for grant     49,208      66,208
                                                       =========   =========

                                                        1996            1995
                                                       --------     --------
                  Outstanding
                      Beginning balance                  399,487         ---
                      Granted                            179,065     453,150
                      Canceled/Forfeited                (36,533)    (53,663)
                      Exercised                         (26,333)         ---
                                                       ---------   ----------
                      Ending balance                     515,686     399,487
                                                        ========    ========




                                      -45-

<PAGE>


                           SPRECKELS INDUSTRIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

16.      STOCK OPTIONS AND WARRANTS - CONTINUED

         The Company also has a Directors' Stock Option Plan (the "Directors'
Plan") dated September 2, 1993, which covers nonemployee directors of the
Company. Certain directors of the Company were granted stock options under the
Directors' Plan except the director formerly designated by the holder of the
Company's Class B Common Stock which was converted to Class A in 1996 and those
directors appointed subsequent to November 1, 1995. Under the terms of the
Directors' Plan, options to purchase up to 50,000 shares of Class A Common Stock
have been issued at exercise prices of $10.00 and $11.67. The options have
varying vesting dates over a three-year period following their date of grant. As
of June 30, 1996, none of the options issued under the Directors' Plan have been
exercised.

         In October 1995, the Financial Accounting Standards Board issued SFAS
No. 123, "Accounting for Stock-Based Compensation." SFAS No. 123 defines a fair
value based method of accounting for an employee stock option or similar equity
instrument and encourages all entities to adopt that method of accounting for
all employee stock compensation plans. However, SFAS No. 123 also allows an
entity to continue to measure compensation cost for those plans using the
intrinsic value based method of accounting prescribed by APB Opinion No. 25,
"Accounting for Stock Issued to Employees." Entities electing to remain with the
accounting as prescribed by APB Opinion No. 25 must make pro forma disclosures
of net income and, if presented, earnings per share, as if the fair value based
method of accounting defined in SFAS No. 123 had been applied.

         The Company plans to continue accounting for employee stock options
under the provisions of APB Opinion No. 25. Appropriate pro forma information
will be disclosed in future periods in accordance with SFAS No. 123.

WARRANTS--As of June 30, 1996 and 1995, warrants to purchase 2,520,895 shares
and 2,550,000 shares, respectively, of the Company's stock had been issued with
exercise prices ranging from $9.17 to $15.00 per share. These warrants are
noncontingent and do not expire. Warrants to purchase an additional 300,000
shares of the Company's stock had also been issued at June 30, 1996 and 1995,
with an exercise price of $1.00 per share. The exercisability of these warrants
is contingent on the market price of the Company's stock reaching or exceeding
$17.50 per share for 20 consecutive trading days. As of June 30, 1996 and 1995,
the contingency had not been met. Subsequent to June 30, 1996, however, the
contingency was satisfied and the warrants became fully exercisable.

17.      EARNINGS PER SHARE

         Primary and fully diluted earnings per share are based on the weighted
average number of shares outstanding during each period and the assumed exercise
of stock options and warrants, as calculated under the modified treasury stock
method. Under the modified treasury stock method, cash proceeds from the assumed
exercise of outstanding stock options and warrants are used to repurchase the
Company's stock, subject to a 20% limitation. Cash proceeds remaining after the
20%


                                      -46-

<PAGE>


                           SPRECKELS INDUSTRIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

17.      EARNINGS PER SHARE - CONTINUED

limit has been reached are used to reduce indebtedness of the Company.
Accordingly, net income (loss) is adjusted for the resulting reduction of
interest expense to compute net income (loss) applicable to common stock.

         All stock options and warrants have been excluded from the calculation
of earnings (loss) per share for the year ended June 30, 1995, and the 11-month
period ended June 30, 1994, because their inclusion, in the aggregate, is
antidilutive.

18.      COMMITMENTS AND CONTINGENCIES

         The Company has certain contingent liabilities with respect to material
existing or potential claims, lawsuits and other proceedings, including those
involving environmental, product liability and other matters, certain of which
are discussed more specifically below. The Company accrues liabilities when it
is probable that future costs will be incurred and such costs can be reasonably
estimated. Such accruals are based on developments to date, the Company's
estimates of the outcomes of these matters and its experience in contesting,
litigating and settling other matters. As the scope of the liabilities becomes
better defined, there will be changes in the estimates of future costs, which
could have a material effect on the Company's future results of operations and
financial condition or liquidity. In the opinion of management, the results of
any pending legal proceedings or claims will not have a material adverse effect
on the Company's financial position or results of its operations.

ENVIRONMENTAL--The Company discovered in 1987 that groundwater and sediments
beneath the Jackson, Michigan, plant of the Company's subsidiary, Mechanical
Products, Inc., contain certain organic chemical compounds in concentrations
above those permitted by applicable law. The Company conducted an extensive
investigation of the site and has entered into an Administrative Order by
Consent with the State of Michigan Department of Natural Resources which
provides for further investigation, the development of a remedial plan and
subsequent remedial action. In 1991, the Company began removal of such compounds
from the groundwater and affected sediments. These efforts will continue during
fiscal 1997 and possibly beyond. Although no assurances can be given, management
believes that the remaining cost to the Company of remedial efforts at the
Jackson plant will not have a material adverse effect on the Company's business,
financial condition or results of operations.

PRODUCT LIABILITY--The Company is periodically subject to personal injury and
property damage claims arising out of incidents involving the use of its
products. The Company is self-insured for product liability claims up to a
maximum of $500,000 per occurrence and maintains product liability insurance
with a $100 million cap per occurrence. The Company has been advised that a
customer has alleged that one of the Company's products was the cause of a fire
which occurred in January 1995 at a manufacturing facility, resulting in losses
in excess of the Company's policy limits. No litigation or other formal
proceedings against the Company have commenced and, at the present time,

                                      -47-

<PAGE>


                           SPRECKELS INDUSTRIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

18.      COMMITMENTS AND CONTINGENCIES - CONTINUED

it is unclear what role, if any, the Company's product played in the fire.
However, it is the opinion of management that there was no manufacturing defect
and that any claim, if filed and eventually supported, would in all likelihood
be settled within the Company's policy limits.

EMPLOYMENT AGREEMENTS--The Company has employment agreements with certain
executive officers which provide that in the event of their termination or
resignation following a change in control, as defined, the Company may be
required to make certain salary payments and provide medical benefits for a
period ranging from one to two years. The employee agreements also provide for
the employee to become fully vested in all awards granted under all incentive
compensation, deferred compensation and stock option plans maintained by the
Company.

19.      GEOGRAPHIC SEGMENT DATA

         Information about the Company's operations in different geographic
areas is as follows (in thousands):

<TABLE>
<CAPTION>


                                                                    (A)
                                                             OPERATING
                                                                INCOME
                                                                 FROM           DEPRECIATION
                                                  NET       CONTINUING               AND
                                                 SALES      OPERATIONS  ASSETS   AMORTIZATION
<S>                                             <C>        <C>        <C>        <C> 

SUCCESSOR COMPANY:
For the year ended June 30, 1996:
    United States                                 $155,857   $ 14,117   $145,107   $  4,436
    Europe                                          31,110      5,011     15,432        194
                                                  --------   --------   --------   -------- 
                                                  $186,967   $ 19,128   $160,539   $  4,630
                                                  ========   ========   ========   ========   

For the year ended June 30, 1995:
    United States                                 $153,676   $ 11,293   $207,912   $  4,388
    Europe                                          26,904      4,090     14,491        201
                                                  --------   --------   --------   --------
                                                  $180,580   $ 15,383   $222,403   $  4,589
                                                  ========   ========   ========   ======== 

For the 11-month ended June 30, 1994:
    United States                                 $141,949   $ 11,148   $240,925   $  5,839
    Europe                                          19,055      3,107      8,649        116
                                                  --------   --------   --------   --------
                                                  $161,004   $ 14,255   $249,574   $  5,955
                                                  ========   ========   ========   ========

</TABLE>



                                      -48-

<PAGE>


                           SPRECKELS INDUSTRIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

19.  GEOGRAPHIC SEGMENT DATA - CONTINUED
                                                   (A)
                                                OPERATING
                                                 INCOME
                                                  FROM              DEPRECIATION
                                        NET    CONTINUING                AND
                                       SALES   OPERATIONS  ASSETS   AMORTIZATION
PREDECESSOR COMPANY
For the one-month ended July 31, 1993:
      United States                   $ 11,935   $  1,016   $212,935   $    445
      Europe                             1,531        229     10,403         13
                                      --------   --------   -------    --------
                                      $ 13,466   $  1,245   $223,338   $    458
                                      ========   ========   ========   ======== 

         (a) Operating income (loss) is determined by deducting all operating
expenses, including amortization of excess reorganization value and other costs,
from revenues. Operating expenses do not include interest expense.

         Intersegment sales between geographic areas are not significant. For
the years ended June 30, 1996 and 1995, the eleven-month period ended June 30,
1994 and the one-month period ended July 31, 1993, export sales from the United
States to foreign countries were $8.2 million, $9.5 million, $10.8 million and
$0.6 million, respectively.

20.  SUPPLEMENTARY INCOME STATEMENT INFORMATION

         The Company recorded a $1.1 million charge to continuing operations in
1995 for certain costs associated with the reorganization of the corporate
office. The Company also recorded a $1.0 million charge to its discontinued
operations in 1995 for certain costs associated with a reduction in force at
Spreckels Sugar Company, Inc.

21.  SUBSEQUENT EVENT - AGREEMENT OF MERGER

         On August 24, 1996, the Company entered into an Agreement and Plan of
Merger (the "Agreement") whereby the Company will be merged with and into
Columbus McKinnon Corporation ("Columbus McKinnon"), a U.S.-based industrial
manufacturer. Under the terms of the Agreement, Columbus McKinnon will commence
a tender offer to purchase all of the outstanding shares of the Company at a
price of $24 per share and all of the outstanding warrants of the Company at a
price equal to the difference between $24 and the exercise price of the
warrants. As part of this Agreement, all outstanding stock options will be
canceled and each holder of such options will be entitled to receive cash
consideration from the Company equal to the excess of the $24 purchase price
over the exercise price of the respective options. The execution of the merger
is not intended to trigger any of the stockholder rights as described in Note 15
to become exercisable, but may require the Company to repurchase its Senior
Secured Notes. Consummation of the merger is subject to,

                                      -49-

<PAGE>


                           SPRECKELS INDUSTRIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

21.  SUBSEQUENT EVENT - AGREEMENT OF MERGER - CONTINUED

among other things, shareholder and regulatory approval. Under certain
conditions, if the Agreement is terminated by the Company or otherwise not
consummated, the Company may be required to pay Columbus McKinnon a fee of $10
million plus expenses.

22.  GUARANTOR SUBSIDIARIES

         The Company's obligations under the 11-1/2% Senior Secured Notes are
guaranteed by each of the Company's directly held subsidiaries (the
"Guarantees"). Each Guarantee is a senior unsecured obligation of the subsidiary
providing such Guarantee and ranks pari passu with all other senior unsecured
indebtedness of such subsidiary. Duff-Norton, the Company's principal
subsidiary, is directly obligated for money borrowed under the Credit Agreement.
The total funding extended to the Company cannot at any time exceed the maximum
amount of the Credit Agreement, which is $25.0 million. In addition, the Company
and the Company's domestic subsidiaries have guaranteed the indebtedness
outstanding under the Credit Agreement ("with respect to such subsidiaries, the
"Subsidiary Bank Guarantees"). The obligations of Duff-Norton under the Credit
Agreement and the Subsidiary Bank Guarantees are secured in general, by the
cash, cash equivalents, accounts receivable and inventory of Duff-Norton and
other domestic subsidiaries of the Company and therefore effectively rank senior
to the Guarantees.

23.      QUARTERLY RESULTS OF OPERATIONS

(Unaudited and in thousands except per share amounts):

                   FIRST       SECOND              THIRD        FOURTH
FISCAL 1996        QUARTER     QUARTER             QUARTER      QUARTER
-----------        -------     -------             -------      -------
Revenues (a)       $    45,259 $   44,493          $    49,209   $   48,006
Net income (loss)          102     (56,652) (b)          1,770        2,726
Earnings per share $      0.02 $     (9.45)        $      0.26   $     0.38
Stock price        $      9.75 $     13.69         $     14.78   $    15.75

FISCAL 1995
Revenues (a)       $    40,203 $    40,445         $    46,648   $   46,040
Carbidie                5,312        1,932                 ---          ---
                   ----------   ----------         -----------   ----------
     Total         $    45,515 $    42,377         $    46,648   $   46,040
                   = ========= = =========         =  ========   = ========
Net income (loss)          118         488                 619       (3,365)
Earnings per share $      0.02 $      0.08         $      0.13   $    (0.55)
Stock price        $     8.375 $     8.375         $     9.375   $    8.125

(a)  Includes only revenues from continuing operations.
(b)  Includes loss from disposal of discontinued sugar operations.




                                      -50-

<PAGE>



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

         None.

                                    PART III

ITEM 10.      DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         The directors and executive officers of the Company are:

Name                         Age        Position

Bart A. Brown, Jr.           64         Chairman of the Board of
                                          Directors

Gary L. Tessitore            51         Chief Executive Officer,
                                          President and Director

Donald C. Roof               44         Senior Vice President and Chief
                                          Financial Officer

Michael L. Sarina            46         Corporate Controller, Chief Accounting
                                          Officer and Secretary

Joshua S. Friedman           40         Director

Stewart M. Kasen             57         Director

F. Kenneth Iverson           70         Director

William J. Nightingale       67         Director

George A. Poole, Jr.         65         Director

S. Donley Ritchey            63         Director

Steven Van Dyke              37         Director


         The term of each of the directors listed above will expire immediately
prior to the election of directors at the Company's Annual Meeting of
Stockholders.

         BART A. BROWN, JR., has served as Chairman of the Board of Directors of
the Company since July 14, 1994, its Chief Executive Officer from July 14, 1994
to May 15, 1995 and as a Director since September, 1993. Since April, 1996 he
has served as a consultant to Investcorp International, Inc. He also served as
Chairman and Chief Executive Officer of Color Tile, Inc. from August, 1995 to
March, 1996. From June, 1990 to August 1995, he was Chairman of Circle K
Corporation, which

                                      -51-

<PAGE>



owns and operates  convenience stores, and served as its Chief Executive Officer
from  June,  1991  through  July,  1993.  Prior to  joining  Circle K, he was an
attorney  practicing in the Cincinnati,  Ohio area for over 30 years.  Mr. Brown
serves on the  Board of  Directors  of  Barry's  Jewelers,  Inc.  and  Firstcity
Financial  Corporation.  He received his B.S. in Accounting  and Bachelor of Law
degrees  from the  University  of  Louisville  along  with a Masters of Law from
Georgetown  University.  Mr. Brown is admitted to practice law in both  Kentucky
and Ohio.

         GARY L. TESSITORE became the President, Chief Executive Officer and a
Director of the Company on May 15, 1995. Prior to joining the Company, Mr.
Tessitore was the President and Chief Operating Officer of Breed Technologies,
Inc., a manufacturer of automotive safety equipment, from 1993 to 1995, an
Executive Vice President and General Manager of the agricultural equipment and
components group of J. I. Case Company from 1990 to 1993, and its Senior Vice
President and Chief Financial Officer from 1988 to 1990. From 1968 to 1988, he
held various positions with Ford Motor Company, including Vice President and
Controller of its Ford New Holland Division. Mr. Tessitore received his B.S.
degree from Villanova University in 1966 and his M.B.A. degree from the
University of Maryland in 1968.

         DONALD C. ROOF became  Chief  Financial  Officer of the Company in 1990
and its Senior Vice President in 1994. Mr. Roof joined Mechanical Products, Inc.
in March,  1985 as Controller and became Corporate  Controller of the Company in
June,  1987.  He is a certified  public  accountant  in Michigan  and has a B.A.
degree in Accounting from Eastern Michigan University.

         MICHAEL L. SARINA joined the Company in June, 1994 and became its Chief
Accounting Officer on August 29, 1994 and Secretary on September 11, 1995. Mr.
Sarina is a certified public accountant in California and has a B.S. degree in
accounting from Golden Gate University. Prior to joining the Company, Mr. Sarina
has held positions as Controller and Chief Division Financial Officer for
various corporations, including Verbatim Corporation (floppy disk manufacturer)
from 1982 to 1985, California Microwave, Inc. (telecommunications equipment
manufacturer) from 1985 to 1987 and 1990 to 1993, and Sequel Corporation (rigid
disk drive manufacturer) from 1988 to 1990.

         JOSHUA S.  FRIEDMAN  became a director  of the  Company on  November 2,
1995.  He is  founding  director  and  officer of Canyon  Partners  Incorporated
("CPI"), a California  corporation,  positions he has held since 1990, and holds
similar  positions  or limited  partnership  interests in its  subsidiaries  and
affiliates.  Mr.  Friedman  is in charge of CPI's  merchant  banking  and direct
investment  activities.  Prior to the  formation  of CPI,  Mr.  Friedman  was an
Executive Vice President and Co-Director of the Capital  Markets  Services Group
of  Drexel  Burnham  Lambert.  Prior  to  1984,  he  worked  in  the  Mergers  &
Acquisitions Department of Goldman, Sachs & Company in New York. Mr. Friedman is
a graduate of Harvard  College (B.A.),  Oxford  University  (M.A.),  Harvard Law
School (J.D.) and Harvard Business School (M.B.A.). Mr. Friedman currently holds
no position as an officer of the Company.  In 1995, Mr.  Friedman was elected to
the board of directors of Showbiz Pizza Time, Inc.

         STEWART M. KASEN became a director of the Company in  September,  1993.
He served as  President  and Chief  Executive  Officer  of Best  Products,  Inc.
(discount  retail  stores)  until  earlier  this year.  Mr. Kasen joined Best in
October,  1989 as President and Chief Operating Officer. He previously served as
President  of Emporium  Capwell  (retail  stores) and  President  of  Thalhimers
(retail stores). He also serves on the Board of Directors of Markel Corporation.
Mr. Kasen received his B.S. degree from Seton Hall University.


                                      -52-

<PAGE>



         F. KENNETH IVERSON became a director of the Company on February 14,
1996. He has served as Chief Executive Officer of Nucor Corporation, a
Charlotte-based steel manufacturer company, since 1965 and as its Chairman since
1984. Mr. Iverson serves on the Board of Directors of Wikoff Color Corporation,
Citizens for a Sound Economy and Tultex Corporation and is a former director of
Wachovia Corporation and Wal-Mart Stores. He received his Bachelor's degree in
Aeronautical Engineering from Cornell University and a Master's Degree from
Purdue University. He also holds honorary doctorates from the University of
Nebraska and Purdue University.

         WILLIAM J. NIGHTINGALE became a director of the Company in September
1993. He has been a Senior Advisor of Nightingale & Associates, Inc., a general
management consulting firm, since July 1995, after serving as the firm's
Chairman and President since July 1975. In this previous capacity, he has
provided executive management services for a number of companies. Prior to
founding Nightingale & Associates, he was President and Chief Executive Officer
of the Bali Company, Inc. Mr. Nightingale also serves as a director of
Glasstech, Inc. and Rings End Inc., as well as a trustee of the Narragansett Tax
Free Bond Fund (Rhode Island), Churchill Money Market Fund and Churchill Tax
Free Bond Fund (Kentucky). He received his B.A. degree in Economics from Bowdoin
College and an M.B.A. from Harvard Business School.

         GEORGE A. POOLE,  JR.  became a director  of the  Company in  September
1993,  and has been a private  investor  for more than the past five  years.  He
currently serves as a director of U.S. Home  Corporation,  Bucyrus-Erie  Company
and Rock  Island  Foods,  Inc.  Mr.  Poole  received  his B.A.  degree from Yale
University and his J.D. from Stanford University.

         S. DONLEY RITCHEY  became a director of the Company in September  1993,
and  currently  serves on the  Board of  Directors  of  Pacific  Telesis  Group,
McClatchy Newspapers, Inc., De La Salle Institute and Hughes Markets, Inc. Since
May 1981,  he has been the managing  partner of Alpine  Partners,  an investment
partnership.  Mr. Ritchey is the former  President,  Chief Executive Officer and
Chairman of the Board of Lucky  Stores,  Inc.  where he worked for over 30 years
prior to his retirement. He has previously served as a director of Lucky Stores,
Inc., York International  Corp.,  Levolor Corporation and Crocker National Bank.
Mr.  Ritchey  also  served  as  Council  Member/Mayor  of the Town of  Danville,
California from December,  1987 until December,  1995. He received both his B.S.
and M.S. degrees from San Diego State University and was a Sloan Ph.D. Fellow at
Stanford University..

STEVEN VAN DYKE became a director of the Company on February 14, 1996. He has
served as President of Tower Investment Group in Tampa, Florida since 1989. He
received his B.A. degree in Finance from the University of Kentucky.

SECTION 16(A) REPORTING--Pursuant to the Securities and Exchange Commission
regulations, the Company is required to identify the names of persons who failed
to file or filed late a report required under Section 16(a) of the Securities
Exchange Act of 1934. Generally, the reporting regulations under Section 16(a)
require directors, executive officers and greater than 10% stockholders to
report changes in ownership of Company securities. To the Company's knowledge,
based solely on review of the copies of such reports furnished to the Company
and written representations that no other reports were required, for the fiscal
year ended June 30, 1996, the Company believes that all of its directors,
officers and greater than 10% beneficial owners complied with all filing
requirements applicable to them.


                                      -53-

<PAGE>



ITEM 11.  EXECUTIVE COMPENSATION

     The following table sets forth a summary of annual and long-term
compensation for the fiscal years ended June 30, 1996, 1995 and 1994 awarded to,
earned by or paid to the Chief Executive Officer of the Company during the
fiscal year ended June 30, 1996 and each of the four most highly compensated
executive officers of the Company (other than the Chief Executive Officer) whose
total annual salary and bonus for the fiscal year ended June 30, 1996 were in
excess of $100,000:

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>


                                                                               Long-Term
                                                                              Compensation
                                                Annual Compensation                 Awards
                                                                                Securities
                                                                                Underlying
                                      Salary     Bonuses      Other Annual       Options           All Other
                             Year     ($)(1)      ($)(2)      Compensation($)    SARs(# )       Compensation($)(3)
                             -----    -------   ----------    --------------- ---------------  ------------------
<S>                       <C>       <C>         <C>          <C>             <C>               <C>

Bart A. Brown, Jr.         1996      48,000       50,000                0              0                   0
 Chairman of the Board     1995           0            0       327,202(4)      60,000(5)           27,500(5)
                           1994           0            0                0         10,000                   0

Gary L. Tessitore          1996     350,000      358,112       188,862(6)         30,000               3,000
 President and Chief       1995      47,115            0                0         60,000                   0
 Executive Officer         1994           0            0                0              0                   0

Donald C. Roof             1996     182,000      167,787       117,336(6)         20,000               3,000
 Senior Vice President     1995     164,323       25,000                0         22,000                   0
 and Chief Financial       1994     156,655       24,000                0      16,500(7)               1,615
 Officer

James E. Boyd(8)           1996     175,000      113,257                0              0          310,575(8)
 President                 1995     166,440       79,342                0         21,500               3,000
Duff-Norton Company        1994     146,630       25,820                0      19,500(7)               3,000

Michael L. Sarina          1996     114,000       71,112       114,755(6)          3,800               3,000
 Controller, Chief         1995     110,000            0                0          9,000                   0
 Accounting Officer        1994       8,462            0                0              0                   0
 and Secretary
</TABLE>


----------
(1)      Amounts shown include the dollar value of base salary (cash and
         noncash) earned by the executive officers named above, and any salary
         deferred under a Company-sponsored 401(k) or other deferred
         compensation plan.

(2)      Amounts shown include the dollar value of bonuses (cash and noncash)
         earned by the executive officers named above, as well as accrued
         interest on certain bonuses not yet paid, and any bonus deferred under
         a Company-sponsored 401(k) or other deferred compensation plan.

(3)      Except as otherwise indicated, the amounts shown consist of 
         contributions made by the Company to the Company-sponsored 401(k).

(4)      Consists of consulting payments of $267,500, office reimbursements in
         the amount of $52,500 and payments made by the Company amounting to
         $7,202 for an automobile.

(5)      Mr. Brown was granted options to purchase 60,000 shares of Class A
         Common Stock during fiscal year 1995; options covering 35,000 of such
         shares were canceled on June 30, 1995 in exchange for a payment of
         $17,500, which amount is included under "All Other Compensation." The
         remaining $10,000 of such compensation consists of director's fees.

                                      -54-

<PAGE>



(6)      Represents reimbursement of moving expenses.

(7)      Of the options granted during the fiscal year ended June 30, 1994,
         one-third were forfeited as of each June 30, 1994, June 30, 1995 and
         June 30, 1996. See "Option Grants and Exercises" below.

(8)      Mr. Boyd resigned from the Company effective June 30, 1996 and received
         severance in the amount of $290,750, $115,750 in cash and the balance
         in monthly installments of $14,583 per month for twelve months
         beginning July 1, 1996 and vacation payments of $16,825. The Company
         will provide Mr. Boyd with medical benefits for a period of one year
         subsequent to June 30, 1996.

OPTION GRANTS AND EXERCISES--The following tables summarize option grants to
each of the Company's officers named in the Summary Compensation Table during
the last fiscal year.

                                       OPTION GRANTS IN FISCAL YEAR 1996(1)

<TABLE>
<CAPTION>

                                                                                    POTENTIAL REALIZABLE
                                      INDIVIDUAL GRANTS                              VALUE AT ASSUMED
                       NUMBER OF           % OF TOTAL                                 ANNUAL RATES OF
                       SECURITIES         OPTIONS                                       STOCK PRICE
                       UNDERLYING        GRANTED TO                                   APPRECIATION FOR
                          OPTIONS       EMPLOYEES IN      EXERCISE   EXPIRATION        OPTION TERMS (2)
                         GRANTED(#)     FISCAL YEAR (3)   PRICE(S/SH)      DATE         5%          10%($)
                       ------------     ---------------   ----------- ----------  -------------    ---------
<S>                  <C>              <C>                <C>         <C>           <C>              <C>

Gary L. Tessitore          30,000(3)         19.6          15.625      6/30/2006    294,794        747,067
Donald C. Roof             20,000(3)         13.1          15.625      6/30/2006   196,530         498,045
Michael L. Sarina          3,800(3)           2.5          15.625      6/30/2006     37,341         94,629
---------
</TABLE>

(1)   There were no SAR grants during the fiscal year ended June 30, 1996.

(2)   The five percent (5%) and ten percent (10%) assumed rates of
      appreciation are mandated by the rules of the Securities and Exchange
      Commission and do not represent the Company's estimate or projection of
      the future Class A Common Stock price.

(3)   Such options vest in one-third increments on June 30, 1997, 1998 and 1999.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND 1996 FISCAL 
YEAR-END OPTION VALUES(1)


                                           NUMBER OF SECURITIES    VALUE OF
                                               UNDERLYING         UNEXERCISED
                                           UNEXERCISED OPTIONS   IN-THE-MONEY
                                                AT FISCAL      OPTIONS AT FISCAL
                                               YEAR END(#)      YEAR END($)(2)
                      SHARES
                    ACQUIRED ON    VALUE      EXERCISABLE/       EXERCISABLE/
NAME                EXERCISE(#) REALIZED($)   UNEXERCISABLE      UNEXERCISABLE

BART A. BROWN, JR..       0            0         25,000/0          196,875/0
GARY L. TESSITORE..       0            0    30,000/60,000    228,750/232,500
DONALD C. ROOF.....       0            0     9,667/32,333      70,211/94,789
JAMES E. BOYD......       0            0          9,333/0           67,914/0
MICHAEL L. SARINA..   1,500        8,813      3,000/8,300      21,750/33,663


(1)      THERE WERE NO SAR EXERCISES DURING THE FISCAL YEAR ENDED JUNE 30, 1996.

(2)      CALCULATED ON THE BASIS OF THE FAIR MARKET VALUE OF THE UNDERLYING 
         SECURITIES AT JUNE 30, 1996 ($15.75 PER SHARE) MINUS THE EXERCISE 
         PRICE.


                                      -55-

<PAGE>



         THE COMPANY ADOPTED THE NEW MANAGEMENT STOCK OPTION PLAN (THE "OPTION
PLAN") WHICH AUTHORIZES THE GRANTING OF OPTIONS COVERING UP TO 564,894 SHARES OF
CLASS A COMMON STOCK OF THE COMPANY TO KEY EMPLOYEES AND DIRECTORS. IN AUGUST
1993, OPTIONS TO PURCHASE 376,494 SHARES WERE ISSUED AT AN EXERCISE PRICE OF
$0.01 PER SHARE. SUCH OPTIONS WERE TO VEST IN ONE-THIRD INCREMENTS AT THE CLOSE
OF THE FISCAL YEARS ENDING JUNE 30, 1994, 1995 AND 1996 IF THE COMPANY'S EBITDA
(EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION) FOR THE
RELEVANT YEAR IS AT LEAST EQUAL TO THE TARGETS SET FORTH IN THE OPTION PLAN. THE
COMPANY DID NOT MEET THE RESPECTIVE EBITDA TARGETS, SO OPTIONS REPRESENTING
376,494 SHARES OF CLASS A COMMON STOCK HAVE BEEN FORFEITED.

         OPTIONS TO PURCHASE 188,298 SHARES ALONG WITH ANY FORFEITED SHARES MAY
BE GRANTED UNDER THE OPTION PLAN AT EXERCISE PRICES AND UPON SUCH OTHER TERMS AS
DETERMINED BY THE COMPANY'S BOARD OF DIRECTORS. OPTIONS TO PURCHASE 60,000
SHARES OF CLASS A COMMON STOCK AT AN EXERCISE PRICE OF $7.875 WERE GRANTED TO
BART A. BROWN, JR., UPON BECOMING CHAIRMAN AND CHIEF EXECUTIVE OFFICER ON JULY
14, 1994. ALL OF THESE OPTIONS WERE VESTED AT THE TIME OF GRANT. OPTIONS
COVERING 35,000 OF SUCH SHARES WERE CANCELED ON JUNE 30, 1995. ON AUGUST 29,
1994, OPTIONS TO PURCHASE AN ADDITIONAL 200,000 SHARES OF CLASS A COMMON STOCK
AT AN EXERCISE PRICE OF $8.875 PER SHARE WERE GRANTED TO CERTAIN OFFICERS AND
DIRECTORS OF THE COMPANY, INCLUDING MESSRS. ROOF, BOYD, SARINA, KASEN,
NIGHTINGALE, POOLE AND RITCHEY. THESE OPTIONS VEST IN ONE-THIRD INCREMENTS ON
JUNE 30, 1995, 1996 AND 1997. ON JUNE 30, 1995, OPTIONS TO PURCHASE AN
ADDITIONAL 193,150 SHARES OF CLASS A COMMON STOCK AT AN EXERCISE PRICE OF $8.125
PER SHARE WERE GRANTED TO CERTAIN OFFICERS OF THE CORPORATION, INCLUDING MESSRS.
TESSITORE, BOYD, ROOF AND SARINA. THESE OPTIONS VEST IN ONE-THIRD INCREMENTS ON
JUNE 30, 1996, 1997 AND 1998, EXCEPT FOR 60,000 SHARES ISSUED TO MR. TESSITORE
WHICH VEST IN ONE-FOURTH INCREMENTS ON JUNE 30, 1995, 1996, 1997 AND 1998.

         ON JUNE 13, 1996, OPTIONS TO PURCHASE 152,815 SHARES OF CLASS A COMMON
STOCK AT AN EXERCISE PRICE OF $15.625 WERE GRANTED TO CERTAIN OFFICERS AND
DIRECTORS OF THE COMPANY, INCLUDING MESSRS. TESSITORE, ROOF, SARINA, IVERSON,
FRIEDMAN AND VAN DYKE. THESE OPTIONS VEST IN ONE-THIRD INCREMENTS ON JUNE 30,
1997, 1998 AND 1999.

OTHER COMPENSATION

PENSION PLANS--The following two tables show estimated pension benefits for
certain employees of the Company. The first table shows the estimated annual
pension payable under the Spreckels Sugar Company, Inc. Salaried Pension Plan
provisions of the Retirement Plan for Salaried Employees of Duff-Norton
Companies (the "Sugar Plan") in conjunction with any benefit that is payable
under the Company's Excess Benefit Plan (the "Excess Plan"). The second table
shows the estimated annual pension payable under the main provisions of the
Retirement Plan for Salaried Employees of the Duff-Norton Companies (the
"Duff-Norton Plan") in conjunction with any benefit payable under the Excess
Plan. The calculations under each table relate to employees at various earnings
classifications retiring on June 30, 1996 at age 65, with representative years
of service, assuming that the employees had elected a single life annuity form
of payment. Prior to June 30, 1979, employees were required to contribute to the
Plan in order to accrue any benefit, and the calculations assume that the
employees made contributions to that plan prior to June 30, 1979 and had begun
participation at the earliest possible date.

         While the Sugar Plan and the Duff-Norton Plan are funded, qualified
pension plans, the Excess Plan is an unfunded, nonqualified plan. The Excess
Plan pays those benefits that exceed the limitations of the Internal Revenue
Service Code of 1986 (the "Code") applicable to qualified pension

                                      -56-

<PAGE>



plans such as the Sugar Plan and the Duff-Norton Plan. For example, for the 1996
fiscal year, neither qualified Plan may base a benefit on compensation in excess
of $150,000, and since 1994 the annual compensation that may be taken into
account under the plans has been subject to a $150,000 indexed limit. In
addition, no qualified plan may pay out an annual age 65 benefit in excess of
$120,000 in 1996. Thus, any benefit accrued in excess of these limits would be
payable from the Excess Plan.

                               PENSION PLAN TABLES

                           SUGAR PLAN AND EXCESS PLAN

                                   Years of Service
REMUNERATION         15          20         25            30         35
------------         --          --         --            --         --
     $    125,00  $  27,000 $   36,000 $    45,000 $     54,000 $    62,000
          150,00     32,000     43,000      54,000       65,000      76,000
         175,000     38,000     51,000      63,000       76,000      89,000
         200,000     44,000     58,000      73,000       87,000     102,000
         225,000     49,000     66,000      82,000       99,000     115,000
         250,000     55,000     73,000      91,000      110,000     128,000
         300,000     66,000     88,000     110,000      132,000     154,000
         400,000     89,000    118,000     148,000      177,000     207,000
         450,000    100,000    133,000     166,000      200,000     233,000
         500,000    111,000    148,000     185,000      222,000     259,000
                             DUFF-NORTON PLAN AND EXCESS PLAN

                                       Years of Service
REMUNERATION         15            20         25         30           35
------------         --            --         --         --           --
     $   125,000  $  27,800 $   37,000   $  46,000  $   55,500   $    64,800
         150,000     33,400     44,500      55,600      66,800        77,900
         175,000     39,000     52,000      65,000      78,000        91,000
         200,000     48,600     59,500      74,400      88,300       104,000
         225,000     50,300     67,000      83,800     100,500       117,300
         250,000     55,900     78,500      93,100     111,800       130,400
         300,000     67,100     89,500     111,900     134,300       156,600
         400,000     89,600    119,500     149,400     179,300       209,100
         450,000    100,900    134,500     168,100     201,800       235,400
         500,000    112,100    149,500     186,900     224,300       261,600

         Pension benefits of executives for the Company are based on the greater
of the determination in (a) or (b) as follows: (a) all years of the executive's
service with the Company are taken into account under the Duff-Norton Plan and
the Duff-Norton Plan's provisions of the Excess Plan, or (b) the Sugar Plan and
the Sugar Plan provisions of the Excess Plan apply to service prior to April 19,
1996, and the Duff-Norton Plan and the Duff-Norton Plan provisions of the Excess
Plan apply to service after April 18, 1996. Under either of the Sugar Plan or
the Duff-Norton Plan, the remuneration on which benefits are based is the
employee's "average annual compensation." In each case, average annual
compensation is the average of the employee's total annual compensation paid
during a three-year computation period in which compensation is the highest out
of the final ten years of employment. Total annual compensation is the amount of
salary and any regular bonus from the Sumary Compensation Table. Pension
benefits under each plan are determined under an integrated

                                      -57-

<PAGE>



formula. However, benefits accrued in the aggregate under the qualified plans
and the Excess Plan are not subject to offset by Social Security old-age
payments.

         At the close of fiscal year 1996, for purposes of the Sugar Plan,
Messrs. Tessitore, Roof and Sarina were credited with 0, 11.25 and 2.08 of
pensionable service with the Company. For purposes of the Duff-Norton Plan, when
counting all years of service, Messrs. Tessitore, Roof and Sarina would have 1,
11 and 2 years of pensionable service, and when counting service on or after
April 19, 1996, Messrs. Tessitore, Roof and Sarina do not yet have any
pensionable service under the Duff-Norton Plan. At the close of fiscal year
1996, for purposes of the Duff-Norton Plan, Mr. Boyd was credited with 21.6
years of service.

SEVERANCE AGREEMENTS--In connection with his resignation from the Company
effective June 10, 1996 and in accordance with the terms of his Severance
Agreement , Mr. Boyd received a cash payment of $115,750, plus accrued vacation
of $16,825. In addition, Mr. Boyd will receive an additional $175,000 in equal
monthly installments of $14,583 beginning July 1, 1996, and will receive medical
benefits for up to one year following his resignation.

         At a meeting of the Board of Directors of the Company (the "Board of
Directors") held on July 17, l996, in order to ensure the continued dedication
and objectivity of certain key executives and managers of the Company, the Board
authorized the Company to enter into amended severance compensation agreements
("Amended Severance Agreements") with certain executives and managers (such
executives and managers, the "Executives"). The Amended Severance Agreements
modified the previously effective severance agreement forms to (i) provide that
an Executive will be entitled to Severance (as defined below) based on the
Annual Target Bonus (as defined below) rather than the Executive's accrued bonus
to the date of Termination (as defined below), (ii) provide that an Executive
will be entitled to Severance in the event of an Executive's termination of
employment by the Company (or its successor) within two years following a Change
in Control (as defined below), rather than one-year for constructive termination
or six months from resignation; and (iii) modify the definitions of
"Termination" and "Change in Control".

         Under the new severance structure adopted by the Board, Mr. Tessitore,
Chief Executive Officer of the Company and Mr. Roof, Chief Financial Officer of
the Company, are entitled to an amount equal to (a) two times the Executive's
annual rate of Base Compensation, plus (b) two times the Executive's annual
target bonus as in effect for the year in which termination occurs (or, if
higher, the target bonus for the year in which the Change in Control occurs (the
"Annual Target Bonus").

         Mr. Sarina, Controller, Chief Accounting Officer and Secretary of the
Company, is entitled to an amount equal to (a) one and one-half times the
Executive's annual rate of Base Compensation, plus (b) one and one-half times
the Executive's annual target bonus as in effect for the year in which
termination occurs (or, if higher, the target bonus for the year in which the
Change in Control occurs (the "Annual Target Bonus").

         The Amended Severance Agreement also provide for the Executive to
become fully vested in all awards granted to such Executive under all incentive
compensation, deferred compensation, stock option, stock appreciation rights,
restricted stock, phantom stock, or similar plans maintained by the Company, any
contrary provisions of such plans notwithstanding.



                                      -58-

<PAGE>



         A "Change in Control" for the purposes of the Amended Severance
Agreements is deemed to have occurred if: (i) the six persons who were directors
of the Company on September 1, 1995 (the "Incumbent Directors") cease (for any
reason other than death) to constitute a majority of the Board of Directors. For
this purpose, any director who was not a director on September 1, 1995 shall be
deemed to be an Incumbent Director if such director was elected or appointed to
the Board after July 24, 1996 in substitution of an Incumbent Director by, or on
the recommendation of, or with the approval of, at least a majority of the
directors who then qualified as Incumbent Directors (so long as such director
was not nominated by a person who has threatened to, or has entered into an
agreement to, effect a Change in Control); (ii) any person (as such term is used
in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) (excluding the Company or any Company benefit plans) is or
becomes the beneficial owner directly or indirectly of securities of the Company
representing more than 30% of the combined voting power of the Company's then
outstanding securities ordinarily (and apart from rights accruing under special
circumstances) having the right to vote at elections of directors; (iii) the
stockholders of the Company approve (A) a merger or consolidation of the
Company, with any other corporation or (B) an agreement for the sale of 50% or
more of the assets of the Company; or (iv) any other event determined to be a
Change in Control by a majority of the Board.

         Under the Amended Severance Agreements, "Cause" is defined as (i) a
willful failure by the Employee to substantially perform his duties, other than
a failure resulting from the Employee's complete or partial incapacity due to
physical or mental illness or impairment, (ii) a willful act by the Employee
which constitutes gross misconduct or fraud and which is materially injurious to
the Company, or (iii) a conviction of, or a plea of "guilty" or "no contest" to,
a felony, provided that no act or failure to act by the Employee shall be
considered "willful" unless committed without good faith and without a
reasonable belief that the act or omission was in the Company's best interest.

         Under the Amended Severance Agreements, "Termination" or "Terminated"
is defined as any of the following: (i) the Employee has been terminated by the
Company for any reason other than Cause; (ii) elimination of the Employee's
position or job; (iii) a significant diminution of the Employee's duties,
responsibilities or authority without the Employee's consent; (iv) a reduction
in the Employee's Base Compensation after the Change in Control; (v) the failure
by the Company to provide substantially similar benefits as in effect on the
date thereof, including, without limitation, equity, incentive, bonus,
retirement, health, life insurance, vacation, change in control protection and
other fringe benefit arrangements; (vi) any breach of the Amended Severance
Agreement by the Company; or (vii) a requirement that the Employee relocate his
principal place of work by a distance of 50 miles or more.

         On August 23, 1996, in connection with the Board's approval of the
Merger Agreement and its recommendation of the transactions contemplated
thereby, including the Offer and the Merger, and in recognition and
consideration of the services provided and to be provided prior to the Merger,
the Board approved Amendatory Agreements with two Executives, Messrs. Tessitore
and Roof, to remove the parachute limit imposed by Section 280G of the Internal
Revenue Code of 1986, as amended (the "Code"), and to provide that amounts
received by such Executives upon a Change in Control (whether or not received
pursuant to the Tier 1 Amended Severance Agreements) will be increased by any
amounts incurred by them as a result of the imposition of the excise taxes
imposed on any payments deemed made to them under such agreements or otherwise
under other agreements, plans or programs pursuant to Section 4999 of the Code.


                                      -59-

<PAGE>



         On August 23, 1996, in consideration and recognition of their
dedication to the Company and services rendered for the Company in the past and
to be rendered to the Company until a Change in Control occurs and in connection
with its approval of the Merger Agreement, the Board also approved bonus
payments, payable upon a Change in Control, to Mr. Tessitore of $500,000, Mr.
Roof of $350,000, Mr. Sarina of $65,000, Mr. Brown of $150,000 and remaining
members of the Board in an aggregate amount equal to $275,000.

         The Company also has indemnification agreements (the "Indemnification
Agreements") with each member of the Board and certain executive officers. The
Indemnification Agreements supplement the protections afforded to the Company's
directors and executive officers under the Company's Bylaws. In general, the
Indemnification Agreements provide that upon the occurrence of a Change in
Control, the Company will obtain an irrevocable standby letter of credit in an
amount not less than $1,000,000 per individual naming such director or officer
as the sole beneficiary (each, a "Letter of Credit"). Such director or officer
can draw amounts under a Letter of Credit upon the certification by such
indemnified person that (i) such indemnified person has made a written request
to the Company for such amount and the Company has failed or refused to provide
him with such amount in full for 30 days and (ii) the indemnified party believes
that he is entitled under the terms of the Indemnification Agreement to the
amount he is drawing down. The Indemnification Agreements are binding on the
Company and any successor to the Company. Pursuant to the Merger Agreement, the
Company has agreed to deliver to Parent, on or prior to the initial expiration
date of the Offer, a copy of an amendment to each director's Indemnification
Agreement, executed by the Company and such director, pursuant to which the
requirement of the Company to obtain a Letter of Credit will cease to be
effective upon consummation of a change in control upon the consummation of the
transactions contemplated by the Merger Agreement.

DIRECTORS' COMPENSATION--Each director of the Company who is not also an
employee of the Company, receives an annual fee of $10,000, plus $2,000 for each
Board meeting attended, $500 for each committee meeting attended that is held on
the day immediately preceding or following a Board meeting, $750 for each
committee meeting attended that is not held on the same day or day immediately
preceding or following a Board meeting and $500 for participation in each
telephonic meeting. During the 1995 fiscal year, an aggregate amount of $187,750
in fees was paid to directors. Directors are also reimbursed for reasonable
out-of-pocket expenses incurred in attending Board of Directors and committee
meetings.

         The Board of Directors held 12 meetings during the fiscal year ended
June 30, 1996. Each of the directors attended seventy-five percent (75%) or more
of the aggregate number of meetings of the Board of Directors and of the
committees on which such director served during the fiscal year ended June 30,
1996.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION--The Company
established a Compensation Commitee in September, 1993, the current members of
which are Messrs. Stewart M. Kasen, William J. Nightingale and S. Donley
Ritchey, none of whom are or have been officers or employees of the Company or
any of its subsidiaries.






                                      -60-

<PAGE>



ITEM 12.          SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
                  AND MANAGEMENT

         The following table sets forth certain information as of August 29,
1996 as to shares of the Common Stock beneficially owned by: (i) each person who
is known by the Company to own beneficially more than 5% of the Common Stock,
(ii) each of the Company's directors, (iii) each of the Company's officers named
in the Summary Compensation Table and (iv) all directors and executive officers
of the Company as a group:

<TABLE>
<CAPTION>

                                                                                      Percentage
                                                                           Shares     Beneficially
                                  NAME OF BENEFICIAL OWNER               Beneficially   Owned(1)
                                                                          Owned(1)
<S>                                                                     <C>           <C>

American Enterprises, L.L.C.(2) ........................................  1,201,260      19.7%
Metropolitan Capital Advisors, Inc. (3) ................................    455,636       7.2%
Scoggin Capital Management, L.P. (4) ...................................    386,333       6.2%
Joshua S. Friedman(5)...................................................    256,500       4.3%
James E. Boyd(6)(7)(8)(9)...............................................     74,270       1.2%
Donald C. Roof(6)(7)(8)(9)..............................................     40,822         *
Gary L. Tessitore(6)....................................................     30,000         *
Bart A. Brown, Jr.(6)...................................................     26,500         *
George A. Poole, Jr.(6).................................................     10,833         *
Stewart M. Kasen(6).....................................................      9,333         *
William J. Nightingale(6)...............................................      9,333         *
S. Donley Ritchey(6)....................................................      9,333         *
Steven Van Dyke.........................................................      5,000         *
Michael L. Sarina(6)....................................................      3,001         *
All directors and executive officers as a group (12 persons)(6)(7)(8)...    471,925       7.8%
*Less than 1%.
</TABLE>

(1)      The number of shares beneficially owned includes shares which could be
         acquired upon exercise of warrants or options to acquire Common Stock
         if such warrants or options are exercisable within 60 days thereof.
         Except as set forth below, to the Company's knowledge, the person
         listed has sole voting power and sole investment power with respect to
         the shares beneficially owned.

(2)      As of July  19,  1996,  as  reported  in a  Joint  Schedule  14D-1  and
         Amendment No. 2 to a Schedule 13D filed with the Commission on July 19,
         1996.  American  Enterprises,  L.L.C.  holds the sole  power to vote or
         direct the vote and to dispose or direct the  disposition  of 1,201,260
         shares  of Common  Stock of the  Company.  By  virtue of their  limited
         liability interest in American Enterprises,  L.L.C.,  Mitchell P. Rales
         and  Steven M. Rales may be deemed to share the power to vote or direct
         the vote and the power to dispose or direct the disposition of, all the
         shares of Common  Stock of the Company  owned by American  Enterprises,
         L.L.C.

(3)      As of August 26, 1996, as reported in Amendment No. 3 to a Schedule 13D
         filed with the Commission on August 29, 1996.  Such Amendment  reported
         that (i) Bedford  Falls  Investors,  L.P. had the sole power to vote or
         dispose  of or direct the voting or  disposition  of 455,636  shares of
         Common  Stock of the  Company,  of which  296,236  are  represented  by
         currently  exercisable  warrants,  and (ii) such voting and dispositive
         power may be exercised on behalf of Bedford  Falls  Investors,  L.P. by
         its General Partner,  Metropolitan  Capital Advisors,  L.P., which acts
         through its corporate General Partner,  Metropolitan  Capital Advisors,
         Inc.  By virtue of its  position  as General  Partner  of  Metropolitan
         Capital Advisors, L.P., the General Partner of Bedford Falls Investors,
         L.P., Metropolitan Capital Advisors, Inc. may be deemed

                                      -61-

<PAGE>



         to have shared voting and dispositive power over the 455,636 shares of
         Common Stock of the Company beneficially owned by Bedford Falls
         Investors, L.P. In addition, by virtue of its discretionary trading
         authority over 42,297 shares of the Company's Common Stock, 31,097 of
         which may be acquired upon exercise of currently exercisable warrants,
         held in a managed account, Metropolitan Capital Advisors may be deemed
         to be the beneficial owner of an aggregate amount of 497,933 shares of
         Common Stock of the Company. Such Amendment also reported that (i)
         Jeffrey E. Schwarz did not own any shares of Common Stock directly but
         may be deemed to be the beneficial owner of 497,933 shares (7.9%) of
         the Common Stock of the Company, of which 327,333 are represented by
         currently exercisable warrants, as a result of his being a director,
         executive officer and controlling stockholder of Metropolitan Capital
         Advisors, Inc. and (ii) Karen Finerman did not own any shares of Common
         Stock directly but may be deemed to be the beneficial owner of the
         aforementioned 497,933 shares of Common Stock of the Company by virtue
         of her being a director and executive officer of Metropolitan Capital
         Advisors, Inc.

(4)      As of  December 1, 1996,  as reported in a Schedule  13D filed with the
         Commission on December 11, 1996. The Schedule 13D reported that Scoggin
         Capital  Management,  L.P.  beneficially  owns 386,333 shares of Common
         Stock of the Company.  Such shares  consist of 155,500 shares of Common
         Stock  owned  by  Scoggin  Capital  Management,  L.P.,  163,683  shares
         issuable  upon exercise of currently  exercisable  warrants to purchase
         Common Stock owned by Scoggin Capital  Management,  L.P., 37,000 shares
         of Common Stock held in managed  customer  accounts,  and 29,650 shares
         issuable  upon  the  exercise  of  currently  exercisable  warrants  to
         purchase Common Stock in such managed customer accounts.

(5)      Of such shares, 205,875 represent shares beneficially owned by entities
         advised  by  Capital  Management,   which  exercises  both  voting  and
         dispositive  power  with  respect to such  shares and 50,625  represent
         shares owned by CPI  Securities,  L.P.  ("CPIS")  which  exercises both
         voting and dispositive power with respect to such shares. Since Capital
         Management  and CPIS  are each  indirectly  equally  controlled  by Mr.
         Friedman and two other individuals, Mr. Friedman and such other persons
         exercise both voting and dispositive power with respect to such shares.
         Mr. Friedman disclaims beneficial ownership of such shares.

(6)      Includes  53,069:  24,590;  and 77,659  shares  subject to  warrants to
         purchase  Common Stock held by Messrs Boyd and Roof,  and all directors
         and executive officers as a group, respectively.

(7)      Includes 9,333; 9,667; 30,000; 25,000; 8,333; 8,333; 8,333; 8,333;
         3,000; and 110,333 shares subject to options to purchase Common Stock
         held by Messrs. Boyd, Roof, Tessitore, Brown, Poole, Kasen,
         Nightingale, Ritchey and Sarina, and all directors as a group,
         respectively.

(8)      Includes 5,381 and 3,575 shares of Common Stock held by the Company's
         Incentive Savings Plan allocated to Messrs. Boyd and Roof,
         respectively.

(9)      Includes  1,175,  1,001  and 1  shares  of  Common  Stock  held  by the
         Company's Employee Stock Ownership Plan allocated to Messrs. Boyd, Roof
         and Sarina, respectively.


                                      -62-

<PAGE>



ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Under the indenture governing the Company's 11-1/2% Senior Secured
Notes and under its secured revolving credit facility, the Company is generally
precluded from entering into any transaction with any affiliate of the Company
(including officers and directors) or any five percent (5%) stockholder unless
the Board of Directors determines in good faith that the transaction is as
favorable to the Company as terms that could be obtained at the time for
comparable transactions in arm's-length dealings with unaffiliated parties.


                                      -63-

<PAGE>



                                     PART IV

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

         (a)       The following documents are filed as a part of this report:

                  1.      FINANCIAL STATEMENTS

                          The Consolidated Financial Statements, Notes thereto
                          and Accountants' Report thereon are included in Part
                          II, Item 8 of this report.

                  2.      FINANCIAL STATEMENT SCHEDULES

                          -         Condensed Consolidating Balance Sheets as of
                                    June 30, 1996 and June 30, 1995.

                          -         Condensed Consolidating Statements of
                                    Operations for the years ended June 30, 1996
                                    and June 30, 1995, the eleven month period
                                    ended June 30, 1994 and the one- month
                                    period ended July 31, 1993.

                          -         Condensed Consolidating Statements of Cash
                                    Flows for the years ended June 30, 1996 and
                                    June 30, 1995, the eleven-month period ended
                                    June 30, 1994 and the one-month period ended
                                    July 31, 1994.

                          -         Valuation and Qualifying Accounts for the
                                    years ended June 30, 1996 and June 30, 1995,
                                    the 11-month period ended June 30, 1994 and
                                    the one-month period ended July 31, 1993.

         All other schedules have been omitted since the required information is
either not present in amounts sufficient to require submission of the schedule
or is included in the consolidated financial statements or notes thereto.

                   3.     EXHIBITS

                          See (c) below.

         (b)       Reports on Form 8-K filed during fourth quarter:

                   Form 8-K filed on April 19, 1996 and Form 8-K filed on May 3,
1996.

         (c)       Exhibits

                   The exhibits filed with this Form 10-K are listed in the 
Exhibit Index commencing on page 78.




                                      -64-

<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.

                            SPRECKELS INDUSTRIES, INC.


                            By: /s/ Michael L. Sarina
                                            Michael L. Sarina
                                   Controller, Chief Accounting Officer
                                      and Secretary

Date:   October 16, 1996

                                   SIGNATURES

         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.

<TABLE>
<CAPTION>

SIGNATURE                                    TITLE                             DATE
<S>                                <C>                                       <C>

*Bart A. Brown, Jr.                 Director and Chairman of                   October 16, 1996
                                      the Board
/s/ Gary L. Tessitore               Chief Executive Officer and                October 16, 1996
Gary L. Tessitore                     President (principal executive
                                      officer)

/s/ Donald C. Roof                  Senior Vice President and                  October 16, 1996
Donald C. Roof                      Chief Financial Officer
                                    (principal financial officer)

/s/ Michael L. Sarina               Controller, Chief Accounting               October 16, 1996
Michael L. Sarina                   Officer and Secretary (principal
                                     accounting officer)

*Joshua S. Friedman                 Director                                   October 16, 1996
*F. Kenneth Iverson                 Director                                   October 16, 1996
*Stewart M. Kasen                   Director                                   October 16, 1996
*William J. Nightingale             Director                                   October 16, 1996
*George A. Poole, Jr.               Director                                   October 16, 1996
*S. Donley Ritchey                  Director                                   October 16, 1996
*Steven A. Van Dyke                 Director                                   October 16, 1996

*  By /s/ Michael L. Sarina
         Michael L. Sarina, Attorney-in-Fact

</TABLE>


                                      -65-

<PAGE>



                           SPRECKELS INDUSTRIES, INC.
                     CONDENSED CONSOLIDATING BALANCE SHEETS
                                  JUNE 30, 1996

<TABLE>
<CAPTION>


                                                           COMBINED
                                            COMBINED         NON-
                                            GUARANTOR      GUARANTOR
                                            SUBSIDIARIES  SUBSIDIARIES ELIMINATIONS CONSOLIDATED
<S>                                        <C>           <C>           <C>           <C>  

(dollars in thousands)

ASSETS:
Cash and cash equivalents                    $   8,653    $   1,569    $    --      $  10,222
Accounts receivable, net                        24,911        5,743         --         30,654
Inventories                                     30,929        7,817         --         38,746
Net assets of discontinued operations           11,224         --           --         11,224
Other current assets                             6,325        3,395         --          9,720
                                             ---------    ---------    ---------    ---------
    Total current assets                        82,042       18,524         --        100,566

Property, plant and equipment, net              22,075        3,405         --         25,480
Excess reorganization value, net                28,382         --           --         28,382
Investment in subsidiary                         6,396         --         (6,396)        --
Other assets                                     6,212         (101)        --          6,111
                                             ---------    ---------    ---------    ---------
    Total assets                             $ 145,107    $  21,828    $  (6,396)   $ 160,539
                                             =========    =========    =========    =========

LIABILITIES AND STOCKHOLDERS' EQUITY:
Accounts payable                             $  12,674    $   2,631    $    --      $  15,305
Accrued payroll costs                            3,913          290         --          4,203
Accrued interest                                 1,364         --           --          1,364
Other current liabilities                       11,843        4,452         --         16,295
                                             ---------    ---------    ---------    ---------
    Total current liabilities                   29,794        7,373         --         37,167

Long-term debt                                  70,000         --           --         70,000
Intercompany debt                                 --          6,396       (6,396)        --
Post-retirement benefit obligation              15,573         --           --         15,573
Other non-current liabilities                   14,286        3,555         --         17,841
                                             ---------    ---------    ---------    ---------
    Total liabilities                          129,653       17,324       (6,396)     140,581

STOCKHOLDERS' EQUITY:
Common stock and additional paid-in capital     71,571         --           --         71,571
(Accumulated deficit) retained earnings        (55,876)       4,152         --        (51,724)
Treasury stock                                      (2)        --           --             (2)
Accumulated benefit obligation in excess
  of plan assets                                  (244)        --           --           (244)
Accumulated foreign currency translation
  adjustment                                         5          352         --            357
                                             ---------    ---------    ---------    ---------
  Total stockholders' equity                    15,454        4,504         --         19,958
                                             ---------    ---------    ---------    ---------
  Total liabilities and stockholders' equity $ 145,107    $  21,828    $  (6,396)   $ 160,539
                                             =========    =========    =========    =========

</TABLE>


                                      -66-

<PAGE>



                           SPRECKELS INDUSTRIES, INC.
                     CONDENSED CONSOLIDATING BALANCE SHEETS
                                  JUNE 30, 1995

<TABLE>
<CAPTION>


                                                         COMBINED
                                          COMBINED         NON-
                                          GUARANTOR     GUARANTOR
                                          SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
(dollars in thousands)
<S>                                       <C>          <C>          <C>          <C> 

ASSETS:
Cash and cash equivalents                  $     294    $   2,145    $    --      $   2,439
Accounts receivable, net                      23,912        5,037         --         28,949
Inventories                                   35,112        7,413         --         42,525
Net assets of discontinued operations         78,382         --           --         78,382
Other current assets                           7,199        2,901         --         10,100
                                           ---------    ---------    ---------    ---------
    Total current assets                     144,899       17,496         --        162,395

Property, plant and equipment, net            20,962        2,171         --         23,133
Excess reorganization value, net              30,487         (389)        --         30,098
Investment in subsidiary                       4,932         --         (4,932)        --
Other assets                                   6,632          145         --          6,777
                                           ---------    ---------    ---------    ---------
    Total assets                           $ 207,912    $  19,423    $  (4,932)   $ 222,403
                                           =========    =========    =========    =========

LIABILITIES AND STOCKHOLDERS' EQUITY:
Accounts payable                           $  13,290    $   2,946    $    --      $  16,236
Accrued payroll costs                          3,633         --           --          3,633
Accrued interest                               1,827         --           --          1,827
Other current liabilities                      9,647        4,294         --         13,941
                                           ---------    ---------    ---------    ---------
    Total current liabilities                 28,397        7,240         --         35,637

Long-term debt                                80,616         --           --         80,616
Intercompany debt                               --          4,932       (4,932)        --
Post-retirement benefit obligation            16,103         --           --         16,103
Other non-current liabilities                 14,149        3,389         --         17,538
                                           ---------    ---------    ---------    ---------
    Total liabilities                        139,265       15,561       (4,932)     149,894

STOCKHOLDERS' EQUITY:
Common stock and additional paid-in capital   71,000         --           --         71,000
(Accumulated deficit) retained earnings       (2,289)       2,619         --            330
Treasury stock                                    (1)        --           --             (1)
Accumulated benefit obligation in
 excess of plan assets                          (154)        --           --           (154)
Accumulated foreign currency translation
  adjustment                                      91        1,243         --          1,334
                                           ---------    ---------    ---------    ---------
 Total stockholders' equity                   68,647        3,862         --         72,509
                                           ---------    ---------    ---------    ---------
 Total liabilities and stockholders' equity$ 207,912   $  19,423    $  (4,932)   $ 222,403
                                           =========    =========    =========    =========

</TABLE>



                                      -67-

<PAGE>



                           SPRECKELS INDUSTRIES, INC.
                 CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

                            YEAR ENDED JUNE 30, 1996

<TABLE>
<CAPTION>


                                                            COMBINED
                                            COMBINED         NON-
                                            GUARANTOR       GUARANTOR
                                            SUBSIDIARIES   SUBSIDIARIES ELIMINATIONS CONSOLIDATED
(dollars in thousands)
<S>                                        <C>             <C>         <C>          <C>   

Net sales                                      $ 155,857    $  31,110    $    --      $ 186,967
Cost of product sold                             113,832       18,024         --        131,856
                                               ---------    ---------    ---------    ---------
Gross profit                                      42,025       13,086         --         55,111

OPERATING EXPENSES:
Selling, general and administrative
  expenses                                        26,169        8,098         --         34,267
Amortization of excess reorganization
  value                                            1,739          (23)        --          1,716
Equity (in earnings) loss of subsidiaries         (2,997)        --          2,997         --
                                               ---------    ---------    ---------    ---------

Operating income (loss) from continuing
  operations                                      17,114        5,011       (2,997)      19,128
Interest expense, net                              7,964           47         --          8,011
                                               ---------    ---------    ---------    ---------
Income (loss) from continuing operations
  before provision for income taxes                9,150        4,964       (2,997)      11,117
Provision for income taxes                         2,282        1,967         --          4,249
                                               ---------    ---------    ---------    ---------
Net income (loss) from continuing operations       6,868        2,997       (2,997)       6,868

DISCONTINUED OPERATIONS:
Loss from the operation of
  discontinued sweetener operations               (2,263)        --           --         (2,263)
Loss on disposal of sweetener business,
  net of income taxes                            (56,659)        --           --        (56,659)
                                               ---------    ---------    ---------    ----------
Loss from discontinued operations,
    net of tax                                   (58,922)        --           --        (58,922)
                                               ---------    ---------    ---------    ----------
Net (loss) income                              $ (52,054)   $   2,997    $  (2,997)   $ (52,054)
                                               =========    =========    =========    =========

</TABLE>

                                                      -68-

<PAGE>



                           SPRECKELS INDUSTRIES, INC.
                 CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>


                                             YEAR ENDED JUNE 30, 1995

                                                            COMBINED
                                            COMBINED          NON-
                                            GUARANTOR      GUARANTOR
                                            SUBSIDIARIES  SUBSIDIARIES  ELIMINATIONS CONSOLIDATED
(dollars in thousands)
<S>                                         <C>           <C>          <C>           <C>   

Net sales                                      $ 153,676    $  26,904    $    --      $ 180,580
Cost of product sold                             113,631       15,711         --        129,342
                                               ---------    ---------    ---------    ---------
Gross profit                                      40,045       11,193         --         51,238

OPERATING EXPENSES:
Selling, general and administrative
  expenses                                        25,805        7,126         --         32,931
Restructuring costs                                1,122         --           --          1,122
Amortization of excess reorganization
  value                                            1,825          (23)        --          1,802
Equity (in earnings) loss of subsidiaries         (2,203)        --          2,203         --
                                               ---------    ---------    ---------    ---------


Operating income (loss)  from continuing
  operations                                      13,496        4,090       (2,203)      15,383

Interest expense, net                              8,072           74         --          8,146
                                               ---------    ---------    ---------    ---------
Income (loss) from continuing operations
  before provision for income taxes                5,424        4,016       (2,203)       7,237

Provision for income taxes                         1,085        1,813         --          2,898
                                               ---------    ---------    ---------    ---------

Net income (loss) from continuing operations       4,339        2,203       (2,203)       4,339

DISCONTINUED OPERATIONS:
Loss from the operation of
  discontinued sweetener operations               (6,479)        --           --         (6,479)

Loss on disposal of sweetener business,
  net of income taxes                               --           --           --           --
                                               ---------    ---------    ---------    ---------

Loss from discontinued operations,
    net of tax                                    (6,479)        --           --         (6,479)
                                               ---------    ---------    ---------    ---------

Net (loss) income                              $  (2,140)   $   2,203    $  (2,203)   $  (2,140)
                                               =========    =========    =========    =========



</TABLE>






                                      -69-

<PAGE>



                           SPRECKELS INDUSTRIES, INC.
                 CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>


                                         ELEVEN MONTHS ENDED JUNE 30, 1994

                                                         COMBINED
                                           COMBINED         NON-
                                           GUARANTOR      GUARANTOR
                                           SUBSIDIARIES  SUBSIDIARIES ELIMINATIONS CONSOLIDATED
(dollars in thousands)
<S>                                        <C>            <C>        <C>          <C>

Net sales                                   $ 141,949    $  19,055    $    --      $ 161,004
Cost of product sold                          103,907       11,211         --        115,118
                                            ---------    ---------    ---------    ---------
Gross profit                                   38,042        7,844         --         45,886

OPERATING EXPENSES:
Selling, general and administrative
  expenses                                     24,547        4,757         --         29,304
Restructuring costs                              --           --           --           --
Amortization of excess reorganization
  value                                         2,347          (20)        --          2,327
Equity (in earnings) loss of subsidiaries      (2,075)        --          2,075         --
                                            ---------    ---------    ---------    ---------

Operating income from continuing
  operations                                   13,223        3,107       (2,075)      14,255
Interest expense, net                           7,281           98         --          7,379
                                            ---------    ---------    ---------    ---------
Income (loss) from continuing operations
  before provision for income taxes             5,942        3,009       (2,075)       6,876

Provision for income taxes                      2,676          934         --          3,610
                                            ---------    ---------    ---------    ---------

Net income (loss) from continuing
  operations                                    3,266        2,075       (2,075)       3,266

DISCONTINUED OPERATIONS:
Loss from the operations of discontinued
  sweetener operations                           (796)        --           --           (796)
Loss on disposal of sweetener business,
  net of income taxes                            --           --           --           --
                                            ---------    ---------    ---------    ---------

Loss from discontinued operations,
  net of tax                                     (796)        --           --           (796)
                                            ---------    ---------    ---------    ---------

Net income (loss)                           $   2,470    $   2,075    $  (2,075)   $   2,470
                                            =========    =========    =========    =========

</TABLE>

                                      -70-

<PAGE>



                           SPRECKELS INDUSTRIES, INC.
                 CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>


                                               ONE MONTH ENDED JULY 31, 1993

                                                               COMBINED
                                               COMBINED         NON-
                                               GUARANTOR      GUARANTOR
                                               SUBSIDIARIES   SUBSIDIARIES ELIMINATIONS CONSOLIDATED
(dollars in thousands)
<S>                                           <C>             <C>        <C>           <C>   

Net sales                                          $ 11,935    $  1,531    $   --      $ 13,466
Cost of product sold                                  8,115         908        --         9,023
                                                   --------    --------    --------    --------
Gross profit                                          3,820         623        --         4,443

OPERATING EXPENSES:
Selling, general and administrative
  expenses                                            2,806         392        --         3,198
Restructuring costs                                    --          --          --          --
Amortization of excess reorganization
  value                                                  (2)          2        --          --
Equity (in earnings) loss of subsidiaries                39        --           (39)       --
                                                   --------    --------    --------    --------

Operating income from continuing
  operations                                            977         229          39       1,245
Interest expense, net                                 1,811          15        --         1,826
Reorganization items                                    555        --          --           555
                                                   --------    --------    --------    --------
(Loss) income from continuing operations
  before provision for income taxes                  (1,389)        214          39      (1,136)

(Benefit) provision for income taxes                   (105)        105        --          --
                                                   --------    --------    --------    --------

(Loss) income from continuing operations
   before discontinued operations,
  fresh-start adjustments, cumulative
  effect of changes in accounting principle,
  and
  extraordinary item                                 (1,284)        109          39      (1,136)

DISCONTINUED OPERATIONS:
Loss from the operation of
  discontinued sweetener operations                  (2,910)       --          --        (2,910)

Loss on disposal of sweetener business,
  net of income taxes                                  --          --          --          --
                                                    --------    --------    --------     -------

Loss from discontinued operations,
    net of tax                                       (2,910)       --          --        (2,910)

Fresh-start reporting adjustments, net of tax        16,194        (148)       --        16,046

Cumulative effect of changes in accounting
  principle, net of tax                              (3,938)       --          --        (3,938)

Extraordinary item, debt forgiveness, net of tax     26,388        --          --        26,388
                                                   --------    --------    --------    --------

Net income (loss)                                  $ 34,450    $    (39)   $     39    $ 34,450
                                                   ========    ========    ========    ========

</TABLE>


                                      -71-

<PAGE>



                           SPRECKELS INDUSTRIES, INC.
                 CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
                            YEAR ENDED JUNE 30, 1996

<TABLE>
<CAPTION>


                                                            COMBINED
                                               COMBINED        NON-
                                              GUARANTOR      GUARANTOR
                                              SUBSIDIARIES  SUBSIDIARIES   ELIMINATIONS CONSOLIDATED

(dollars in thousands)
<S>                                             <C>          <C>         <C>          <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net (loss) income                                $(55,051)   $  2,997    $   --      $(52,054)
  Equity in earnings of subsidiaries                  2,997        --        (2,997)       --
  Loss from discontinued operations                  58,922        --          --        58,922
  Depreciation and amortization                       4,436         194        --         4,630
  Deferred income tax                                 1,112        --          --         1,112
  Gain on the sale of fixed assets                       76        --          --            76
Net changes in operating assets and liabilities:
  (Increase) decrease  in receivables,
     prepaid expenses and other assets               (2,197)        145        --        (2,052)
  Decrease (increase) in inventories                  4,183        (404)       --         3,779
  Increase (decrease) in trade payables,
    accrued expenses and other
    current liabilities                               1,450        (130)       --         1,320
  (Decrease) increase in postretirement
    benefit obligation                                 (696)        166        --          (530)
  Increase (decrease) in other noncurrent
    obligations                                       1,456        (960)       --           496
                                                   --------    --------    --------    --------

  Net cash provided by (used in)
    continuing operations                            16,688       2,008      (2,997)     15,699
  Discontinued operations-Net cash used
    in discontinued operations                      (22,144)       --          --       (22,144)
                                                   --------    --------    --------    --------
  Net cash (used in) provided by
    operating activities                             (5,456)      2,008      (2,997)     (6,445)
                                                   --------    --------    --------    --------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures                               (3,520)     (1,410)       --        (4,930)
  Proceeds from the sale of discontinued
    operations                                       29,312        --          --        29,312
  Proceeds from the sale of fixed assets                (18)         28        --            10
  Investment in joint ventures                         (136)       --          --          (136)
                                                   --------    --------    --------    --------
Net cash provided by (used in)
  investing activities                               25,638      (1,382)       --        24,256
                                                   --------    --------    --------    --------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Net payments under capital leases obligations        (193)       --          --          (193)
  (Decrease) increase in short-term debt                (52)        262        --           210
  Repayment of revolving loan                       (33,162)       --          --       (33,162)
  Net borrowings - revolver                          22,546        --          --        22,546
  Intercompany transfers                              1,464      (1,464)       --          --
  Proceeds from the exercise of stock
    options and warrants                                571        --          --           571
                                                               --------    --------    --------
Net cash used in financing activities                (8,826)     (1,202)       --       (10,028)
                                                   --------    --------    --------    --------
Net increase (decrease) in cash
  and cash equivalents                               11,356        (576)     (2,997)      7,783
Cash and cash equivalents at
  beginning of period                                   294       2,145        --         2,439
                                                   --------    --------    --------    --------
Cash and cash equivalents at
  end of period                                    $ 11,650    $  1,569    $ (2,997)   $ 10,222
                                                   ========    ========    ========    ========

</TABLE>


                                      -72-

<PAGE>



                           SPRECKELS INDUSTRIES, INC.
                 CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
                            YEAR ENDED JUNE 30, 1995
<TABLE>
<CAPTION>

                                                               COMBINED
                                              COMBINED           NON-
                                               GUARANTOR      GUARANTOR
                                               SUBSIDIARIES  SUBSIDIARIES ELIMINATIONS CONSOLIDATED

(dollars in thousands)
<S>                                             <C>            <C>        <C>          <C>  

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net (loss) income                                $ (4,343)   $  2,203    $   --      $ (2,140)
  Equity in earnings of subsidiaries                  2,203        --        (2,203)       --
  Loss from discontinued operations                   6,479        --          --         6,479
  Depreciation and amortization                       4,388         201        --         4,589
  Deferred income tax                                (1,316)       --          --        (1,316)
  Gain on the sale of fixed assets                       19        --          --            19
Net changes in operating assets and liabilities:
  Decrease (increase) in receivables,
    prepaid expenses and other
    current assets                                    1,436      (2,619)       --        (1,183)
  Increase in inventories                            (4,222)     (2,752)       --        (6,974)
  Increase in trade payables, accrued
    expenses and other current liabilities            2,553       3,263        --         5,816
  (Decrease) increase in other
    non-current liabilities                          (6,009)      1,176        --        (4,833)
  Decrease in deferred carges and
    other assets                                      1,059         900        --         1,959
                                                   --------    --------    --------    --------

  Net cash provided by continuing
    operations                                        2,247       2,372      (2,203)      2,416
  Discontinued operations-Net cash used
    in discontinued operations                      (19,465)       --          --       (19,465)
                                                               --------    --------    --------
  Net cash (used in) provided by
    operating activities                            (17,218)      2,372      (2,203)    (17,049)
                                                   --------    --------    --------    --------


CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures                               (4,279)     (1,035)       --        (5,314)
  Proceeds from the sale of subsidiary
    company                                          21,800        --          --        21,800
  Proceeds from the sale of fixed assets                 39        --          --            39
  Investment in joint ventures                         (370)       --          --          (370)
                                                   --------    --------    --------    --------
Net cash provided by (used in)
  investing activities                               17,190      (1,035)       --        16,155
                                                   --------    --------    --------    --------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Net borrowings (payments) under
    capital lease obligations                           275         (82)       --           193
  Decrease in short-term debt                           (30)       --          --           (30)
  Repayment of revolving loan                        (8,511)       --          --        (8,511)
  Net borrowings - revolver                          10,616        --          --        10,616
                                                   --------    --------    --------     -------
  Net cash provided by (used in)
  financing activities                                2,350         (82)       --         2,268
                                                   --------    --------    --------    --------
Net increase (decrease) in cash
  and cash equivalents                                2,322       1,255      (2,203)      1,374
Cash and cash equivalents at
  beginning of period                                   175         890        --         1,065
                                                   --------    --------    --------    --------
Cash and cash equivalents at
  end of period                                    $  2,497    $  2,145    $ (2,203)   $  2,439
                                                   ========    ========    ========    ========

</TABLE>


                                      -73-

<PAGE>



                           SPRECKELS INDUSTRIES, INC.
                 CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
                        ELEVEN MONTHS ENDED JUNE 30, 1994

<TABLE>
<CAPTION>


                                                            COMBINED
                                                COMBINED       NON-
                                               GUARANTOR     GUARANTOR
                                               SUBSIDIARIES SUBSIDIARIES   ELIMINATIONS CONSOLIDATED

(dollars in thousands)
<S>                                               <C>         <C>       <C>            <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                       $    395    $  2,075    $   --      $  2,470
  Equity in earnings of subsidiaries                  2,075        --        (2,075)       --
  Loss from discontinued operations                     796        --          --           796
  Depreciation and amortization                       5,839         116        --         5,955
  Deferred income tax                                    90        --          --            90
Net changes in operating assets and liabilities:
  (Increase) decrease in receivables, prepaid
   expenses and other current assets                 (3,636)      2,043        --        (1,593)
  (Increase) decrease in inventories                 (4,833)        117        --        (4,716)
    Decrease in trade payables, accrued
    expenses and other current liabilities          (11,055)     (2,152)       --       (13,207)
  Increase in other noncurrent obligations           18,828         936        --        19,764
                                                   --------    --------    --------    --------
Net cash provided by continuing operations            8,499       3,135      (2,075)      9,559
Net cash used in discontinued operations            (10,531)       --          --       (10,531)
                                                   --------    --------    --------    --------
Net cash (used in) provided by
    operating activities                             (2,032)      3,135      (2,075)       (972)
                                                   --------    --------    --------    --------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures                               (2,885)        (55)       --        (2,940)
  Proceeds from the sale of discontinued
    operations                                         --          --          --          --
                                                   --------    --------    --------     -------
Net cash used in investing activities                (2,885)        (55)       --        (2,940)
                                                   --------    --------    --------    --------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Increase (decrease) in short-term debt                647        (647)       --          --
  Net borrowings - revolver                          (2,520)       --          --        (2,520)
  Intercompany transfers                              1,910      (1,910)       --          --
                                                   --------    --------    --------    --------
Net cash provided by (used in)
  financing activities                                   37      (2,557)       --        (2,520)
                                                   --------    --------    --------    --------
Net (decrease) increase in cash
  and cash equivalents                               (4,880)        523      (2,075)     (6,432)
Cash and cash equivalents at
  beginning of period                                 7,130         367        --         7,497
                                                   --------    --------    --------    --------
Cash and cash equivalents at
  end of period                                    $  2,250    $    890    $ (2,075)   $  1,065
                                                   ========    ========    ========    ========

</TABLE>


                                      -74-

<PAGE>



                           SPRECKELS INDUSTRIES, INC.
                 CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
                          ONE MONTH ENDED JULY 31, 1993

<TABLE>
<CAPTION>


                                                               COMBINED
                                               COMBINED         NON-
                                               GUARANTOR       GUARANTOR
                                               SUBSIDIARIES  SUBSIDIARIES ELIMINATIONS CONSOLIDATED

(dollars in thousands)
<S>                                             <C>         <C>          <C>            <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)                                $ 34,489    $    (39)   $   --     $ 34,450
  Equity in earnings of subsidiaries                    (39)       --            39       --
  Reorganization items                                  555        --          --          555
  Loss from discontinued operations                   2,910        --          --        2,910
  Depreciation and amortization                         445          13        --          458
  Deferred income tax                                  --          --          --         --
  Fresh-start adjustments                           (16,194)        148        --      (16,046)
  Gain on debt forgiveness                          (26,388)       --          --      (26,388)
  Cumulative effect of changes in
    accounting principle                              3,938        --          --        3,938
Net changes in operating assets and liabilities:
  (Increase) decrease in receivables, prepaid
   expenses and other assets                           (884)        344        --         (540)
  (Increase) decrease in inventories                 (2,664)        450        --       (2,214)
  (Decrease) increase in trade payables,
    accrued expenses and other current
    liabilities                                      (4,399)        809        --       (3,590)
  Increase (decrease) in other
    non-current liabilities                          (3,330)       (227)       --       (3,557)
                                                   --------    --------    --------   --------
Net cash (used in) provided  by
  continuing operations                             (11,561)      1,498          39    (10,024)
  Discontinued operations-Net cash
    provided by discontinued operations              56,865        --          --       56,865
                                                   --------    --------    --------   --------
Net cash provided by operating activities            45,304       1,498          39    (46,841)
                                                   --------    --------    --------   --------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures                                 (536)         (1)       --         (537)
  Proceeds from the sale of discontinued
    operations                                          (30)         30        --         --
  Proceeds from sale of fixed assets                     29        --          --           29
  Other                                               1,074        --          --        1,074
                                                   --------    --------    --------   --------
Net cash provided by investing activities               537          29        --          566
                                                   --------    --------    --------   --------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Increase (decrease) in short-term debt                273        (273)       --         --
  Repayment of revolving loan                       (30,009)       --          --      (30,009)
  Decrease in liabilities subject
    to compromise                                   (92,503)       --          --      (92,503)
  Net borrowings - revolver                          11,036        --          --       11,036
  Repayment of long-term debt                       (40,006)       --          --      (40,006)
  Issuance of senior notes                           70,000        --          --       70,000
  Intercompany transfers                              1,365      (1,365)       --         --
                                                   --------    --------    --------   --------
Net cash used in financing activities               (79,844)     (1,638)       --      (81,482)
                                                   --------    --------    --------   --------
Net decrease in cash and cash equivalents           (34,003)       (111)         39    (34,075)
Cash and cash equivalents at
  beginning of period                                41,094         478        --       41,572
                                                   --------    --------    --------   --------
Cash and cash equivalents at
  end of period                                    $  7,091    $    367    $     39   $  7,497
                                                   ========    ========    ========   ========

</TABLE>

                                      -75-

<PAGE>



                                   SCHEDULE II
                           SPRECKELS INDUSTRIES, INC.
                      VALUATION AND QUALIFYING ACCOUNTS(1)
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>

           COLUMN A           COLUMN B    COLUMN C   COLUMN D    COLUMN E       COLUMN F
---------------------------   --------   ---------  -----------  ------        --------
                              Balance at Charged to             Fresh-Start    Balance at
                              Beginning  Costs and               Accounting       End
       Classification         of Period  Expenses   Deductions   Adjustments  of Period
<S>                          <C>        <C>       <C>        <C>              <C>    

June 30, 1996:
Reserve for doubtful accounts   $1,160   $  174     $ (323)   $          --     $1,011
Accumulated amortization of 
  excess reorganization value    3,570    1,716      --                  --      5,286
Accumulated amortization of
 bond issue costs                  360      212      --                  --        572
                                ------   ------     ------    ---------------   ------
         Total                  $5,090   $2,102     $ (323)   $          --     $6,869
                                ======   ======     ======    ===============   ======

June 30, 1995:
Reserve for doubtful accounts   $  576   $  744   $ (160)    $          --     $1,160
Accumulated amortization of 
  excess reorganization value    2,327    1,802     (559)               --      3,570
Accumulated amortization of 
  bond issue costs                 148      212     --                  --        360
                                ------   ------   ------     ---------------   ------
         Total                  $3,051   $2,758   $ (719)    $          --     $5,090
                                ======   ======   ======    ===============    ======

June 30, 1994:
Reserve for doubtful accounts   $  824   $  202   $ (450)    $          --     $  576
Accumulated amortization of
 excess reorganization value      --      2,327     --                  --      2,327
Accumulated amortization of
  bond issue costs                --        148     --                  --        148
                                ------   ------   ------     ---------------   ------
         Total                  $  824   $2,677   $ (450)    $          --     $3,051
                                ======   ======   ======     ===============   ======

August 1, 1993:
Reserve for doubtful accounts   $  573      251   $ --       $          --     $  824
Accumulated amortization of
  goodwill                       8,293      119     --                (8,412)       0
                                ------   ------   ------     ---------------   ------
         Total                  $8,866   $  370   $ --       $        (8,412)  $  824
                                ======   ======   ======     ===============   ======

June 30, 1993:
Reserve for doubtful accounts   $  599   $  179   $ (205)    $          --     $  573
Accumulated amortization of
 goodwill                        6,869    1,424     --                  --      8,293
                                ------   ------   ------     ---------------   ------
         Total                  $7,468   $1,603   $ (205)    $          --     $8,866
                                ======   ======   ======     ===============   ======

</TABLE>
                                                                             

                                      -76-

<PAGE>



                                  EXHIBIT INDEX

         Asterisk indicates exhibit previously filed with the Commission and
incorporated herein by reference as indicated.


<TABLE>
<CAPTION>


<S>               <C>  

Exhibits
3.1*              Restated Certificate of Incorporation of the Registrant.  (1994 Form 10-K, File No.
                  0-23050, Exhibit 3.1).

3.2*              By-laws of the Registrant, as amended on November 11, 1995 (1995 Form 10-K, File
                  No. 0-23050, Exhibit 3.2).

4.1*              Indenture entered into by the Registrant and Chemical Trust Company of California,
                  as Trustee (including form of Note).  (1994 Form 10-K, File No. 0-23050, File No.
                  00-23050, Exhibit 4.1).

4.2*              Supplemental Indenture entered into by the Registrant and Chemical Trust Company
                  of California, as Trustee.  (1994 Form 10-K, File No. 0-23050, Exhibit 4.2).

4.3*              Form of Warrants of the Registrant.  (1994 Form 10-K, File No. 0-23050, Exhibit
                  4.3).

10.1*             Senior Notes Agreement dated as of September 2, 1993, by and among the
                  Registrant, Citibank, N.A., Union Bank, Pacific Corinthian Life Insurance and The
                  Resolution Trust Corporation as Conservator for HomeFed Bank, F.A. (1994 Form
                  10-K, File No. 0-23050, Exhibit 10.1).

10.2*             Registration Rights Agreement dated September 2, 1993, by and among the
                  Registrant and the persons identified therein. (1994 Form 10-K, File No. 0-23050,
                  Exhibit 10.2).

10.4*             Form of Indemnification Agreement entered into by and between the Registrant and
                  each of George A. Lamberth, Donald C. Roof, Robert L. Schmalz, David E.
                  Dennehy, James E. Boyd, Lynn R. Matzen and Richard A. Harmon.  (S-1 Registration
                  Statement No. 33-67740).

10.5*             Employee Stock Ownership Plan, effective July 1, 1987.  (S-1 Registration Statement
                  No. 33-67740).

10.6*             1993 Nonstatutory Stock Option Plan (Form 8-K dated April 18, 1994, File
                  No. 0-23050, Exhibit 10.18, File No. 0-23050, Exhibit 10.18).

10.7*             Form of Nonstatutory Option Agreement (Form 8-K dated April 18, 1994, File No.
                  0-23050, Exhibit 10.19).



                                      -77-

<PAGE>



10.8*             Severance Agreement dated December 21, 1993, between Spreckels Industries, Inc.
                  and George A. Lamberth (Form 8-K dated April 18, 1994, File No. 0-23050, Exhibit
                  10.20).

10.9*             1993 Directors' Stock Option Plan (Form 8-K dated April 18, 1994, File
                  No. 0-23050, Exhibit 10.26).

10.10*            Form of 1993 Directors' Stock Option Plan; Nonstatutory Stock Option Agreement
                  (Form 8-K dated April 18, 1994, File No. 0-23050).

10.11*            Form of Officers' and Directors' Indemnity Agreement.  (S-1 Registration Statement
                  No. 33-67740).

10.12*            Secured Revolving Credit Agreement between the Registrant, Spreckels Sugar
                  Company, Inc., Duff-Norton Company, Inc. and Harris Trust and Savings Bank dated
                  as of July 22, 1994.  (1994 Form 10-K, File No. 0-23050, Exhibit 10.29).

10.13*            Stock Purchase Agreement as of June 30, 1994 by and between NCD Acquisition
                  Company and the Registrant.  (1994 Form 10-K, File No. 0-2350, Exhibit 10.30).

10.14*            Excess Benefit Plan of the Registrant.  (1994 Form 10-K, File No. 0-23050, Exhibit
                  10.32).

10.15             Amended and Restated Registrant's Employees' Incentive Savings Plan.

10.16*            Retirement Plan for Salaried Employees of Duff-Norton Company, Inc.  (1994 Form
                  10-K, File No. 0-23050, Exhibit 10.35).

10.17*            Disclosure Statement for Registrant's Third Amended Plan of Reorganization.  (1994
                  Form 10-K, File No. 0-23050, Exhibit 10.37).

10.18*            Bart A. Brown, Jr. Consulting Agreement dated July 14, 1994 (1995 Form 10-K, file
                  No. 0-23050, Exhibit 10.38).

10.19*            Robert J. McLaughlin Consulting Agreement dated February 28, 1995 (1995 Form
                  10-K, file No. 0-23050, Exhibit 10.39).

10.20*            Stock Purchase Agreement of Carbidie Corporation dated November 4, 1994 (1995
                  Form 10-K, file No. 0-23050, Exhibit 10.40).

10.21*            Stock Purchase Agreement dated January 8, 1996, between Registrant and Holly
                  Sugar Corporation for the sale of Spreckels Sugar Company, Inc. , dated January 8,
                  1996 (Form 8-K, file No. 0-23050, Exhibit 99.1).




                                      -78-

<PAGE>


10.22*            Agreement and Plan of Merger among Spreckels Industries, Inc., Columbus
                  McKinnon Corporation and L. Acquisition Corp., dated August 24, 1996(Exhibit 1
                  to Registrant's Schedule 14D-9 filed on September 3, 1996).

10.23*            Severance Compensation Agreement (incorporated as Exhibit 2 to Registrant's
                  Schedule 14D-9 filed on August 1, 1996).

10.24*            Amended Severance Compensation Agreement between the Company and Gary L.
                  Tessitore, (Exhibit 11(a) to Amendment No. 1 to Registrant's 14D-9 filed on August
                  1, 1996).

10.25*            Amended Severance Compensation Agreement between the Company and Donald C.
                  Roof,  (Exhibit 11(b) to Amendment No. 1 to Registrant's 14D-9 filed on August 1,
                  1996).

10.26*            Severance Compensation Agreement (Exhibit 3 to Registrant's Schedule 14D-9 filed
                  on August 1, 1996).

10.27*            Form of Corporate Office Employee Bonus Plan (Exhibit 11(c) to Amendment No.
                  1 to Registrant's 14D-9 filed on August 1, 1996).

10.28*            Form of Amendment to Indemnification Agreement (Exhibit 6(b) to  to Registrant's
                  14D-9 filed on September 3, 1996).

10.29*            Rights Agreements dated November 11, 1995 (Form 8-K dated November 17, 1997,
                  File No. 0-23050, Exhibit 1).

10.30*            Amendment to Rights Agreement dated January 8, 1996 (Form 8-K dated February
                  5, 1996,  File No. 0-23050, Exhibit 1).

10.31*            Amendment to Rights Agreement dated July 23, 1996 (Registrant's 14D-9 dated
                  August 1, 1996, File No. 0-23050, Exhibit 8(c)).

10.32*            Amendment to Rights Agreement dated August 23, 1996 (Registrant's Amended
                  14D-9 dated August 1, 1996, File No. 0-23050, Exhibit 14).

10.33             Severance Agreement dated June 5, 1996 between Spreckels Industries, Inc. and
                  James E. Boyd.

10.34             First Amendment to Secured Revolving Credit Agreement and Secured Revolving
                  Credit Note between Registrant, Duff-Norton Company, Inc. and Harris Trust and
                  Savings Bank dated April 19, 1996.

21                List of subsidiaries of the Registrant.

22                Powers of Attorney.
</TABLE>

                                      -79-