UNITED STATES

# SECURITIES AND
EXCHANGE COMMISSION Washington, D.C. 20549

# 

# FORM 10-K

(Mark One)
x  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended      
           
           
                
      December 31, 2004

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       
                  
                  
                  1-448

# Mestek, Inc.

(Exact name of
registrant as specified in its charter)

|Pennsylvania                    | 25-0661650
|------------------------------- | ----------
|                                |           
|(State or other jurisdiction of |           
|incorporation or organization)  |           

|260 North Elm Street, Westfield, MA      | 01085
|---------------------------------------- | -----
|(Address of principal executive offices) |      

|                                                   | 
|-------------------------------------------------- | 
|Registrant's telephone number, including area code | 

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

|                            | 
|--------------------------- | 
|Title of each class         | 
|Common Stock - No Par Value | 

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

NONE

(Title of class)

---

(Title of class)

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

Indicate by check mark if disclosure
of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this
chapter) is not contained herein, and will not be contained, to the best of
registrants knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K.         x

Indicate by check mark whether the
registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).           Yes        Noxx



The aggregate market value of voting
and non-voting common shares held by non-affiliates of the registrant as of June 30, 2004,
the last business day of the most recently completed second quarter of 2004, based upon
the closing price for the registrants common stock as reported in The Wall Street
Journal as of such date was $51,883,067.

The number of shares of the
registrants common stock issued and outstanding as of March 31, 2005 was 8,600,103.

Portions of the registrants
definitive proxy statement relating to the registrants 2005 Annual Meeting of
Shareholders to be filed hereafter are incorporated by reference into Part II (Item 5) and
Part III (Items 10-14) of this Report on Form 10-K and certain Exhibits to previous
filings with the Securities and Exchange Commission are incorporated by reference into
Part IV, Item 15 of this Report on Form 10-K.

---

# PART I

# Item 1  BUSINESS

Certain
statements in this Annual Report on Form 10-K constitute forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995 that are not
historical facts but rather reflect the Companys current expectations concerning
future results and events. The words believes, expects,
intends, plans, anticipates, hopes,
likely, will, and similar expressions identify such
forward-looking statements. Such forward-looking statements involve known and unknown
risks, uncertainties and other important factors that could cause the actual results,
performance or achievements of the Company (or entities in which the Company has
interests), or industry results, to differ materially from future results, performance or
achievements expressed or implied by such forward-looking statements.

Important
factors that might cause our actual results to differ materially from the results
contemplated by these forward-looking statements are contained in Item 7.
Managements Discussion and Analysis of Financial Condition and Results of Operations
 Future Impact of Known Trends or Uncertainties and elsewhere in this report
and our future filings with the Securities and Exchange Commission.

Readers
are cautioned not to place undue reliance on these forward-looking statements, which
reflect managements view only as of the date of this Form 10-K. The Company
undertakes no obligation to update the result of any revisions to these forward-looking
statements which may be made to reflect events or circumstances after the date hereof or
to reflect the occurrence of unanticipated events, conditions or circumstances.

# GENERAL

Mestek,
Inc. (Mestek) was incorporated in the Commonwealth of Pennsylvania in 1898 as
Mesta Machine Company. It changed its name to Mestek, Inc. in October 1984, and merged
with Reed National Corp. on July 31, 1986. The Company, as referred to herein,
refers to Mestek and its subsidiaries, collectively.

The
Company is comprised of two distinct businesses (Operating Segments): (1) the HVAC Segment
which manufactures heating, ventilating, and air conditioning equipment, and (2) the Metal
Forming Segment which manufactures metal-forming equipment. Both Segments operate in
industries which historically have been highly fragmented. In recent years, both
industries, and in particular the HVAC industry, have undergone a gradual
roll-up or consolidation process. The Companys recent history therefore
is one of acquisition.

The
Company is not dependent on any one customer in either of its Segments for 10% or more of
its consolidated revenue.

A
following is a summary of the Companys acquisitions during the most recently
completed three fiscal years:

On
August 29, 2003, the Company acquired all of the issued and outstanding stock of Engel
Industries, Inc. (Engel), a Delaware corporation based in St. Louis, MO, for
approximately $5.7 million including $4.2 million in goodwill. Engel manufactures sheet
metal forming and fabricating equipment for the HVAC sheet metal contactor, steel service
center and custom roll former global markets.

---

Met-Coil Bankruptcy

On
August 26, 2003, Met-Coil Systems Corporation, now known as Met-Coil Systems, LLP,
(Met-Coil), a second-tier subsidiary of the Company, filed a voluntary
petition for relief under Chapter 11 of Title 11 of the United States Code in the United
States Bankruptcy Court for the District of Delaware. Met-Coil remained in possession of
its assets and properties, and continued to operate its businesses and manage its
properties as a debtor-in-possession pursuant to sections 1107(a) and 1108 of
the Bankruptcy Code, as more fully explained in Note 15 to the Consolidated Financial
Statements. On August 17, 2004, the Bankruptcy Court confirmed the Fourth Amended Chapter
11 Plan of Reorganization (the Amended Plan) proposed by Met-Coil and Mestek,
as co-proponents, and recommended to the United States District Court (N. D. Del.)
(the District Court) that it approve and enter a channeling
injunction, and certain related third party releases in favor of, among others,
Mestek and its affiliates. On September 14, 2004, the District Court entered and approved
the recommended findings and conclusions and issued the channeling injunction.
This Amended Plan, supported by all major parties in interest in the Met-Coil Chapter 11
case, became effective on October 19, 2004.

Other Information and
Internet Address

The
Companys executive offices are located at 260 North Elm Street, Westfield, MA 01085.
The Companys phone number is 413-568-9571. The Companys website address is
www.mestek.com. Our Annual Report on Form 10-K, quarterly reports on Form 10-Q,
current reports on Form 8-K and amendments to these reports, as well as Section 16 reports
filed by our insiders, are available, without charge, on our website on the same day they
are filed electronically with the Securities and Exchange Commission. Also contained on
our website are our Code of Business Ethics and our Corporate Governance Guidelines, as
well as a listing of our Board of Directors, Audit Committee Members,
Nominating/Governance Committee Members and Compensation Committee Members, as well as the
Charters for each of these committees. The information contained on our website is not
incorporated by reference in this report. All of these documents are also available in
print upon request to the Secretary of the Company, Legal Department, 260 North Elm
Street, Westfield, MA 01085.

# OPERATIONS OF THE COMPANY

The
Company operates in two business Segments: Heating, Ventilating, and Air Conditioning
(HVAC) and Metal Forming equipment manufacturing. Each of these Segments is
described below.

# EMPLOYMENT

The
Company and its subsidiaries together employed approximately 2,683 persons as of December
31, 2004.

# HEATING, VENTILATING AND
AIR CONDITIONING EQUIPMENT SEGMENT

The
Company, through certain divisions of Mestek, Inc. and various of its wholly or majority
owned subsidiaries (collectively, the HVAC Segment), manufactures and
distributes products in the HVAC industry. These products include residential, commercial
and industrial hydronic heat distribution products, commercial and industrial gas-fired
heating and ventilating equipment, commercial, architectural and industrial air control
and distribution products, commercial and residential gas and oil-fired boilers,
specialized air conditioning units, and related products used in heating, ventilating and
air conditioning systems. These products may be used to heat, ventilate and/or cool
structures ranging in size from large office buildings, industrial buildings, warehouses,
stores and residences, to such small spaces as add-on rooms in residences. The HVAC
Segment sells its products to independent wholesale supply distributors, mechanical, sheet
metal and other contractors and, in some cases, to other HVAC manufacturers under original
equipment manufacture (OEM) agreements and direct to certain retailers
pursuant to national account agreements. No single customer accounts for sales in the
aggregate of 10% or more of consolidated revenue. The HVAC Segment is comprised of three
interrelated HVAC product groups: Hydronic Products, Gas and Industrial Products, and Air
Distribution and Cooling Products, described in more detail as follows:

Hydronic
Products consist of residential baseboard heating products, commercial finned tube heating
products, residential boilers, commercial boilers, convectors, kickspace heaters, fan coil
units, steam and hot water unit heaters, copper-finned boilers and water heaters. These
products are sold principally under the Sterling, Vulcan,
Heatrim, Kompak, Petite, Suntemp,
Beacon Morris, Hydrotherm, Airtherm,
Westcast, RBI, and L. J. Wing brand names. Gas and
oil-fired boilers are sold primarily under the RBI and Hydrotherm
brand names produced by subsidiaries of the Company. Westcast, Inc., a wholly owned
subsidiary, is a distributor of gas and oil fired boilers in the commercial and
residential markets sold principally under the name Smith Cast Iron Boilers.
Boyertown Foundry Company (BFC), approximately 97% owned by the Company,
operates a cast-iron foundry in Boyertown, PA, which manufactures products used
principally in the manufacture of oil and gas fired boilers. The hydronic products are
made in manufacturing facilities, in some cases shared with other HVAC Segment Divisions,
in Westfield, MA; South Windsor, CT; Mississauga, Ontario, Canada; Farmville, NC; Forrest
City, AR; Dundalk, MD; and Dallas, TX.

Gas
Products consist of commercial gas-fired heating and ventilating equipment and corrugated
stainless steel gas tubing sold principally under the Sterling and
TracPipe® brand names. The products are made in manufacturing facilities
in Farmville, NC; Dallas, TX; and Exton, PA. Omega Flex, Inc. (Omega), an 86%
owned subsidiary of Mestek, manufactures corrugated flexible stainless steel hose for use
in a wide variety of industrial applications. Its products include annular, helical and
braided metal hose and hose fabrications and are sold primarily through industrial hose
distributors and original equipment manufacturers. Omegas TracPipe® product line
is a corrugated stainless steel tubing developed for use in piping gas appliances sold
primarily for residential and commercial building applications. The Company has realized
significant synergies by distributing TracPipe® through its extensive HVAC
distribution network. International distribution of the TracPipe® product began in
2002 and is expected to contribute to segment operating profits in 2005. The Company
intends on entering into an Agreement for Corporate Separation with Omega in connection
with the spin-off of Omega as more fully explained in Note 17 to the
Consolidated Financial Statements. Industrial Products consist of commercial and
industrial indoor and outdoor heating, ventilating and air conditioning products sold
principally under the Applied Air, King, L. J. Wing,
Temprite, Alton and Aztec brand names. The products
are made in manufacturing facilities in Dallas, TX. Recently, the Company transferred
certain King product lines from Bishopville, SC to Dallas, TX in connection with the
closing of the Bishopville facility.

Cooling
Products consist of niche residential and commercial air conditioning products principally
sold under the Spacepak and Koldwave brand names. The products are
made in manufacturing facilities in Wrens, GA and Dundalk, MD. Air Distribution Products
consist of fire, smoke and air control dampers, louvers, grilles, registers, VAV boxes and
diffusers sold principally under the American Warming and Ventilating,
Air Balance, Arrow, Louvers & Dampers (L &
D)", Cesco and Anemostat brand names. Air distribution
products are devices designed to facilitate the ventilation and safety of buildings,
tunnels and other structures or to control the movement of air through building ductwork
in the event of fire or smoke and, in some cases, wind or rain. The products are made in
manufacturing facilities in Bradner, OH; Waldron, MI; San Fernando, CA; Wyalusing, PA;
Florence, KY; Wrens, GA; and Carson, CA. In November 2003, the Company closed
substantially all of its operations in Scranton, PA, leaving in place its laboratory and
testing facilities and some sales, marketing, and engineering facilities. The Scranton
facility was sold on December 30, 2004. The Company sold its Air Clean Dampers product
line, including operating assets and related intellectual property, manufactured in
Milford, OH on March 30, 2004 at a nominal gain. The building is available for
disposition.

Collectively,
the HVAC Segments products provide heating, cooling, ventilating, or some
combination thereof, for a wide range of residential, commercial and/or industrial
applications. Through its design and application engineering groups, the HVAC Segment
often custom designs and manufactures many HVAC products to meet unique customer needs or
specifications not met by existing products. Such custom designs often represent
improvements on existing technology and often are incorporated into the HVAC
Segments standard line of products.

The
HVAC Segment sells its HVAC products primarily through a diverse group of independent
representatives throughout the United States and Canada, many of whom sell several of the
Segments products. These independent representatives usually handle various HVAC
products made by manufacturers other than the Company. These representatives are typically
granted an exclusive or semi-exclusive right to solicit orders for specific HVAC Segment
products from customers in a specific geographic territory. Because of the diversity of
the HVAC Segments product lines, there is often more than one representative in a
given territory. Representatives work closely with the HVAC Segments sales managers,
product managers and its technical personnel to meet customers needs and
specifications. The independent representatives are compensated on a commission basis, but
also at times purchase such products for resale. HVAC products are sold primarily to
contractors, installers, and end users in the construction industry, wholesale
distributors and original equipment manufacturers. Additional buying influences include
consulting engineers, architects and building owners. While the HVAC Segments HVAC
products are distributed throughout the United States and Canada, sales in the northeast,
mid-Atlantic and upper mid-west states are somewhat higher than would be suggested by
unadjusted construction statistics in any given year due to the relative popularity of
hydronic products in these areas. The sale of heating and cooling products is sensitive to
climatic trends in that relatively warm winters and/or cool summers can adversely affect
sales volumes.

The
HVAC Segment sells gas-fired and hydronic heating and ventilating products, boilers and
other HVAC equipment in Canada and also sells its products in other foreign markets from
time to time. Total export sales did not exceed ten percent of total revenues, nor did
foreign assets exceed ten percent of total assets, in any of the most recent five years
ended December 31, 2004.

The
HVAC Segment uses a wide variety of materials in the manufacture of its products, such as
copper, aluminum and steel, as well as electrical and mechanical components (controls,
motors) and other products, including cardboard for packaging. Commodities markets in
general and these commodities in particular have seen significant upward price movement in
2004, resulting in increasing costs to manufacture products and, in some cases, a
tightening supply. Management believes that it has adequate sources of supply for its raw
materials and components and has not had significant difficulty in obtaining the raw
materials, component parts or finished goods from its suppliers although many steel
distribution centers were on allocation from steel mills in 2004. No industry segment of
the Company is dependent on a single supplier, the loss of which would have a material
adverse effect on its business. Marketplace conditions may not allow the Company to pass
along raw materials or component part price increases to its customers.

The
businesses of the HVAC Segment are highly competitive. The Company believes that it is the
largest domestic manufacturer of hydronic baseboard heating for residential and commercial
purposes and is one of the three leading manufacturers of commercial and industrial
gas-fired heating and air distribution products. The Company established itself in the
market for cast-iron boilers in 1991 and 1992, developing strength in the commercial
market and in the copper-finned boiler business through a 1998 acquisition and significant
product and market development in recent years. The Company has expanded its portfolio of
air control and distribution products substantially over the last several years, largely
by acquisition. Nevertheless, in all of the industries in which it competes, the Company
has competitors with substantially greater manufacturing, sales, research and financial
resources than the Company has. Competition in these industries is based mainly on price,
product offering, distribution and merchandising capability, technical and customer
service, ability to provide electronic tools to specify products and track orders, and
quality and ability to meet customer requirements. The Company believes that it has
achieved and maintained its position as a substantial competitor in the HVAC industry
largely through the strength of its extensive distribution network, the breadth of its
product line and its ability to meet customer delivery and service requirements. In
addition, the Company provides product specifier software to aid in product
selection and the Sales Assistant software to help customers and sales
representatives enter, track and manage sales orders. Most of its competitors offer their
products in some but not all of the industries served by the HVAC Segment.

The
periodic results of operations of the HVAC Segment are affected by the construction
industrys demand for heating equipment, which generally peaks in the last four
months of each year (the heating season), and, to a lesser extent, industrial
demand for cooling equipment during summer months in the northeast and year round in the
south and southwest. Accordingly, sales are usually higher during the heating season, and
such higher levels of sales may in some years continue into the following calendar year.
As a result of these seasonal factors, the Companys inventories of finished goods
reach higher levels early in the heating season and accounts receivable reach higher
levels during the heating season and both are generally lower during the balance of the
year.

BACKLOG

Management
does not believe that backlog figures relating to the HVAC Segment are material to an
understanding of its business because most equipment is shipped promptly after the receipt
of orders.

PATENTS/TRADEMARKS

The
Company owns a number of United States and foreign patents. Although the Company usually
seeks to obtain patents where appropriate, it does not consider any segment materially
dependent upon any single patent or group of related patents. The HVAC Segment trademarks
have been described above.

RESEARCH AND DEVELOPMENT

Expenditures
for research and development for the HVAC Segment in 2004, 2003, and 2002, were
$3,786,000, $4,596,000, and $4,410,000, respectively. Product development efforts are
necessary and ongoing in all product markets.

INTERNATIONAL

The
HVAC Segment sells products in Europe including in the United Kingdom, in Canada and to a
lesser extent in other parts of the world. Total export sales of the HVAC Segment do not
exceed ten percent (10%) of the total revenues of the Segment.

# METAL FORMING SEGMENT

The
Metal Forming Segment, operating under the umbrella name Formtek, is comprised
of several closely related entities, all manufacturers, remanufacturers or distributors of
equipment used in the Metal Forming industry (the uncoiling, straightening, leveling,
feeding, forming, bending, notching, stamping, cutting, stacking, bundling or moving of
metal in the production of metal products, such as steel sheets, office furniture, heating
and air conditioning ducts, appliances, vehicles, buildings, and building components,
among many others). As of December 31, 2004, the Formtek
entities consisted of :

|o | Formtek
Maine, a division of Formtek, Inc. including the Cooper-Weymouth, Petersen ("CWP"), Rowe,
and                   CoilMate/Dickerman product lines;
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------

|o | Formtek
Cleveland, Inc., a subsidiary of Formtek, Inc. including the Yoder, Dahlstrom, B & K,
                  Krasny-Kaplan, and Mentor AGVS product lines;
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------

|o | Hill
Engineering Inc., which provides tools and dies complementary to the other subsidiaries
product                   lines and gasket tooling and tool maintenance for the
automotive industry;
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|o | Met-Coil
Systems LLC, comprised of the Lockformer and Iowa Precision ("IPI") divisions,
|- | ---------------------------------------------------------------------------------------

|o | Iowa
Rebuilders, Inc., a subsidiary of Formtek, Inc.,
|- | -----------------------------------------------------

|o | Formtek
Metalforming Integration, Inc., a subsidiary of Formtek, Inc.,
|- | ----------------------------------------------------------------------

|o | Formtek
Machinery ("Beijing") Company Ltd., a Chinese wholly foreign owned enterprise.
|- | --------------------------------------------------------------------------------------

|o | Axon
Electric LLC, a subsidiary of Formtek, Inc., and
|- | -----------------------------------------------------

|o | Engel
Industries, Inc., a subsidiary of Formtek, Inc.
|- | -----------------------------------------------------

At
January 1, 2005, Formtek began a process of cooperation and consolidation whereby the 10
operating units were organized into three (3) operating groups:

FORMTEK
METAL FORMING, INC. ("FMF") (formerly known as Formtek Cleveland, Inc.):  this unit,
headquartered in Cleveland, OH; is comprised of:

| | 1. | Formtek Cleveland division  Manufacturer of Yoder and Dahlstrom roll
               formers and roll forming systems; B&K Supermills and rotary punching and
               shearing units; Win-Pro fenestration machines and systems; Mentor AGVS automatic
               guided vehicle systems; rebuilding of Yoder, Dahlstrom and other roll formers
               and Krasny Kaplan tube & pipe material handling products; and repair parts
               for all of the foregoing. All of these products are manufactured in Warrensville
               Heights and Bedford Heights, OH.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 2. | Hill Engineering  Manufacturer of Hill Engineering tooling for roll former
               and roll forming systems including notching and punching dies and systems; Hill
               Engineering flying cut-off dies and saws; Hill Tool & Die die rebuilding and
               maintenance; Hill Engineering compound dies primarily for the gasket industry;
               and repair parts and service for the foregoing. These products are manufactured
               in Villa Park, IL, and Danville, KY, where the tool and die maintenance is also
               performed.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3. | Axon Electric, LLC  Distributor of electrical parts and components in the
               Chicagoland area and designer and manufacturer of electric controls (panels) for
               Chicago area third parties and Formtek business units. Since March 2005, the
               products have been assembled and distributed from Villa Park, IL.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

FMF owns plants in Bedford Heights,
OH; Villa Park, IL; and Danville, KY, leases a plant in Warrensville Heights, OH; and
leases a sales office in Warrensville, Heights, OH.



FORMTEK
METAL PROCESSING ("FMP"):  This unit, headquartered in St. Louis, MO is comprised of:

| | 1. | Lockformer, division of Met-Coil, LLC  Manufacturer of Lockformer
               HVAC/Sheet metal roll formers and related forming equipment; Vulcan Blue,
               PipeFab and Water-Jet cutting machines; Lockformer custom roll formers; and
               repair parts and start up and diagnostic field service for the foregoing. These
               products are manufactured in Lisle, IL, supplemented by certain roll forming
               products from Formtek Beijing. Lockformer is also a distributor of the Elgin
               line of precision shears and press brakes powered by B & R controls and
               safety devices.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 2. | Iowa Precision (IPI), division  Manufacturer of IPI-HVAC duct lines
               including the Pro-Duct and related equipment such as the Whisper-Loc,
               Cornermatic and Elbow Machine; stamped corner for the HVAC/sheet metal
               contractor; multi-blanking and cut-to-length equipment including the line of
               Slears; and repair parts and start up and diagnostic field service for the
               foregoing. These products are manufactured in Cedar Rapids, IA.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3. | Flexible Fabrication, division  Manufacturer and integrator of Iowa
               Precision custom fabrication systems and lines and the FMI/Dahlstrom flexible
               fabrication systems, now consolidated as a new business unit. These products are
               manufactured and integrated in Cedar Rapids, IA.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4. | B&K CMP, division  A start up manufacturer based on new product
               development of 2003 and 2004, which is offering for sale and will produce
               B&K cut-to-length, slitting, multi-blanking and coil breakdown lines and
               related accessories for steel service centers and toll processors. These
               products will be manufactured at a new facility the unit is seeking to acquire
               in the St. Louis, MO area.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 5. | Engel Industries, Inc.  Manufacturer of Engel-HVAC/Sheet metal roll
               formers and related forming equipment; Engel duct line; Vulcan Green cutting
               machines Engel industrial roll formers and roll forming systems; Engel
               metal building and metal construction precuts, the Lion HVAC forming products;
               and repair parts and start up and diagnostic field service for the foregoing.
               These products are manufactured in St. Louis, MO.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 6. | Formtek Maine, division  Manufacturer of Cooper-Weymouth, Peterson
               (CWP), Rowe and CoilMate/Dickerman press feeding and coil handling
               machines and systems and related equipment and accessories; CWP and Rowe
               cut-to-length lines and the B&K leveler used in metal processing; and repair
               parts and start up and diagnostic field service for the foregoing. These
               products are manufactured in Clinton, ME.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 7. | Iowa Rebuilders, Inc. (IRI)  Rebuilders and re-conditioners of IPI duct
               lines and Engel coil lines, IPI elbow machines and various other metal
               processing equipment. These products are rebuilt in Cedar Rapids, IA.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

FMP owns plants in St. Louis, MO;
Cedar Rapids, IA; Lisle, IL, and Clinton, ME, leases an engineering office in New Bremen,
OH, and leases two manufacturing facilities in Cedar Rapids, IA,

FORMTEK INTERNATIONAL
(FI): This unit, headquartered in a leased facility in Itasca, IL, is
comprised of:

| | 1. | Formtek (Beijing) Machinery Company, Ltd., a wholly-owned foreign entity 
               Seller and assembler under license of various Lockformer, Vulcan, Iowa
               Precision, Engel and Yoder products and component parts and the repair parts and
               start up and diagnostic field service of the foregoing. These products are
               assembled in Beijing for sale in China, the rest of Asia, Australia and the
               Middle East.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 2. | Formtek Europe, division  sales of machinery, repair parts, service and
               related products manufactured by the North American-based units of Formtek,
               except those under separate license.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

FI leases assembly facility in the
Changping District, outside Beijing, China, and a leases sales/service office in Fribourg,
Switzerland,

The
Metal Forming Segments products are sold through factory direct, technical sales and
independent dealers and distributors, in most cases to end-users and in some cases to
distributors or other original equipment manufacturers. The core technologies are
processing equipment for roll forming, coil processing (for stamping, forming and
cut-to-length applications), metal duct fabrication and tube and pipe systems. The
products include roll formers, roll forming systems, wing benders, air, mechanical and
hydraulic presses, servo-feeds, straighteners, cradles, reels, coil feeding systems,
cut-to-length lines, flexible fabrication systems, duct forming systems, rotary shearing,
specialty dies, tube cut-off systems, hydraulic punching, blanking and cutoff systems,
rotary punching, flying cut-off saws, plasma cutting equipment, tube mills, pipe mills and
sophisticated material handling systems including automated vehicle guidance systems. The
primary customers for such metal handling and metal forming equipment include sheet metal
and mechanical contractors, steel service centers, contract metal-stampers, contract roll
formers, and manufacturers of large and small appliances, commercial and residential
lighting fixtures, automotive parts and accessories, office furniture and equipment,
tubing and pipe products, metal construction products, doors, windows and screens,
electrical enclosures, shelves and racks and metal ductwork. The Segments products
are manufactured in facilities having approximately 400,000 square feet of manufacturing
space, located in Clinton, ME; Bedford Heights, OH; Warrensville Heights, OH; Villa Park,
IL; Lisle, IL; Cedar Rapids, IA; Danville, KY; South Elgin, IL; St. Louis, MO; and
Beijing, China. The Segment closed and consolidated into the Cleveland, OH area facilities
its Schiller Park, IL facility in 2001 and is in the process of closing and consolidating
its South Elgin, IL facility into the Villa Park, IL facility, IRI  Cedar Rapids, IA
facility and the Cleveland, OH area facilities in the first quarter of 2005. A centralized
office for marketing, market development and international sales was opened in Itasca, IL
in late 2002. An independent sales office located in Shanghai was closed at the end of
2004, consolidating all China sales into Formtek Beijing. The European sales/service
office is in Fribourg, Switzerland. No single customer accounts for sales in the aggregate
of 10% or more of consolidated revenue.

The
Company believes it has improved its competitive position within the metal forming
marketplace by developing high quality reliable equipment with electronic and software
controls, affording diagnostic, performance and operational features, as well as by the
strategic acquisitions made in recent years, which broadened the Metal Forming
Segments overall product offerings, created cross-selling opportunities, afforded
synergies in sales/marketing and field service and allows the Segment to offer
sophisticated metal forming solutions that reduce scrap, improve quality, increase
throughput, shorten set up or changeover time, reduce downtime, reduce operator
involvement and allow a wider variety of products to be processed. Cooperative marketing,
market development, new product development and international sales and administration
also strengthen the individual business units. Throughout 2003 and 2004 the business units
have been working together such that inter-company sales have been growing. For example,
in 2004 Formtek Cleveland, as an integrator for its customers, acquired tools and machines
from Hill Engineering and Formtek Maine and components from Axon and Formtek Beijing; Iowa
Precision, as an integrator for its customers, acquired machines from Lockformer; Engel
acquired tools and machines for integration from Hill Engineering and Formtek Main and
Lockformer acquired machines for re-sale from Formtek Beijing and electrical components
for integration from Axon. Inter-company sales in 2004 totaled approximately $7,411,000,
while inter-company gross bookings for 2004 totaled approximately $8,789,000.

Many
products made by these units are custom designed and manufactured or the result of applied
engineering in order to meet unique customer needs or specifications not currently met by
existing products. These products, developed by the Segments development, design and
application engineering groups, often represent improvements on existing technology and
are often then incorporated into the standard product line.

The
businesses of the Segment are highly competitive and, due to the nature of the products,
are significantly more cyclical (due to changes in manufacturing capacity utilization and
the cost and availability of financing) than the Companys other operating Segment.
Lockformer, Vulcan, Engel, Lion and Iowa Precision are among the leaders in the production
of metal forming solutions for the HVAC/sheet metal fabricators, contractors and
distributors. CWP, Rowe, CoilMate/Dickerman, and IPI have a strong presence in the
manufacture of coil processing equipment through their broad and competitive product
lines, together with Formteks customer-driven application engineering and ability to
meet customer delivery and service requirements through separate extensive distribution
networks. Dahlstrom, B & K, Yoder and Lockformer are well-established names in the
roll former market place. The Company believes that the critical mass created by the
recent acquisitions of Engel Industries, Inc. and SNS (now known as Formtek Metal Forming,
Inc.) will allow it to more fully leverage its large installed customer base in the sale
of equipment, service and repair parts.

Like
the HVAC Segment, the Metal Forming Segment uses a wide variety of raw materials and
components incorporating raw materials which experienced upward price pressure in 2004 and
continuing commodity shortage threats. The Company, however, believes that its
relationship with materials and component suppliers will assure an adequate supply for its
forecast production in 2005.

The
companies acquired by the Metal Forming Segment in the past were selected for their
synergies with the existing metal forming franchises: complementary products and
distribution channels, potential manufacturing synergies, shared technologies and
engineering skills, potential purchasing synergies, common field service skills and
organizations, and shared customer bases. The most significant synergistic theme has been
the real and potential common customer base. To a large degree, any historical customer of
one of the companies is a potential customer for any of the others. Exploiting this cross
selling opportunity is a central factor in the creation of the Formtek family of metal
forming products and underscores the Segments goal of creating a single integrated
metal forming and fabricating solution provider for the metal forming and fabricating
marketplace worldwide. In addition, customers appreciate the value of acquiring a system
made up of individual units, integrated through electronic and mechanical controls, rather
than working with a number of suppliers and undertaking their own integration.
Accordingly, there is a substantial and growing degree of inter-company sales among the
formerly separate metal forming companies and the re-building companies that afford the
opportunity to mix new and used equipment for the economy-minded customer.

BACKLOG

The
backlog relating to the Metal Forming Segment at December 31, 2004 was approximately
$25,300,000 compared to approximately $27,800,000, and $23,118,000, at December 31, 2003
and 2002 respectively.

PATENTS/TRADEMARKS

The
units comprising this Segment own a number of United States and foreign patents, but the
Segment does not consider itself materially dependent upon any single patent or group of
related patents. The Lockformer and IPI units had certain patent protections expire in
2002 and 2001, but have not experienced a significant decrease in sales due to the
engineering of cost reductions and strong distribution. The B&K unit has been
capitalizing on recently issued patents for its Supermill, Rotary Punch and Rotary Shear
products that the Company believes are a productivity breakthrough for the steel framing
segment of the metal building market once established. Sales of metal forming equipment
approached $8.4 million in 2004, up from approximately $2.0 million in 2003.

RESEARCH AND DEVELOPMENT

Expenditures
for research and development for the Metal Forming Segment in 2004, 2003, and 2002, were
$1,655,000, $1,150,000 and $922,000,respectively.

INTERNATIONAL

The
Metal Forming Segment sells equipment in Canada, Mexico, Europe, China, East Asia, the
Middle East and Australia, among other foreign markets. Total export sales did not exceed
ten percent (10%) of the total revenues, nor did foreign assets exceed ten percent (10%)
of total assets in any of the most recent five years ending December 31, 2004.

---

SEGMENT INFORMATION

Selected
financial information regarding the operations of each of the above Segments, consistent
with statement of Financial Accounting Standard No. 131 and Section 101 (d) of Regulations
S-K, is presented in Note 11, Segment Information, of our Consolidated Financial
Statements.

ENVIRONMENTAL MATTERS

The
Company is subject to numerous laws and regulations that govern the discharge and disposal
of materials into the environment. Except as described below in Item 7 under the heading
Contingent Liabilities Guaranties, Subsidiary Bankruptcy, and Environmental
Matters and in Note 10, Commitments and Contingencies, of our Consolidated Financial
Statements, including the matters related to the discharge of trichloroethylene (TCE) onto
or into the soil of The Lockformer Company division (Lisle, IL) of the Companys
second tier subsidiary, Met-Coil Systems Corporation (now Met-Coil Systems, LLC)
(Met-Coil), the Company is not aware, at present, of any material
administrative or judicial proceedings against the Company arising under any Federal,
State or local environmental protection laws.

For
discussion of the Companys alleged liability for asbestos-related products, see also
Item 7 and Note 10, Commitments and Contingencies, of our Consolidated Financial
Statements.

The
Company is engaged in various matters with respect to obtaining, amending or renewing
permits required to operate each of its manufacturing facilities. Management does not
believe that a denial of any currently pending permit application would have a material
adverse effect on the companys financial position or the results of operations.

# Item 2  PROPERTIES

The
HVAC Segment of the Company manufactures equipment at plants that the Company or its
subsidiaries own in Waldron, MI; Bradner, OH; Wyalusing, PA; Dundalk, MD; Wrens, GA;
Dallas, TX; Exton, PA and Boyertown, PA. The Companys Scranton, PA plant has been
closed (other than for laboratory and office use) and was sold at a nominal loss on
December 30, 2004. The Companys Bishopville, SC plant has been closed and is
presently leased to an unrelated party. The Companys Milford, OH plant is available
for disposition. The HVAC Segment operates plants that it leases from entities owned
directly or indirectly by certain officers and directors of the Company in Westfield, MA;
Farmville, NC; and South Windsor, CT. The HVAC Segment leases manufacturing space from
unrelated parties in Mississauga, Ontario, Canada; Carson, CA; San Fernando, CA; Florence,
KY; St. Louis, MO; and Forrest City, AR; as well as a regional distribution facility in
Mississauga, Ontario, Canada and laboratory space in the Companys formerly-owned
Scranton, PA facility.

The
Metal Forming Segment manufactures products at plants the Company owns in Clinton, ME;
Villa Park, IL; Schiller Park, IL (closed in 2001, sold in 2002); Danville, KY; Cedar
Rapids, IA; Lisle, IL; South Elgin, IL; Bedford Heights, OH; and St. Louis, MO, and leases
manufacturing space in Cedar Rapids, IA; Warrensville Heights, OH and Beijing, China and
office space in Itasca, IL; Warrensville Heights, OH; New Bremen, OH; and Shanghai, China.

The
Companys principal executive offices in Westfield, MA are leased from an entity
beneficially owned by an officer and director of the Company. The Company also owns an
office building in Holland, OH.

In
addition, the Company and certain of its subsidiaries lease other office space in various
cities around the country for use as sales offices.

Certain
of the owned facilities are pledged as security for certain long-term debt instruments.
See Property and Equipment, Note 4 to the Consolidated Financial Statements. See Note 16
to the Consolidated Financial Statements relative to Plant Shutdown expense.

---

# Item 3  LEGAL
PROCEEDINGS

The
information set forth in Note 10, Commitments and Contingencies, of the Companys
Consolidated Financial Statements and Item 7  Managements Discussion and
Analysis of Financial Condition and Results of Operations-under the Sub-caption
CONTINGENT LIABILITIES is incorporated herein by reference to this Report on
Form 10-K.

The
Company is not presently involved in any litigation that it believes could materially and
adversely affect its financial condition or results of operations except as described in
Item 7  Managements Discussion and Analysis of Financial Condition and Results
of Operations-under the Sub-caption Contingent Liabilities and in Note 10 of
the Companys Consolidated Financial Statements, which are a part of this Annual
Report on Form 10-K.

# Item 4  SUBMISSION
OF MATTER TO A VOTE OF THE SECURITY HOLDERS

No
matters were submitted to the security holders of the Company for a vote during the fourth
quarter of 2004.

---

# PART II

# Item 5  MARKET FOR
REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Mesteks
common stock is listed on the New York Stock Exchange, under the symbol MCC. The number of
shareholders of record as of March 31, 2005, based on inquiries of the registrants
transfer agent, was approximately 1,200. For this purpose, shareholders whose shares are
held by brokers on behalf of such shareholders (shares held in street name)
are not separately counted or included in that total.

The
high and low prices of the Companys common stock for the quarterly periods during
2004 and 2003, as reported in the consolidated transaction reporting system, were as
follows:

`PRICE RANGE

                                 2004                              2003
                         high           low              high              low

  First Quarter         $20.28         $17.68           $18.35            $17.40
  Second Quarter        $18.39         $15.55           $19.10            $17.95
  Third Quarter         $17.80         $16.66           $20.39            $16.81
  Fourth Quarter        $18.58         $17.40           $20.63            $16.95`

Mestek
has not paid any cash dividends on its common stock since 1979.

No
securities issued by Mestek, other than common stock, are listed on a stock exchange or
are publicly traded.

Our
future decisions concerning the payment of dividends on our common stock will depend upon
our results of operations, financial condition and capital expenditure plans, as well as
such other factors as the Board of Directors, in its sole discretion, may consider
relevant. In addition, our existing indebtedness restricts, and we anticipate our future
indebtedness may restrict, our ability to pay dividends.

The
remaining information called for in the item relating to Securities Authorized for
Issuance under Equity Compensation Plans is reported in Note 14 to the Consolidated
Financial Statements, in Part III, Item 11 of this Annual Report on Form 10-K and in the
Companys Proxy Statement relating to the annual meeting of shareholders to be held
on May 24, 2005, under the caption Executive Compensation. With respect to
2004, no equity compensation plans have been or currently are submitted for stockholder
approval.

# Omega Flex Spin-Off

On
January 19, 2005, the Company announced that John E. Reed, the Chairman and Chief
Executive Officer of the Company, proposed to a Special Committee of independent directors
appointed at the Companys December 14, 2004 regular Board meeting, (the
Special Committee), acting on behalf of the Board of Directors, that the
Companys 86% equity interest in Omega Flex, Inc. be spun-off, pro rata, to
all of the Companys public shareholders as of a record date to be established (the
Spin-Off). In conjunction with the Spin-Off, Omega Flex, Inc. proposes to file
a Form 10 registration under the Securities Exchange Act of 1934 and would expect to be a
publicly traded, reporting company following the Spin-Off. It is not expected that the
Spin-Off will require any vote of the Companys shareholders; however, the approval
of its Board of Directors will be necessary.

# Mestek Going
Private

On
January 19, 2005, the Company also announced that John E. Reed further proposed to the Special
Committee that, following the Spin-Off, the Company enter into a going private
transaction. Specifically, it was proposed that the Companys Articles of
Incorporation be amended by shareholder vote, whereby the existing 8,600,103 issued and
outstanding shares of Company common stock, together with treasury shares, as of a record
date to be established, be reclassified in a reverse stock split of 1 share
for each 2,000 issued, with provisions in the amendment to the charter such that
fractional shares of those owning less than one share will not be issued.

It
was further proposed that the Special Committee, with the advice of its independent
financial adviser, determine a fair and equitable per share value for a
pre-reverse stock split share of Company common stock,reflecting the
value of the Company following the Spin-Off, which is proposed to occur before the
going private transaction is consummated. This would then form the basis for
the full Board of Directors determination of the per share value to be
used to effect a cash redemption of those shareholders who, by reason of the reverse
stock split become owners of less than one share.

It
was further proposed that a vote on any required amendments to the Companys Articles
of Incorporation be put before the shareholders at the Annual Meeting of Shareholders,
currently scheduled for May 24, 2005 at the Companys headquarters in Westfield,
Massachusetts or as soon thereafter as possible.

# Special Committee

Managements
proposal of the Spin-Off as well as the terms, timing and structure of the going
private transaction generally are to be reviewed and considered by the Special
Committee which has been charged with making a recommendation regarding these matters to
the full Board of Directors, which will ultimately make the determination of whether to go
forward and propose any appropriate vote or votes of the shareholders. There can be no
assurances that either the Spin-Off or going private transaction will be
consummated.

# Item 6  SELECTED
FINANCIAL DATA

Selected
financial data for the Company for each of the last five years is shown in the following
table, which is derived from and should be read in conjunction with the Consolidated
Financial Statements included elsewhere in this report. Selected financial data reflecting
the operations of acquired businesses is shown only for periods following the related
acquisition. (2)

SUMMARY OF FINANCIAL POSITION as of
December 31,

(dollars
in thousands except per share data)

`2004         2003         2002         2001         2000

Total assets                $238,475     $246,670     $220,301     $259,511        $293,489
Working capital              $36,849       $8,047      $52,141      $45,978         $25,442
Total debt                   $27,980      $22,449      $11,666      $30,182         $63,658
Shareholders' equity        $115,724      $95,473     $137,714     $168,623        $162,872
Shareholders' equity
per common share (1)         $13.46       $10.95       $15.79       $19.33          $18.63`

---

SUMMARY OF OPERATIONS  for the
years ended December 31,

(dollars in thousands except per
share data)

`2004         2003         2002         2001         2000

Revenues from Continuing Operations                 $404,863     $366,513     $373,874     $394,103     $375,987

Income (Loss) from Continuing Operations (3)         $21,534     ($43,165)     ($1,071)     ($2,633)     $15,984
Cumulative Effect of a Change in Accounting
     Principle-Goodwill Impairment                     ---          ---        (29,334)       ---           ---
Discontinued Operations                                ---          ---          ---          8,947         6,611
Net (Loss) Income                                    $21,534     ($43,165)    ($30,405)      $6,314       $16,650

Earnings (Loss) per Common Share:
Basic Earnings (Loss) per Common Share:
     Continuing Operations                            $2.49       ($4.95)      ($0.12)       ($0.30)       $1.83
     Cumulative Effect of a Change in Accounting
         Principle-Goodwill Impairment                 ---          ---         (3.36)         ---          ---
     Discontinued Operations                           ---          ---          ---           1.02         0.07
     Net (Loss) Income                                $2.49       ($4.95)      ($3.48)        $0.72        $1.90

Diluted Earnings (Loss) Per Common Share
     Continuing Operations                            $2.48       ($4.95)      ($0.12)       ($0.30)       $1.82
     Cumulative Effect of a Change in Accounting
         Principle-Goodwill Impairment                 ---          ---         (3.36)         ---          ---
     Discontinued Operations                           ---          ---          ---           1.02         0.08
     Net (Loss) Income                                $2.48       ($4.95)      ($3.48)        $0.72       $1.90`

| | (1) | Equity per common share amounts are computed using the common shares outstanding
          as of December 31, 2004, 2003, 2002, 2001, and 2000.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | Includes the results of acquired companies or asset acquisitions from the date
          of such acquisition, as follows:
| | --- | -------------------------------------------------------------------------------------------------------------------------

| | Engel
Industries, Inc. from August 29, 2003  
King Company from December 31, 2001
Formtek Cleveland, Inc. from July 2, 2001

Airtherm LLC from August 25, 2000 
Louvers & Dampers,Inc. from June 30, 2000
Met-Coil Systems Corporation from June 3, 2000 
B & K Rotary Machinery from February 10, 2000 
Cesco Products from January 28, 2000
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | See
also Item 7 M D & A, Non-GAAP Financial Measures
| | --- | ----------------------------------------------------

---

# Item 7 
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

# FORWARD LOOKING
INFORMATION

# OVERVIEW

The
Company derives its revenues primarily from the sales of Company-manufactured products in
its HVAC Segment and machinery and repair parts in its Metal Forming Segment. In both
Segments the sale of service generates a relatively small component of total net sales.
Within the HVAC Segment most, but not all, of the products sold involve one or more of the
following: sheet metal fabrication, assembly, cast iron production, machining and
stainless steel fabrication.

The
Companys HVAC Segment reflects the seasonal nature of a company engaged in heating
products sales, although the broadening of its product offering over the past 11 years to
include cooling products, air handling products and corrugated stainless steel tubing has
made the seasonal curve of the Segments revenue stream somewhat less pronounced.

The
Companys Metal Forming Segment operates within the highly cyclical capital goods
marketplace and reflects the challenges not only with respect to cyclical demands but also
the globalization of the customer base as well as the competitor base, requiring it to
seek a more international focus in supply, manufacturing, sales and marketing. The Company
operates principally within the North American marketplace. However, the Company does
foresee the need for growth both in sales and production in both Europe and Asia.

As
discussed above in Item 1, fluctuations in the metal commodities market in particular can
have significant impacts on the Companys cost structure and may affect profitability
with respect to revenues based on fixed-price contracts with Company customers, or derived
in markets where pricing cannot be readily or promptly adjusted. The results of operations
for 2004 reflect the significant impact of rapidly escalating commodity prices on
profitability, as more fully discussed below.

The
Company operates in highly competitive markets. While many companies, both larger and
smaller than we are, sell many of the same products and services, our competitive position
is not easily determinable in either of our Segments since no one competitor or group of
competitors offers the same product lines through the same channels. Competitors in both
of our Segments compete primarily through product quality and performance, price, service
(both pre- and post-sale) and technical innovation. The relative importance of these
factors varies from product line to product line.

An
important part of the Companys business strategy is to look for niche areas where
larger competitors in the HVAC arena choose not to focus, or, with respect to our Metal
Forming Segment, where strategic enhancement of product offering will result in a more
competitive position in the marketplace, and, through acquisition or product development,
the Company seeks to address these opportunities. As a part of this process, we
continually review our stable of subsidiary or divisional companies and product lines,
evaluating them with respect to allocation of resources for growth, resuscitation or sale.
Our history over the past twenty years has been growth often through acquisition and this
process continues, as does the occasional divestiture or closing of a company or facility.

As
will be more specifically discussed below, the strength or weakness in the construction
markets directly affects our HVAC business, and aspects of the Metal Forming business, and
strength or weakness in the capital goods markets directly affects our Metal Forming
business. In 2004, residential construction was strong, institutional construction
continued to be flat and industrial/commercial construction remained off from prior
periods. In the capital goods sector, orders for machinery and machine tools continued to
recover from the depressed levels of 2001 (but remained significantly below historical
highs prior to 2000) resulting in significant revenue growth in 2004 for this Segment of
the Companys business.

For
2005, the Companys HVAC Segments budget is based upon an overall stability
expected in the construction markets, though the mix of residential, commercial,
industrial and institutional construction spending may change, and its Metal Forming
Segments budget reflects a continuation of the upturn in capital spending, driven in
part by the pent-up demand resulting from deferred maintenance as well as increased
manufacturing production utilizing the kind of machinery this Segment sells. However,
rising commodity prices, especially copper and aluminum, are expected to contribute to
upward inflationary pressure, which may also push interest rates higher. While the Company
itself has not historically been highly leveraged and thus cost of capital has not been as
significant a factor in the Companys cost structure as it may be in other companies,
increases in interest rates could slow the domestic residential construction market or
contribute to further declines in the commercial and industrial construction markets, as
well as adversely affect the capital goods market recovery. Increased shipping costs and
employee benefits expenses (primarily health care costs) also remain a threat to economic
growth, which could have an adverse effect on the Companys operations. The
Companys plans to go private subsequent to spinning off its Omega Flex
subsidiary, as more fully explained in Note 17, will require additional borrowing which
will result in the Company being more leveraged than at present.

# NON-GAAP FINANCIAL
MEASURES

# RETURN ON AVERAGE NET
ASSETS EMPLOYED

# 2004, 2003, 2002

The
following analysis of the Companys Results of Operations focuses on the relationship
of Core Operating Profits, a Non-GAAP financial measure, as
defined below, to Average Net Assets Employed, as defined below. Management believes this
focus, which is essentially an enterprise value point of view, is more useful
to investors as it isolates and relates the Companys ongoing pre-tax, pre-interest,
operating earnings to the total capital invested, whether debt or equity capital.

The
Companys Operating Profits in 2004 and 2003, as reflected in the accompanying
Consolidated Financial Statements, included disproportionately large Environmental
(Credits) Charges of ($17,738,000) and $53,665,000, respectively, which relate to a
particular environmental litigation matter which is discussed separately herein and which
is therefore excluded from the definition of Core Operating Profits as used
herein. Similarly excluded from the definition of Core Operating Profits is $9,028,000 in
2004 and $5,963,000 in 2003 in Subsidiary Bankruptcy Professional Fees, $1,789,000 in 2004
and $5,239,000 in 2003 in Plant Shutdown and Other Restructuring Charges, and $9,975,000
in Goodwill Impairment charges in 2003, all of which are also discussed separately herein.
Core Operating Profits, as the term is used herein, is defined as Operating Profits
determined in accordance with Generally Accepted Accounting Principles, as reflected in
the accompanying financial statements, plus the aforementioned excluded (credits) and
charges. Core Operating Profits are intended to be representative of the ongoing
historical pretax, pre-interest, operating earnings stream contained in the Companys
HVAC and Metal Forming businesses. The Environmental (Credits) and Charges and Subsidiary
Bankruptcy Professional Fees which are excluded from the definition of Core Operating
Profits relate to a specific circumstance involving an alleged release of pollutants at a
location owned by a subsidiary prior to the acquisition of that subsidiary by the Company
which is discussed in detail herein under the heading CONTINGENT LIABILITIES
below. Management believes that an analysis of the Companys results of operations
independent of the costs related to this particular matter is beneficial to the reader.

Managements
intent in defining Core Operating Profits in this manner is to assist
shareholders and other investors by separating the underlying operating earnings from
unusual or otherwise anomalous events. The Company operates as a manufacturer
in the HVAC and Metal Forming equipment market places. While subject to the effects of the
business cycle, these are nonetheless mature industries characterized historically by
evolutionary rather than sudden technological change and management believes therefore
that its Core Operating Profits have historically been somewhat more
predictable in nature than has been the case in other industries. It is not
Managements intent to suggest that unusual or anomalous events will not
in some form recur in the future, or that such prospects are not relevant to valuation,
only that the isolation of Core Operating Profits in such mature industries is
useful to investors in their evaluation of the Companys overall performance.

---

Core
Operating Profits, as defined, represents a Non-GAAP financial measure
which is reconcilable with the comparable GAAP financial measure, Operating
(Loss) Profits, as follows:

`2004             2003         2002
                                                                           (in thousands)

Core Operating Profits (Non-GAAP financial measure)            $17,840       $14,094      $18,751
(Plus) Less: Environmental (Credits) Charges                   (17,738)       53,665      18,046
Less: Subsidiary Bankruptcy Professional Fees                    9,028         5,963        ---
Less: Goodwill Impairment                                         ---          9,975        ---
Less: Plant Shutdown and Other Restructuring Charges             1,789         5,239        ---
Operating Profits (Comparable GAAP financial measure)          $24,761      ($60,748)       $705`

The
Companys Return on Average Net Assets Employed, defined as Core Operating Profits,
over Average Net Assets Employed From Continuing Operations (Total Assets less Current and
Non Current Liabilities-other than Current and Non Current Portions of Long-Term
Debt-averaged over 12 months) for the years 2004, 2003, and 2002 was as follows:

`2004               2003            2002
                                                                            (in thousands)

Core Operating Profits (Non-GAAP financial measure)             $17,840          $14,094          $18,751
Average Net Assets Employed from Continuing Operations         $158,696         $158,295         $167,440
Return on Average Net Assets Employed                             11.2%           8.9%             11.2%`

Average
Net Assets Employed from Continuing Operations in 2004 and 2003 was further adjusted to
exclude the effect of Environmental Litigation and Remediation Reserves (such that these
reserves, including their deferred tax effects, are not treated as having reduced Net
Assets Employed) as more fully described in CONTINGENT LIABILITIES herein and
in Notes 10 and 15 to the accompanying Consolidated Financial Statements.

The
increase in overall Return on Average Net Assets Employed from 8.9% in 2003 to 11.2% in
2004 reflected several themes and occurred notwithstanding significant cost increases in
steel, copper, and aluminum as well as increases in freight costs which impacted gross margins
for many of the HVAC Segments other franchises resulting in reduced operating
profits on relatively flat revenues:

| | 1. | The HVAC Segments Omega unit continued to increase sales and operating
               profits for its successful TracPipe® corrugated stainless steel tubing
               product despite significant stainless steel cost increases.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 2. | The Metal Forming Segment recorded a 35.9% revenue growth in 2004 (excluding the
               effect of Engel Industries which was acquired in August of 2003) reflecting
               improved conditions in the capital goods marketplace and the segments
               continuing efforts to integrate its numerous complementary acquisitions of the
               last several years. The net result was a significant improvement in Core
               Operating Profits on relatively flat Average Net Assets Employed, as more fully
               explained below, notwithstanding significant cost increases in steel prices.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3. | Operating losses attributable to the Anemostat and King franchises were
               significantly reduced in 2004 as the relocation of these businesses was
               successfully completed.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

# RESULTS OF OPERATIONS

# ANALYSIS: 2004 VS. 2003

# HVAC SEGMENT:

The
Companys HVAC Segment reported comparative results from continuing operations for
2004 and 2003 as follows:

`2004          2004               2003        2003
                                                            ($000)           %               ($000)         %

     Net Sales                                           $ 308,760          100.00%       $ 299,201        100.00%
     Gross Profit                                          $89,581           29.01%         $88,906         29.71%
     Core Operating Profits (a non-GAAP financial measure) $17,021            5.51%         $18,949          6.33%
     Average Net Assets Employed (ANAE)                   $126,036                         $126,630
     Return on ANAE                                         13.50%                           14.96%`

The
HVAC Segments revenues by product group were as follows for 2004 and 2003:

`2004                              2003
                                                           ($000)                            ($000)

     Hydronic Products                                    $124,104                         $120,793
     Air Distribution & Cooling Products                    78,241                           82,994
     Gas & Industrial Products                             106,415                           95,414
     Segment Total                                        $308,760                         $299,201`

The Hydronic
Product Groups sales increased 2.74%in 2004 due to strong sales of residential
hydronic products which were partially offset by weak commercial hydronic product sales,
including finned tube and commercial boilers. The Air Distribution and Cooling Products
Groups revenues were down 5.73% reflecting continuing weak commercial construction
activity in 2004. The Gas & Industrial Products Groups revenues were up 11.5% in
2004 reflecting continued strong sales of Omegas TracPipe® flexible gas piping
product and its patented connection system. TracPipe® is a corrugated stainless steel
tubing product developed especially for use in the piping and installation of gas
appliances. TracPipe® and the Segments residential HVAC products were sustained
in 2004 by relatively strong single family and multi-family residential construction
activity

For
the year as a whole, the HVAC Segments revenues were up 3.19%, from $299,201,000 in
2003, to $308,760,000 in 2004, reflecting the various effects mentioned above. The
Segments gross profit margins were negatively impacted by inflationary pressures
effecting copper, steel, aluminum, scrap steel and other commodities in 2004.

Reflecting
the factors mentioned above, Core Operating Profit, a non-GAAP financial measure, for the
HVAC Segment was reduced by 10.2% from $18,949,000 in 2003 to $17,021,000 in 2004. Core
Operating Profit, a non-GAAP financial measure, is reconcilable with Operating Profit, the
most directly comparable GAAP financial measure, as follows:

`2004              2003
                                                                        ($000)            ($000)

     Core Operating Profits (a non GAAP financial Measure)               $17,021          $18,949
     Plant Shutdown and Other Restructuring Charges                       (1,789)          (5,239)
     Operating Profits (Comparable GAAP Financial Measure)               $15,232          $13,710`

---

# METAL FORMING SEGMENT:

This
Segment includes a number of established brand names including CWP, Rowe, Dahlstrom, Hill,
CoilMate/Dickerman, Lockformer, IPI, Engel, Lion, Yoder, Krasny Kaplan and Mentor AGVS
which manufacture sophisticated metal handling, feeding and forming equipment,
roll-forming equipment and related machine tools and dies, tube mills, pipe mills, custom
engineered material handling equipment, and automated guided vehicle systems. The Segment
acquired 100% of the capital stock of Engel Industries, Inc. (Engel) on August
29, 2003 for $5,687,000 after adjustments. Engel is a leading manufacturer of roll forming
equipment whose products are similar to those made by the Lockformer division of Met-Coil
Systems LLC. The Segment acquired the assets of Lion Machinery on October 6, 2004 for
approximately $1.0 million. The operations were folded into Engel.

The
Companys Metal Forming Segment reported comparative results from continuing
operations for 2004 and 2003 as follows:

`2004       2004                  2003         2003
                                                               ($000)        %                  ($000)          %

     Net Sales                                                $96,033      100.00%             $66,905      100.00%
     Gross Profit                                             $25,923       26.99%             $17,017       25.43%
     Core Operating Profit (Loss) (Non-GAAP financial measure)   $847      1.00%             ($4,322)      (6.46%)
     Average Net Assets Employed (ANAE)                       $32,660                          $31,665
     Return on ANAE                                             2.59%                          (13.65)%`

Core
Operating (Loss), a non-GAAP financial measure, is reconcilable with Operating (Loss), the
most directly comparable GAAP financial measure, as follows:

`2004              2003
                                                                        ($000)            ($000)

     Core Operating (Loss) (Non-GAAP financial measure)                     $847          ($4,322)
     (Plus) Less: Environmental (Credits) Charges                        (17,738)          53,665
     Less: Subsidiary Bankruptcy Professional Fees                         9,028            5,963
     Less: Goodwill Impairment                                           ---                9,975
     Operating (Loss) Profits (Comparable GAAP financial measure)         $9,557         ($73,925)`

The
Metal Forming Segments products are capital goods used in the handling, forming and
fabrication of sheet metal in various manufacturing applications including those in the
auto, steel service center, stamping, metal construction, appliance and metal office
furniture manufacturing industries, among others. As such, the Segments products
have benefited from recent strengthening in the demand for machine tools in those
industries. The Company also believes that its continuing efforts to integrate and
synergize the various complementary franchises acquired over the last several years have
begun to positively impact the segments revenues and margins. Management continues
to study ways to maximize the opportunities presented by its development of a multifaceted
product platform under the Formtek name which it believes is unique in the Metal Forming
industry. Net Sales for the Segment, excluding
for both 2004 and 2003 revenues from Engel which was acquired in August of 2003, as more
fully explained in Note 2, were up 35.9% from 2003, but remained significantly below the
cyclical peak of 2000.

Core
Operating Profits (Loss) for the Segment in 2004 included approximately $921,000 in
startup and other costs related to the Segments operations in Beijing, the
operations of Formtek Metalforming Integration, Inc. (FMI) (now closed and integrated into
other existing operations), Iowa Rebuilders and Axon Electric LLC and a number of new
product development and market development efforts undertaken by the Formtek Group located
in Itasca, IL, on behalf of the Segment. Core Operating Profit (Loss) for 2003 included
comparable expenses of approximately $900,000. The Segments sales backlog was $25.9
million at December 31, 2004, down slightly from $27.8 million at December 31, 2003,
reflecting significantly increased and on time fourth quarter shipments in 2004 relative
to 2003. The Segment believes that such a backlog, representing about 12 weeks of planned
shipments, is an adequate balance of work ahead and ability to meet lead times required in
the marketplace.

---

# CONSOLIDATED RESULTS:

As
a whole, the Company reported comparative results as follows:

`2004              2004                 2003              2003
                                                            ($000)               %                 ($000)               %

     Net Sales                                             $404,863         100.00%                $366,513          100.00%
     Gross Profit                                          $115,256          28.47%                $106,066           28.94%
     Core Operating Profits (Non-GAAP financial measure)    $17,840           4.41%                $14,094             3.85%
     Average Net Assets Employed (ANAE)                    $158,696                                $158,295
     Return on ANAE                                          11.2%                                   8.9%`

Core Operating Profit (Loss), a
non-GAAP financial measure, is reconcilable with Operating Profit (Loss), the most
directly comparable GAAP Financial Measure, as follows:

`2004              2003
                                                                        ($000)            ($000)

     Core Operating Profit (Non-GAAP financial measure)                  $17,840          $14,094
     (Plus) Less: Environmental (Credits) Charges                        (17,738)          53,665
     Less: Subsidiary Bankruptcy Professional Fees                         9,028            5,963
     Less: Plant Shutdown and Other Restructuring Charges                  1,789            5,239
     Less: Goodwill Impairment                                            ---               9,975
     Operating (Loss) Profits (Comparable GAAP financial measure)        $24,761         ($60,748)`

The
modest improvement in Gross Profit margins overall reflects the offsetting effects of
improved margins in the Metal Forming Segment and reduced margins in the HVAC Segment
traceable principally to inflationary increases in commodity costs experienced in 2004, as
explained above.

Sales
expense for the Company as a whole, as a percentage of revenues, was reduced from 14.41%
in 2003 to 13.78% in 2004, reflecting the effect of improved revenues. General and
Administrative expenses, as a percentage of revenues, decreased from 6.52% in 2003 to
6.33% in 2004, reflecting the effect of improved revenues, but was increased in absolute
terms by $1.7 million primarily reflecting the increased costs of compliance with the
requirements of the Sarbanes-Oxley Act of 2002, and related Securities and Exchange
Commission rules and regulations issued pursuant to the Sarbanes-Oxley Act, and the new
Corporate Governance Listing Standards of the New York Stock Exchange also issued, in
part, in response to the Sarbanes-Oxley Act. Engineering expense, as a percentage of
continuing revenues, decreased from 4.17% in 2003 to 3.94% in 2004, reflecting the effect
of improved revenues.

Interest
Expense increased substantially in 2004, reflecting principally the effects of additional
borrowings required to fund the costs of the Met-Coil bankruptcy administration and the
Met-Coil bankruptcy reorganization plan which became effective on October 19, 2004, as
more fully described in Note 15 and as discussed in more detail in the Liquidity and
Capital Structure section herein. As a result, average outstanding debt in 2004 was $28.2
million versus $16.1 million in 2003.

Income
Tax Expense (Benefit) for 2004 on Income from Continuing Operations, as a percentage of
pretax income (loss), differed substantially from the expected income tax
expense due to the federal and state income tax effects of the Met-Coil bankruptcy process
which resulted in substantial one time tax benefits, as more fully described in Note 7.

---

# ANALYSIS: 2003 VS. 2002

# HVAC SEGMENT:

The
Companys HVAC Segment reported comparative results from continuing operations for
2003 and 2002 as follows:

`2003          2003               2002        2002
                                                            ($000)           %               ($000)         %

     Net Sales                                           $ 299,201          100.00%       $ 307,585        100.00%
     Gross Profit                                           88,906           29.71%          93,176         30.29%
     Core Operating Profits (a non-GAAP financial measure)  18,949            6.33%          21,801          7.08%
     Average Net Assets Employed (ANAE)                    126,630                          130,150
     Return on ANAE                                         14.96%                           16.75%`

The
HVAC Segments revenues by product group were as follows for 2003 and 2002:

`2003                              2002
                                                           ($000)                            ($000)

     Hydronic Products                                    $120,793                         $115,160
     Air Distribution & Cooling Products                82,994                           90,502
     Gas & Industrial Products                          95,414                          101,923
     Segment Total                                        $299,201                         $307,585`

The Hydronic
Product Groups sales increased in 2003 due to strong commercial boiler product sales
which offset weakness in the market for certain commercial hydronic products, including
finned tube and related products. The Air Distribution and Cooling Products Groups
revenues were impacted negatively in 2003 by the closure and relocation of the Anemostat
(Scranton, PA) manufacturing facility accounting for the majority of the revenue drop in
this Product Group. The Gas & Industrial Products Groups revenues were similarly
affected in 2003 by the closure and relocation of the King Company (Bishopville, SC)
manufacturing facility, accounting for the majority of the revenue drop in this Product
Group.

For
the year as a whole, the HVAC Segments revenues were down 2.72%, from $307,585,000
in 2002, to $299,201,000 in 2003, reflecting the various effects mentioned above.

The
HVAC Segments Air Distribution and Cooling Products Group incurred substantial
incremental costs in its Wrens, GA facility in 2003 relating to the relocation of
Anemostat products to that location. A 25,000 square foot plant addition was completed at
the Wrens, GA location in 2003 to accommodate the relocation, and significant disruptions
to the existing product franchises at that location were incurred in the absorption of the
Anemostat product line into the Wrens operations. In addition, continuing softness in
certain commercial construction markets adversely impacted revenues and Return on ANAE for
this Group.

Reflecting
the factors mentioned above, Core Operating Profit, a non-GAAP financial measure, for the
HVAC Segment was reduced by 13.1% from $21,801,000 in 2002 to $18,949,000 in 2003. Core
Operating Profit, a non-GAAP financial measure, is reconcilable with Operating Profit, the
most directly comparable GAAP financial measure, as follows:

`2003                              2002
                                                           ($000)                            ($000)

     Core Operating Profits (a non GAAP financial Measure) $18,949                          $21,801
     Plant Shutdown and Other Restructuring Charges         (5,239)                            ---
     Operating Profits (Comparable GAAP Financial Measure) $13,710                          $21,801`

Sales
of Omegas TracPipe® flexible gas piping product and its patented connection
system continued to grow in 2003 sustained by relatively strong single family and
multi-family residential construction activity. TracPipe® is a corrugated stainless
steel tubing product developed especially for use in the piping and installation of gas
appliances.

---

# METAL FORMING SEGMENT:

This
Segment includes a number of established brand names including CWP, Rowe, Dahlstrom, Hill,
CoilMate, Lockformer, and IPI. This Segments results also include the operations of
SNS Properties, Inc. (SNS) (renamed Formtek Cleveland, Inc.) which was acquired on July 2,
2001 and includes the Yoder, Krasny Kaplan and Mentor AGVS businesses which manufacture
sophisticated metal forming equipment, roll-forming equipment, tube mills, pipe mills,
custom engineered material handling equipment, and automated guided vehicle systems. The
Segment acquired 100% of the capital stock of Engel Industries, Inc. (Engel)
on August 31, 2003 for $5,687,000 after adjustments. Engel is a leading manufacturer of
roll forming equipment whose products are similar to those made by the Lockformer division
of Met-Coil Systems Corporation.

The
Companys Metal Forming Segment reported comparative results from continuing
operations for 2003 and 2002 as follows:

`2003       2003              2002            2002
                                                          ($000)        %              ($000)             %

     Net Sales                                           $66,905      100.00%          $65,855          100.00%
     Gross Profit                                        $17,017       25.43%          $15,975           24.25%
     Core Operating (Loss) (Non-GAAP financial measure)  ($4,322)      (6.46%)         ($2,492)          (3.78%)
     Average Net Assets Employed (ANAE)                   $31,665                      $36,943
     Return on ANAE                                       (13.65)%                       (6.75%)`

Core
Operating (Loss), a non-GAAP financial measure, is reconcilable with Operating (Loss), the
most directly comparable GAAP financial measure, as follows:

`2003                  2002
                                                             ($000)                ($000)

     Core Operating (Loss) (Non-GAAP financial measure)    ($4,322)             ($ 2,492)
     Less: Environmental Charges                            53,665                18,046
     Less: Subsidiary Bankruptcy Professional Fees           5,963                 ---
     Less: Goodwill Impairment                               9,975                 ---
     Operating (Loss) Profits (Comparable GAAP financial measure)($73,925)      ($20,538)`

The
Metal Forming Segments products are capital goods used in the handling, forming and
fabrication of sheet metal in various manufacturing applications including those in the
auto, steel service center, stamping and metal appliance and metal office furniture
manufacturing industries, among others. As such, the Segments products are
particularly susceptible to cyclical economic downturns. Reflecting these effects, Net
Sales for the Segment, excluding revenues from Engel, which was acquired on August 31,
2003, as more fully explained in Note 2 to the Consolidated Financial Statements, remained
depressed relative to historical levels, up 1.6% from 2002, but significantly reduced from
a cyclical peak in 2000. The Segments 2003 results reflect the present depressed
conditions in the machine tool industry as a whole.

Core
Operating Profits (Loss) for the Segment in 2003 included approximately $900,000 in
startup and other costs related to the Segments operations in Beijing, the creation
of Formtek Metalforming Integration, Inc. (FMI) and Axon Electric LLC and a number of new
product development and market development efforts undertaken by the Formtek Group located
in Itasca, IL, on behalf of the Segment. Core Operating (Loss) for 2003 also included
operating losses of approximately $950,000 from Engel. Net of these two items, Core
Operating (Loss) for 2003 was comparable to Core Operating (Loss) for 2002, reflecting the
depressed conditions in the machine tool industry which persisted during most of 2003.
Recent signs of economic growth, however, have translated into an improved 2005 outlook.
The Segments sales backlog at February 29, 2004 stood at $30.9 million, up from
$27.8 million at December 31, 2003, $23.7 million at September 30, 2003 and (excluding
Engel) $23.1 million at December 31, 2002.

---

# CONSOLIDATED RESULTS:

As
a whole, the Company reported comparative results as follows:

`2003              2003                 2002              2002
                                                ($000)               %                 ($000)               %

     Net Sales                                 $366,513         100.00%                $373,874          100.00%
     Gross Profit                              $106,066          28.94%                $109,331           29.24%
     Core Operating Profits (Non-GAAP financial measure)    $14,094                           3.85%      $18,751
5.00%
     Average Net Assets Employed (ANAE)        $158,295                                $167,440
     Return on ANAE                               8.9%                                  11.2%`

Core Operating Profit (Loss), a
non-GAAP financial measure, is reconcilable with Operating Profit (Loss), the most
directly comparable GAAP Financial Measure, as follows:

`2003             2002
                                                                  ($000)           ($000)

     Core Operating Profit (Non-GAAP financial measure)           $14,094          $18,751
     Less: Environmental Charges                                   53,665           18,046
     Less: Subsidiary Bankruptcy Professional Fees                  5,963            ---
     Less: Plant Shutdown and Other Restructuring Charges           5,239            ---
     Less: Goodwill Impairment                                      9,975            ---
     Operating (Loss) Profits (Comparable GAAP financial measure)($60,748)          $  705`

The
reduction in Gross Profit margins overall reflects the effect of reduced sales as
explained above.

Sales
expense for the Company as a whole, as a percentage of revenues, increased from 14.34% in
2002 to 14.41% in 2003, reflecting the effect of reduced revenues. General and
Administrative expenses, as a percentage of revenues, increased from 5.89% in 2002 to
6.52% in 2003, reflecting the effect of reduced revenues, and a variety of incremental
expenses associated with the Companys second tier subsidiary, Met-Coil Systems
Corporation and, as well as increased costs associated with environmental litigation and
the bankruptcy process for compliance with the requirements of the Sarbanes-Oxley Act of
2002, and related Securities and Exchange Commission rules and regulations issued pursuant
to the Sarbanes-Oxley Act, and the new Corporate Governance Listing Standards of the New
York Stock Exchange also issued, in part, in response to the Sarbanes-Oxley Act.
Engineering expense, as a percentage of continuing revenues, increased slightly, from
4.01% in 2002 to 4.17% in 2003, reflecting the effect of reduced revenues.

Interest
Expense decreased substantially in 2003, reflecting principally the effects of (1) reduced
investments in inventory and accounts receivable as a result of reduced sales and ongoing
inventory control efforts and (2) positive cash flow from operations, as discussed in more
detail in the Liquidity and Capital Structure section herein. As a result, average
outstanding debt in 2003 was $16.1 million versus $26.6 million in 2002 despite the
acquisition of Engel Industries, Inc. on August 29, 2003 for approximately $5.7 million
and significant spending related to the bankruptcy of the Companys Met-Coil
subsidiary, as more fully discussed in CONTINGENT LIABILITIES herein and in
Note 15 to the Consolidated Financial Statements.

Income
Tax Expense (Benefit) for 2003 on Income from Continuing Operations, as a percentage of
pretax income (loss), differed substantially from the expected income tax
expense due to the state income tax effects of losses in certain subsidiaries where state
tax benefits from such losses are not available.

---

# CONTINGENT LIABILITIES
 Guaranties, Subsidiary Bankruptcy and Environmental Matters

The
Company is obligated under Indemnity Agreements (Indemnity Agreements)
executed on behalf of 23 of the Companys Officers and Directors. Under the terms of
the Indemnity Agreements, the Company is contingently liable for costs which may be
incurred by the Officers and Directors in connection with claims arising by reason of
these individuals roles as Officers and Directors.

The
Company is contingently liable under standby letters of credit totaling $25,384,000 issued
principally in connection with its commercial insurance coverages and in connection with
the funding of the Met-Coil TCE PI Trust discussed below. For losses occurring in the
policy years ending October 1, 2004 and October 1, 2005, the Company retained liability
for the first $2,000,000 per occurrence of commercial general liability claims (including
products liability claims), subject to an agreed aggregate. For losses occurring in the
policy year ended October 31, 2003, the Company retained liability for the first $500,000
per occurrence of commercial general liability claims (including product liability),
subject to an agreed aggregate. In addition, for all three of these policy years the
Company retained liability for the first $250,000 per occurrence of workers compensation
coverage, subject to an agreed aggregate.

The
Company is obligated as a guarantor with respect to certain debt of CareCentric, Inc.
(formerly Simione Central Holdings, Inc.  see Note 5) to CareCentrics primary
commercial bank, Wainwright Bank & Trust Company, in the amount of $4 million. The $4
million Wainwright credit line is secured by substantially all of CareCentrics
assets and the Companys guarantee expires coincident with the credit line on August
31, 2005. The balance outstanding under CareCentrics credit line with Wainwright
Bank & Trust Company as of December 31, 2004 was $500,000, a reduction of $1,625,000
since December 31, 2003. The Company accrued this guarantee (originally in the amount of
$6 million and now reduced to $4 million) as a reserve for Investment Losses. John E.
Reed, the Companys Chairman and Chief Executive Officer, is a shareholder and
director of Wainwright Bank & Trust Company.

The
Company is subject to several legal actions and proceedings in which various monetary
claims are asserted. Management, after consultation with its corporate legal department
and outside counsel, does not anticipate that any ultimate liability arising out of all
such litigation and proceedings will have a material adverse effect on the financial
condition of the Company except as set forth below.

Berry, et al. v. Titeflex Corp., et
al. Case No. 05-6001, U.S.D.C., W.D. Ark., Hot Springs Div.

| | (Originally
filed in Circuit Court of Clark County, Arkansas as Case No. CV-2004-211 on November 15,
2004.)
| | -----------------------------------------------------------------------------------------------------------

Defendant: Omega Flex,
Inc., a Pennsylvania Corporation

Four
individual residents of Arkansas and an individual Texas resident have sued the top four
manufacturers of corrugated stainless steel tubing (CSST), including the
Companys subsidiary Omega Flex, Inc., (Omega) the manufacturer of
TracPipe®-brand CSST. The complainants have proposed a national class action on behalf
of all owners of installed CSST. Installed CSST is alleged to be defective because it is
alleged to be more susceptible to failure from near-lightning strikes than traditional
black iron pipe and because the manufacturers allegedly failed to warn of CSSTs
allegedly heightened susceptibility.

A
federal court has recently remanded the case to state court in Arkansas. The parties will
next engage in discovery and disposition of the issue of class certification. Omega will
oppose both class certification and any request for a national class. The Company believes
Omega has valid defenses to the issues of both class certification and product liability
and Omega will contest these claims vigorously. At this time the Company believes that no
estimation of Omegas potential liability in the matter can be reasonably made. It is
the nature of class action litigation in general, and, accordingly, this matter in
particular, that if there should be an adverse decision on the issue of certification of a
national class of CSST owners and an adverse decision on the issue of product liability,
the financial position and results of operation of Omega could be materially adversely
affected.

---

ENVIRONMENTAL DISCLOSURE

Bankruptcy and
Environmental Issues Involving Releases of Hazardous Materials

As
disclosed in previous filings, the Lockformer Company (Lockformer), a division
of the Companys second tier subsidiary, Met-Coil Systems Corporation, now Met-Coil
Systems, LLC (Met-Coil), and Mestek directly (under various legal theories)
were defendants in various actions relating to the alleged release and presence of
trichloroethylene (TCE) contamination on and in the vicinity of
Lockformers manufacturing facility in Lisle, IL. On August 26, 2003, Met-Coil filed
a voluntary petition for relief under Chapter 11 of Title 11 of the United States Code
(the Bankruptcy Code) in the United States Bankruptcy Court for the District
of Delaware (the Bankruptcy Court) (Case No. 03-12676-MFW).

On
August 17, 2004, the Bankruptcy Court confirmed the Fourth Amended Chapter 11 Plan of
Reorganization (the Amended Plan) proposed by Met-Coil and Mestek, as
co-proponents, and recommended to the United States District Court (N. D. Del.) (the
District Court) that it approve and enter the channeling injunction
discussed below, and certain related third party releases in favor of, among others,
Mestek and its affiliates. On September 14, 2004, the District Court entered and approved
the recommended findings and conclusions and issued the channeling injunction.

This
Amended Plan, supported by all major parties in interest in the Met-Coil Chapter 11 case,
became effective on October 19, 2004.

The
Amended Plan settled the various legal actions which had been commenced against Met-Coil
and Mestek with respect to an alleged release of TCE into the soils, groundwater or air in
or around Met-Coils Lockformer Company facility in Lisle, Illinois, including the
class action captioned Mejdrech, et al. v. The Lockformer Company, et
al. and all other personal injury and indemnification actions brought
against the Company relating to the alleged release of TCE.

In
addition, the Amended Plan established a trust (the TCE PI Trust) for the
holders of future claims or demands, who reside, resided or may reside in a certain
geographic area in the vicinity of the facility in Lisle, Illinois, and who assert or may
assert personal injury claims in the future. Pursuant to the channeling
injunction the TCE PI Trust was established to assume all such future personal
injury claims and demands and pay and administer verified claims for up to 45 years.
Pursuant to the Amended Plan, the Company and Met-Coil are committed to fund up to $26
million (on a present value basis) to the TCE PI Trust over time and based on actual
claims paid. Upon establishment of such TCE PI Trust, Mestek and its affiliates were
released from any liabilities assumed by the TCE PI Trust for up to 45 years. Pursuant to
the Amended Plan, all such future claims and demands will be channeled to the
TCE PI Trust and be paid in accordance with the distribution procedures established for
such trust. This TCE PI Trust is being administered by an independent trustee, with power
to mediate, arbitrate and, if necessary, litigate claims.

The
Companys Environmental and Litigation Reserve as of the year ended December 31, 2003
was approximately $50.8 million. The confirmation of the Amended Plan resulted in the
collection of certain insurance proceeds and the resolution of settlements with various
claimants and creditors, the result of which is a reduction of these reserves as of
December 31, 2004 to $24.7 million and the recording of a negative Environmental
Litigation/Remediation expense (that is, income) of $17,738,000 in the twelve month period
ended December 31, 2004. The reduction in the reserve also reflected approximately
$2,011,000 for remediation expenditures made during the twelve months ended December 31,
2004. Based on recent estimates of ongoing remediation costs, management has increased the
remediation portion of the reserve to $7,018,000, as of December 31, 2004, which amount is
included in the $24.7 million reserve discussed above. See Note 15 to the Consolidated
Financial Statements for a tabular illustration of the effects of the Amended Plan on the
Companys liabilities. The reserve balance at December 31, 2004 relates to future
obligations under the Plan relating to soil and groundwater remediation, municipal water
connections, the TCE PI Trust described above and other administrative expenses of the
Met-Coil bankruptcy. Management believes that no additional reserves, beyond those set
forth above, are required to be taken at this time. These reserves have been established
in accordance with Financial Accounting Standard Board Statement No. 5 and Staff
Accounting Bulletin No. 92. However, while these reserves represent managements best
estimate of these liabilities, and are based upon known or anticipated claims analysis
estimated by various legal, scientific and economic experts, there is no assurance that
these reserves will be adequate to meet all potential claims arising from the
environmental contamination at the Lisle, Illinois site. In addition, there can be no
assurance that future claims for personal injury or property damage will not be asserted
by other plaintiffs against Met-Coil and Mestek with respect to the Lockformer site and
facility. See Remediation  Lisle, IL section below.

The
immediate cash requirements of funding the Amended Plan required borrowing, net of
insurance recoveries, of approximately $9,900,000 in October of 2004, under the
Companys $70 million commercial bank credit facility (see Note 6 to the Consolidated
Financial Statements). In addition, letters of credit of approximately $17,000,000 were
issued against the credit facility in connection with the funding of the Amended Plan and
the TCE PI Trust.

Remediation  Lisle,
IL:

Met-Coil
is continuing the hook-up of certain residences to public water supply and the remediation
of the Lockformer facility in Lisle, IL, pursuant to a Work Plan for the site
(on-site remediation) approved by the Environmental Protection Agency
(EPA) and is awaiting approval of the remedial standards to be achieved by
such Work Plan, as well as the methodology for groundwater remediation, from the IEPA. In
the three months ended December 31, 2004, Met-Coil paid $442,000 in costs related to
on-site remediation, and has a remaining reserve of $7,018,000, as described above,for future remediation costs as of December 31, 2004. The Company has guaranteed to
the IEPA up to $3 million of remediation costs incurred by either Met-Coil or, if Met-Coil
fails to perform the remediation, the IEPA.

In
light of the remaining uncertainties surrounding the effectiveness of the available
remediation technologies and the future potential changes in methodology, remedial
objectives and standards, still further reserves may be needed in the future with respect
to the on-site remediation of the Lisle facility. The complexity of aforementioned factors
makes it impossible at this time to further estimate any additional costs.

The
Companys Environmental Litigation and Remediation Reserve is comprised of the
following at December 31, 2004 and 2003.

`December 31,
                                                                          2004              2003
                                                                              (in thousands)

Mejdrech and Schreiber litigation claim (Letter Agreement)                    $0          $18,500
Devane Litigation Claims                                                       0            2,368
Estimated Future Remediation costs                                         7,018            7,632
The Illinois Actions, The Honeywell Claims, The Attorney
     General Action and all matters related to pending
     future personal Injury claims in the Lockformer area                  1,500           22,300
Potential Future Obligations to the TCE PI Trust                          16,171            ---

     Total Environmental Litigation and Remediation Reserve              $24,689          $50,800`

Other Claims Alleging
Releases of Hazardous Materials or Asbestos Related Liability

The
Company is currently a party to approximately 265 asbestos-related lawsuits, and in the
past twelve months has been named in approximately 5 new such lawsuits each month,
primarily in one county in Illinois where numerous asbestos-related actions have been
filed against numerous defendants.

Almost
all of these suits seek to establish liability against the Company as successor to
companies that may have manufactured, sold or distributed asbestos-related products, and
who are currently in existence and defending thousands of asbestos related cases, or
because the Company currently sells and distributes boilers, an industry that has been
historically associated with asbestos-related products. The Company believes it has valid
defenses to all of the pending claims and vigorously contests that it is a successor to
companies that may have manufactured, sold or distributed any product containing asbestos
materials. However, the results of asbestos litigation have been unpredictable, and
accordingly, an adverse decision or adverse decisions in these cases, individually or in
the aggregate, could materially adversely affect the financial position and results of
operation of the Company and could expose the Company to substantial additional asbestos
related litigation and the defense costs thereof, which defense costs, because of the
sheer number of asbestos claimants and the historical course of the litigation process in
this area has the potential to become substantial, though these costs are not capable of
estimation at this time. The total requested damages of these cases are over $3 billion.
To date, however, the Company has had over 40 asbestos-related cases dismissed without any
payment and it settled approximately twenty-five asbestos-related cases for a de minimis
value. However, there can be no assurance the Company will be able to successfully defend
or settle any pending litigation.

In
addition to the Lisle, IL site, the Company has been named or contacted by state
authorities and/or the EPA regarding the Companys asserted liability or has
otherwise determined it may be required to expend funds for the remediation of certain
other sites in North Carolina, Connecticut and Pennsylvania. Such matters have been
previously described in greater detail in the Companys 2003 Report on Form 10-K.

The
Company continues to investigate all of these matters. Given the information presently
known, no estimation can be made of any liability which the Company may have with respect
to these matters. There can be no assurance, but based on the information presently
available to it, the Company does not believe that any of these matters will be material
to the Companys financial position or results of operations.

Warranty Commitments

Products
sold by the Company are covered by various forms of express limited warranty with terms
and conditions that vary depending upon the product. The express limited warranty
typically covers the equipment, replacement parts and, in very limited circumstances,
labor necessary to satisfy the warranty obligation for a period which is generally the
earlier of 12 months from date of installation or 18 months from date of shipment from the
Company factory, although some products or product components are warranted for periods
ranging from eighteen months to ten years. The Company estimates the costs that may be
incurred under its warranty obligations and records a liability in the amount of such
costs at the time product revenue is recognized. Factors that affect the Companys
warranty liability include the number of units sold, historical and anticipated rates of
warranty claims, allowable costs per claim and recoveries from vendors. At least once a
quarter the Company assesses the adequacy of its recorded warranty liabilities and adjusts
the amounts as necessary. Costs to satisfy warranty claims are charged as incurred to the
accrued warranty liability.

Following
is a summary of changes in the Companys product warranty liability for the twelve
months ended December 31, 2004 and 2003.

`Twelve months ended
                                                                   December 31,
                                                            2004                      2003
                                                                    (in thousands)

Balance at beginning of period                              $2,524                       $2,662
Provision for warranty claims                                2,824                        1,271
Warranty claims incurred                                    (1,484)                      (1,453)
Balance at end of period                                    $3,864                       $2,480`

# FUTURE IMPACT OF KNOWN
TRENDS OR UNCERTAINTIES

The
Companys operations are sensitive to a number of market factors, any one of which
could materially adversely affect its results of operations in any given year:

Construction
ActivityThe Companys largest Segment, its Heating, Ventilating, and Air
Conditioning (HVAC) Segment, is directly affected and its other Segment, Metal Forming, is
indirectly affected by commercial construction projects and residential housing starts.
Historically low interest rates in 2004 contributed to continued strong residential
construction activity which offset relatively weak commercial construction activity.
Commercial construction activity in 2004 was negatively affected by rising commodity costs
and other uncertainties in the economy. Significant increases in interest rates or
reductions in construction activity for other reasons in future periods, however, could be
expected to adversely effect the Companys revenues, possibly materially.

Manufacturing
ActivityThe Companys Metal Forming Segment, as a manufacturer of capital
goods used in other manufacturing processes, is subject to significant cyclicality based
upon factory utilization, especially in North America. The Companys Metal Forming
Segment provides equipment used to hold, uncoil, straighten, form, bend, cut, and
otherwise handle metal used in manufacturing operations, all activities likely to be
adversely affected in recessionary periods. The level of manufacturing activity in the
automotive, steel processing, metal construction, sheet metal contracting, metal
furniture, and stamping industries, is particularly relevant to this Segment since its
products are typically purchased to upgrade or expand existing equipment or facilities.
Expectations of future business activity are also particularly relevant. Activity in this
Segment may be affected significantly in the future by the effects of globalization which
impact both the markets for its products, the competitors it faces in such markets and
potentially the cost and availability of its key components.

Credit
AvailabilityAlthough interest rates trended lower in the beginning of 2004,
interest rates began to increase in the last two quarters of 2004 and credit availability
continues to be critical to the Companys customers and suppliers. As the
Companys customer base includes many small to medium size businesses a contraction
in credit availability could significantly impact the Companys operations.

Technological
ChangesAlthough the HVAC industry has historically been impacted by technology
changes in a relatively incremental manner, it cannot be discounted that radical
changessuch as might be suggested by fuel cell technology, burner technology and/or
other developing technologiescould materially adversely affect the Companys
results of operations and/or financial position in the future.

Environmental
Laws Affecting Operations and Product Design The Company is subject to numerous
laws and regulations that govern the discharge and disposal of materials into the
environment. The Companys operations and its HVAC products that involve combustion,
refrigeration, air conditioning and related technologies as currently designed and applied
entail the risk of future noncompliance with the evolving landscape of environmental laws
regulations and industry standards. The cost of complying with the various environmental
laws regulations and industry standards is likely to increase over time, and there can be
no assurance that the cost of compliance, including changes to manufacturing processes and
design changes to current HVAC product offerings that involve the creation of carbon
dioxide or other currently unregulated compounds emitted in atmospheric combustion, or
efficiency standards, will not over the long-term and in the future have a material
adverse affect on the Companys results of operations. In addition, a growing trend
of governmental units and business entities to mandate or favor compliance with
environmentally-based rating systems in the construction of buildings (such as
LEED standards) may change the nature of HVAC products accepted in the
marketplace and may have a materially adverse affect on the Companys results of
operations.

Weather
ConditionsThe Companys core HVAC Segment manufactures heating, ventilating
and air conditioning equipment with heating products representing the bulk of the
Segments revenues. As such, the demand for its products depends upon colder weather
and benefits from extreme cold. Severe climatic changes, such as those suggested by the
global warming phenomenon, could over time adversely affect the Companys
results of operation and financial position.

Purchasing
PracticesIt has been the Companys policy in recent years for high value
commodities to aggregate purchase volumes with fewer vendors to achieve maximum cost
reductions while maintaining quality and service. This policy has been effective in
reducing costs but has introduced additional risk which could potentially result in
short-term supply disruptions or cost increases from time to time in the future.

Supply
Disruptions and Commodity RisksThe Company uses a wide variety of materials in
the manufacture of its products, such as copper, aluminum and steel, as well as electrical
and mechanical components, controls, motors and other products. In connection with the
purchase of major commodities, principally copper, stainless steel and aluminum for
manufacturing requirements, the Company enters into some commodity forward agreements to
effectively hedge a portion of the cost of the commodity. This forward approach is done
for a portion of the Companys requirements, while the balance of the transactions
required for these commodities are conducted in the cash or spot market. The
forward agreements require the Company to accept delivery of the commodity in the
quantities committed, at the agreed upon forward price, and within the timeframe
specified. The cash or spot market transactions are executed at the
Companys discretion and at the current market prices. In addition to the raw
material cost strategy described above, the Company enters into fixed pricing agreements
for the fabrication charges necessary to convert these commodities into useable product.
Management believes at present that it has adequate sources of supply for its raw
materials and components (subject to the risks described above under Purchasing Practices)
and has historically not had significant difficulty in obtaining the raw materials,
component parts or finished goods from its suppliers. No industry Segment of the Company
is dependent on a single supplier, the loss of which would have a material adverse effect
on its business.

Interest
Rate SensitivityThe Companys borrowings are largely Libor or Prime Rate
based. The Company believes that a 100 basis-point increase in its cost of funds would not
have a material effect on the Companys financial statements taken as a whole.
Interest rates are nonetheless significant to the Company as a participant in the
construction and capital goods industries. (See Construction Activity, Manufacturing
Activity and Credit Availability above.)

Acquisition
and Consolidation/Integration  The Company has historically grown through
acquisition. Acquisitions often involve risks of integration with the parent company or
consolidation between and among operating units or functional departments and may present
managerial and operational challenges, which can have adverse effects on results of
operations, typically when charges result from impairment of goodwill or indefinite lived
intangibles or cessation of business operations from consolidations or otherwise.
Acquisition integration also often requires considerable diversion of management
attention, difficulty in integrating management resource planning and financial control
systems, increased risk of contingent or unknown liabilities and potential disputes with
sellers of the acquired companies. Expected cost savings from strategic acquisitions may
not be realized or achieved within the timeframe initially expected.

Retention
of Qualified Personnel  The Company does not operate with multiple levels of
management. It is relatively flat organizationally spread over multiple
locations and while we perceive this as a strength overall, it does subject the Company to
the risks associated with the separation from the Company of critical managers for
whatever reason. From time to time, there may be a shortage of skilled labor, which may
make it more difficult and expensive for the Company to attract and retain qualified
employees.

# CRITICAL ACCOUNTING
POLICIES AND USE OF ESTIMATES

Financial
Reporting Release No. 60, released by the Securities and Exchange Commission, requires all
companies to include a discussion of critical accounting policies or methods used in the
preparation of financial statements. Note 1 of the Notes to the Consolidated Financial
Statements includes a summary of the significant accounting policies and methods used in
the preparation of our Consolidated Financial Statements. The following is a brief
discussion of the Companys more significant accounting policies.

The
preparation of financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and the disclosure of contingent assets and liabilities
at the dates of the financial statements and the reported amounts of revenues and expenses
during the reporting periods. The most significant estimates and assumptions relate to
revenue recognition, accounts receivable valuations, inventory valuations, goodwill
valuation, intangible asset valuations, warranty costs, product liability costs,
environmental reserves, workers compensation claims reserves, health care claims reserves,
investments, and accounting for income taxes and the realization of deferred tax assets.
Actual amounts could differ significantly from these estimates.

Our
critical accounting policies and significant estimates and assumptions are described in
more detail as follows:

As
discussed more fully in Note 11 and 16 to the Consolidated Financial Statements,
Mesteks subsidiary, Met-Coil Systems LLC (Met-Coil), established reserves to address
the cost of administering a trust for the benefit of persons exposed to releases of
pollutants by Met-Coil and reserves to address the remaining costs of remediation to its
property in Lisle, Illinois. These matters require the Company to monitor estimates, which
are inherently judgmental and subject to change on an ongoing basis, and make changes as
appropriate.

---

Accounts receivable are reduced by an
allowance for amounts that may become uncollectible in the future. The estimated allowance
for uncollectible amounts is based primarily on specific analysis of accounts in the
receivable portfolio and historical write-off experience. While management believes the
allowance to be adequate, if the financial condition of the Companys customers were
to deteriorate, resulting in impairment of their ability to make payments, additional
allowances may be required.

As explained in more detail in Note
11 to the Consolidated Financial Statements, the Company has absorbed significantly higher
levels of insurance risk subsequent to September 11, 2001 due to the effects of September
11, 2001 on pricing in the commercial insurance marketplace. As a result, the Company must
establish estimates relative to the outcome of various product liability and general
liability matters which are inherently judgmental and subject to ongoing change.

The Company values its inventory at
the lower of cost to purchase and/or manufacture the inventory, principally determined on
the last-in, first-out (LIFO) method, or the current estimated market value of
the inventory. The Company periodically reviews inventory quantities on hand and records a
provision for excess and/or obsolete inventory based primarily on its estimated forecast
of product demand, as well as based on historical usage. A significant decrease in demand
for the Companys products or technological changes in the industries in which the
Company operates could result in an increase of excess or obsolete inventory quantities on
hand, requiring adjustments to the value of the Companys inventories.

The
Companys revenue recognition activities relate almost entirely to the manufacture
and sale of heating, ventilating and air conditioning (HVAC) products and equipment and
metal forming equipment. Under generally accepted accounting principles, revenues are
considered to have been earned when the Company has substantially accomplished what it
must do to be entitled to the benefits represented by the revenues. With respect to sales
of the Companys HVAC or metal forming equipment, the following criteria represent
preconditions to the recognition of revenue:

| | *
persuasive evidence of an arrangement must exist; * delivery has occurred or services
rendered; * the sales price to the customer is fixed or determinable; and * collection is
reasonably assured.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

As discussed more fully in Note 5 to
the Consolidated Financial Statements, the Company has certain investments in CareCentric,
Inc. (CareCentric) which it had historically accounted for by the equity method. On March
29, 2002, the Company transferred certain voting rights to John E. Reed, its Chairman and
CEO, in the context of a refinancing transaction under which both the Company and John E.
Reed invested additional monies in CareCentric. As a result of the transfer of votes, the
Company determined that it no longer had significant influence relative to
CareCentric, as defined in APB 18 and EITF Issue 98-13, and, accordingly, adopted the cost
method of accounting for its investments in CareCentric subsequent to that date. The
Company has also concluded that it is not required to consolidate the financial statements
of CareCentric under the requirements of FASB Interpretation No. 46, Consolidation of
Variable Interest Entities (FIN 46), as more fully explained in Note 5 to the accompanying
Financial Statements.

The Company provides for the
estimated cost of product warranties at the time revenue is recognized based upon
estimated costs, historical and industry experience, and anticipated in-warranty failure
rates. While the Company engages in product quality programs and processes, the
Companys warranty obligation is affected by product failure rates, and repair or
replacement costs incurred in correcting a product failure. Should actual product failure
rates or repair or replacement costs differ from estimates based on historical experience,
revisions to the estimated warranty liability may be required.

The
Company self-insures a substantial portion of the health benefits provided for its
employees and maintains reserves in this regard. The Company relies upon a recognized
actuarial consulting firm to help it set and maintain these reserves.

The
Company provides workers compensation coverage principally through commercial insurance
carriers using high deductible programs, which require the Company to reserve
for and pay a high proportion of its workers compensation claims payable. The Company
relies upon the expertise of its insurance carriers and its own historical experience in
setting the reserves related to these claims.

Effective January 1, 2002, the
Company adopted the provisions of FAS No. 142, Goodwill and Other Intangible
Assets. This statement affected the Companys treatment of goodwill and other
intangible assets. The statement required that goodwill existing at the date of adoption
be reviewed for possible impairment and that impairment tests be periodically repeated,
with impaired assets written down to fair value. Additionally, existing goodwill and
intangible assets were required to be assessed and classified within the statements
criteria. Intangible assets with finite useful lives continued to be amortized over those
periods. Amortization of goodwill and intangible assets with indeterminable lives ceased.

The
Company completed the first step of the transitional goodwill impairment test during the
six months ended June 30, 2002 based on the amount of goodwill as of the beginning of
fiscal year 2002, as required by FAS No. 142. The Company performed a valuation to
determine the fair value of each of the reporting units. Based on the results of the first
step of the transitional goodwill impairment test, the Company determined that goodwill
impairment existed as of January 1, 2002, in the Companys Metal Forming Segment,
which the Company has determined constitutes a reporting unit under FAS 142.
The Company completed undertaking the second step of the transitional goodwill impairment
test in 2002 and reported a charge for goodwill impairment in 2002 as explained more fully
in Note 1 to the accompanying Consolidated Financial Statements, net of a related tax
benefit, of $29,334,000.

The
Company performed an annual impairment test in accordance with FAS 142 as of December 31,
2004 and 2003 for both its HVAC Segment and its Metal Forming Segment. The analysis under
step one of FAS 142 indicated impairment of goodwill existed in the Metal Forming Segment
as of December 31, 2003 and computations done in accordance with step two of FAS 142
indicated that all of this Segments remaining goodwill of $9,975,000 was impaired
and was reported in 2003 in the Companys financial statements under the heading
Goodwill Impairment. The related tax benefit of $420,000, which was included in Income
Taxes Benefit (expense) in 2003, was substantially lower than what would be expected on
the basis of statutory rates due to the fact that the majority of the goodwill impairment
had a zero basis for tax purposes as a result of having been acquired in stock rather than
asset purchase transaction. Goodwill acquired in a stock rather than asset transaction
generally carries a zero basis for tax purposes.

The
Company concluded that no impairment of goodwill existed in either segment at December 31,
2004.

The
preparation of the Companys Consolidated Financial Statements requires it to
estimate its income taxes in each of the jurisdictions in which it operates, including
those outside the United States which may be subject to certain risks that ordinarily
would not be expected in the United States. The income tax accounting process involves
estimating its actual current exposure together with assessing temporary differences
resulting from differing treatment of items, such as depreciation and equity method gains
and losses, for tax and accounting purposes. These differences result in the recognition
of deferred tax assets and liabilities. The Company must then record a valuation allowance
to reduce its deferred tax assets to the amount that is more likely than not to be
realized. Significant management judgment is required in determining the Companys
provision for income taxes, its deferred tax assets and liabilities and any valuation
allowance recorded against deferred tax assets. In the event that actual results differ
from these estimates or the Company adjusts these estimates in future periods, it may need
to adjust its valuation allowance which could materially impact its financial position and
results of operations.

# IMPACT OF INFLATION

Copper,
steel, aluminum, fiberboard, and other related commodities represent a significant portion
of the Companys prime costs. As such, the Companys margins are vulnerable to
inflationary pressures which affect the commodity markets from time to time. Margins were
significantly impacted by such commodity cost increases in 2004, as explained in more
detail above. If the rate of inflation continues to climb in 2005, with concurrent
interest rate increases, the Company expects that the construction markets and the capital
goods markets in which it operates could be adversely impacted, thus potentially impacting
the Companys results of operations.

# NON-EXCHANGE TRADED
CONTRACTS

# LIQUIDITY AND CAPITAL
RESOURCES

Total
Debt increased in 2004 by $5,531,000 reflecting the following:

`(in thousands)

                  Total Debt at December 31, 2003                                         $22,449
                  Plus: Met-Coil Reorganization Plan-Funding and related expense           12,211
                  Plus: Subsidiary Bankruptcy Expenses Paid                                 9,028
                  Less: Operating Cash Flow and Other Effects                             (15,708)
                    Total Debt at December 31, 2004                                     $  27,980`

The
Companys Long-Term Debt to Equity ratio at December 31, 2004 is 6.2%, up from 4.6%
at December 31, 2003. As of December 31, 2004, the Company had approximately $23 million
in remaining available credit capacity under its commercial bank lines of credit. The
ratio of the Companys Funded Debt (Long-Term Debt, Current Portion of Long-Term Debt
plus Short-term Notes Payable) to Shareholders Equity was 24.1% at December 31,
2004. The ratio of the Companys Funded Debt at December 31, 2004 to its 2004
Adjusted EBITDA (a non-GAAP financial measure) was approximately 1.1 times. If Funded Debt
is adjusted to include outstanding letters of credit the ratio becomes 2.1 times. Adjusted
EBITDA is defined as Operating Profit determined in accordance with GAAP plus Depreciation
and Amortization plus (less) Environmental Charges (Credits), plus Goodwill Impairment,
plus Subsidiary Bankruptcy Professional Fees, plus Plant Shutdown and Other Restructuring
Charges.

The
Company believes its liquidity position at December 31, 2004 is adequate to meet
foreseeable future needs. As more fully explained in Note 6 to the Consolidated Financial
Statements, on October 19, 2004, the Company entered into a multi-bank, $70 million
three-year, committed, unsecured revolving loan and letter of credit agreement. As more
fully explained in Note 17 to the Consolidated Financial Statements, the Company has
announced plans to spin-off its Omega Flex, Inc. subsidiary and subsequently
Go Private which will require additional borrowings and will result in the
Company being more leveraged than at present.

The
Company has a number of contingent obligations (in addition to those related to the
Met-Coil Bankruptcy and Environmental Litigation Disclosed in Unusual Events above) which
can be summarized as follows:

The
Company has guaranteed the obligations of CareCentric, Inc. to Wainwright Bank & Trust
Company under CareCentrics $4 million credit line agreement with the bank, as more
fully described in Notes 5 and 10 to the Consolidated Financial Statements. The
outstanding balance under CareCentrics credit line agreement was $500,000 at
December 31, 2004 and $400,000 at February 28, 2005. John E. Reed, the Companys
Chairman and Chief Executive Officer, and Chairman of CareCentric, is a shareholder and
director of Wainwright Bank & Trust Company.

The
Company is obligated under Indemnity Agreements executed on behalf of 23 of the
Companys Officers and Directors. Under the terms of the Agreement, the Company is
contingently liable for costs which may be incurred by the Officers and Directors in
connection with claims arising by reason of these individuals roles as Officers and
Directors.

The
Company is contingently liable under standby letters of credit totaling $25,384,000 issued
principally in connection with the funding of the Met-Coil plan of reorganization, as more
fully explained in Notes 10 and 15, and the Companys commercial insurance coverages.
The level of insurance risk which the Company absorbs under its workers compensation and
comprehensive general liability (including products liability) insurance programs
increased substantially after October 1, 2001, largely as a result of the effects of
September 11, 2001 on the commercial insurance marketplace. For losses
occurring in the policy years ending October 1, 2004 and October 1, 2005, the Company
retained liability for the first $2,000,000 per occurrence of commercial general liability
claims (including products liability claims), subject to an agreed aggregate. In addition,
the Company retained liability for the first $250,000 per occurrence of workers
compensation coverage, subject to an agreed aggregate.

Adverse
developments in any of the areas mentioned above could materially affect the
Companys results of operations in any given year.

The
Company leases several manufacturing facilities and its corporate headquarters from
Related Parties, as more fully disclosed in Note 8 to the Consolidated Financial
Statements.

# RECENT ACCOUNTING
PRONOUNCEMENTS

In
January 2003, FASB issued FASB Interpretation No. 46, Consolidation of Variable Interest
Entities (FIN 46). FIN 46 requires a variable interest entity to be
consolidated by a company if that company is subject to a majority of the risk of loss
from the variable interest entitys activities or entitled to receive a majority of
the entitys residual returns, or both. FIN 46 also requires disclosures about
variable interest entities that a company is not required to consolidate, but in which it
has a significant variable interest. In December of 2003 FASB issued FIN 46 (R) which,
among other things, deferred the consolidation requirements for existing entities until
the first reporting period ending after March 15, 2004. Certain of the disclosure
requirements apply in all financial statements issued after January 31, 2003, regardless
of when the variable interest entity was established. The adoption of FIN 46 did not have
a material effect on the Companys Consolidated Financial Statements. (See Note 5 to
the accompanying Consolidated Financial Statements.)

# TABULAR DISCLOSURE OF
CONTRACTUAL OBLIGATIONS AND OFF-BALANCE SHEET ARRANGEMENTS

Contractual Obligation
and Commercial Commitments

The
Companys primary contractual obligations are summarized in the following table and
are more fully explained in Notes 6, 8, and 10 to the Consolidated Financial Statements.

`Payments Due by Period
                                                                (in thousands)

Contractual Obligations                                     Less than        1-3             4-5           After 5
                                              Total          1 year         years           years           year

Short Term Debt                             $20,000        $20,000        $      0       $      0       $      0
Long-Term Debt                                7,980            768           1,446          1,557          4,209
Purchase Obligations                         27,164         27,164                          ---            ---
Operating Leases                             12,211          3,426           5,113          3,672          ---
Total Contractual Cash Obligations          $67,355        $51,358          $6,559         $5,229         $4,209`

The
Companys commercial commitments under letters of credit and guarantees are
illustrated in the following table. These Standby Letters of Credit are reflected in the
After 5 Years column, as they are open-ended commitments not subject to a
fixed expiration date. All guarantees may be extended by the Company for longer periods.
The Company had outstanding at December 31, 2004, $16,977,796 in standby letters of credit
issued in connection with the Met-Coil bankruptcy reorganization plan, as more fully
explained in Note 10, and $8,406,102 in standby letters of credit issued in connection
with its commercial insurance programs, as more fully explained above and in Note 10 to
the Consolidated Financial Statements. The guarantee of $4,000,000 relates to the
Companys guarantee of the obligations of CareCentric under its commercial bank
secured line of credit, as more fully explained in Note 10 to the accompanying
Consolidated Financial Statements.

`Payments Due by Period
                                                                (in thousands)

Other Commercial Commitments                                Less than        1-3             4-5           After 5
                                              Total          1 year         years           years           years

Standby Letters of Credit                   $25,384             $0              $0             $0        $25,384
Guarantee                                     4,000          4,000            0              0                 0
Total Commercial Commitments                $29,384         $4,000          $  0           $  0          $25,384`

Off-Balance Sheet
Obligations or Arrangements

The Company is not a party to any
off-balance sheet obligations or arrangements of which it is aware.

# Item 7A. QUANTITIVE AND
QUALITATIVE MARKET RISKS

The
Company does not engage in the purchase or trading of market risk sensitive instruments
other than with respect to a single interest rate swap transaction entered into on
February 9, 2004 whereby the Company has obtained fixed interest rate protection for
approximately $14,000,000 of its bank debt. The Company does not presently have any
positions with respect to hedge transactions such as forward contracts relating to
currency fluctuations. No market risk sensitive instruments are held for speculative or
trading purposes.

---

# Item 8. FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA

# REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors andShareholders of Mestek, Inc.

We
have audited the accompanying consolidated balance sheet of Mestek, Inc. and subsidiaries
(the Company) as of December 31, 2004, and the related consolidated statements of
operations, shareholders equity and comprehensive income (loss), and cash flows for
the year then ended. These Consolidated Financial Statements are the responsibility of the
Companys management. Our responsibility is to express an opinion on these
Consolidated Financial Statements based on our audit.

We
conducted our audit in accordance with the standards of the Public Company Accounting
Oversight Board (United States). 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 consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of
the Companys internal control over financial reporting. Accordingly we express no
such opinion. An audit also 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 financial statements referred to above present fairly, in all material
respects, the consolidated financial position of Mestek, Inc. and subsidiaries as of
December 31, 2004, and the consolidated results of their operations and their cash flows
for the year then ended in conformity with accounting principles generally accepted in the
United States of America.

/s/ Vitale Caturano &
Company, Ltd.

Boston, MassachusettsMarch 21, 2005

---

Report of Independent
Registered Public Accounting Firm

Board of Directors and Shareholders
of Mestek, Inc.

We
have audited the accompanying consolidated balance sheet of Mestek, Inc. and subsidiaries
as of December 31, 2003, and the related consolidated statements of operations,
shareholders equity and comprehensive income (loss), and cash flows for each of the
years in the two-year period ended December 31, 2003. These Consolidated Financial
Statements are the responsibility of the Companys management. Our responsibility is
to express an opinion on these Consolidated Financial Statements based on our audits.

We
conducted our audits in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of
material misstatement. The Company is not required to have, nor were we engaged to perform
an audit of its internal control over financial reporting. Our audit included
consideration of internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Companys internal control over
financial reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements, 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 Mestek, Inc. and subsidiaries as of
December 31, 2003 and the consolidated results of their operations and their consolidated
cash flows for each of the two years in the period ended December 31, 2003 in conformity
with accounting principles generally accepted in the United States of America.

/s/ Grant Thornton LLP

Boston, MassachusettsMarch 30, 2004

---

# MESTEK, INC.   CONSOLIDATED BALANCE
SHEETS    As of December 31,

# 

# 

|                                         | 2004 | 2003      
|---------------------------------------- | ---- | ----------
|
|Current Assets                           |      |           
|Cash and Cash Equivalents                |      | $    1,428
|Accounts Receivable - less allowances of |     
|$2,718 and $3,387, respectively          |      | 60,777    
|Inventories                              |      | 64,963    
|Deferred Tax Asset                       |      | 14,232    
|Income Tax Refund Receivable             |      | 1,152     
|Other Current Assets                     |      | 8,136     
|Total Current Assets                     |      | 150,688   
|Property and Equipment - net             |      | 53,846    
|Property Held for Sale                   |      | 1,297     
|Deferred Tax Asset                       |      | 6,675     
|Other Assets and Deferred Charges - net  |      | 4,313     
|Goodwill-net                             |      | 21,656    
|Total Assets                             |      | $238,475  
|                                         |     

See Accompanying Notes to Consolidated Financial Statements

---

# MESTEK, INC.  CONSOLIDATED BALANCE
SHEETS (continued)   As of December 31,

# 

# 

|                                                     | 2004 | 2003      
|---------------------------------------------------- | ---- | ----------
|
|Current Liabilities:                                 |      |           
|Short Term Notes Payable                             |      | $   20,000
|Current Portion of Long-Term Debt                    |      | 768       
|Accounts Payable                                     |      | 16,803    
|Accrued Compensation                                 |      | 9,194     
|Accrued Commissions                                  |      | 2,113     
|Reserve for Equity Investment Losses                 |      | 4,000     
|Customer Deposits                                    |      | 8,007     
|Accrued Employee Benefits                            |      | 8,376     
|Environmental Reserves                               |      | 24,689    
|Liabilities Subject to Compromise                    |      | --        
|Other Accrued Liabilities                            |      | 19,889    
|Total Current Liabilities                            |      | 113,839   
|Long-Term Debt                                       |      | 7,212     
|Pension Obligation                                   |      | 1,208     
|Other Liabilities                                    |      | 100       
|Total Liabilities                                    |      | 122,359   
|Minority Interests                                   |      | 392       
|Shareholders' Equity:                                |     
|Common Stock - no par, stated value $0.05 per share, |     
|9,610,135 shares issued                              |      | 479       
|Paid in Capital                                      |      | 15,434    
|Retained Earnings                                    |      | 112,165   
|Treasury Shares, at cost, 1,010,032 and 888,532      |     
|common shares, respectively                          |      | (12,103)  
|Accumulated Other Comprehensive Loss                 |      | (251)     
|Total Shareholders' Equity                           |      | 115,724   
|Total Liabilities and Shareholders' Equity           |      | $238,475  
|                                                     |     

See Accompanying Notes to
Consolidated Financial Statements.

---

# MESTEK, INC.  CONSOLIDATED
STATEMENTS OF OPERATIONS    For the years ended
December 31,

# 

# 

|                                                                               | 2004 | 2003     | 2002
|------------------------------------------------------------------------------ | ---- | -------- | ----
|
|Net Sales                                                                      |      | $404,863 |     
|Cost of Goods Sold                                                             |      | 289,607  |     
|Gross Profit                                                                   |      | 115,256  |     
|Selling Expense                                                                |      | 55,795   |     
|General and Administrative Expense                                             |      | 25,632   |     
|Engineering Expense                                                            |      | 15,989   |     
|Environmental Litigation/Remediation                                           |      | (17,738) |     
|Goodwill Impairment                                                            |      | --       |     
|Plant Shutdown and Other Restructuring Charges                                 |      | 1,789    |     
|Operating Profit (Loss) before Reorganization Items                            |      | 33,789   |     
|Subsidiary Bankruptcy Professional Fees                                        |      | 9,028    |     
|Operating Profit (Loss)                                                        |      | 24,761   |     
|Interest Income                                                                |      | 271      |     
|Interest Expense                                                               |      | (1,226   | )   
|Other Income (Expense), Net                                                    |      | 2,355    |     
|Income (Loss) Before Income Taxes                                              |      | 26,161   |     
|Income Taxes Benefit (Expense)                                                 |      | (4,627)  |     
|                                                                               |     
|Income (Loss) Before Cumulative Effect of a     Change in Accounting Principle |      | 21,534   |     
|Cumulative Effect of a Change in Accounting Principle:  (See Note 1)           |     
|Gross Impairment (Expense)                                                     |      | ---      |     
|Tax Benefit                                                                    |      | ---      |     
|Net Impairment (Expense)                                                       |      | ---      |     
|Net Income (Loss)                                                              |      | $21,534  |     
|Basic Earnings (Loss) per Common Share:                                        |     
|Net Income (Loss) Before Cumulative Effect                                     |      | $2.49    |     
|Cumulative Effect of a Change in Accounting Principle                          |      | ---      |     
|Net Income (Loss)                                                              |      | $2.49    |     
|Basic Weighted Average Shares Outstanding                                      |      | 8,658    |     
|Diluted Earnings (Loss) Per Common Share                                       |     
|Net Income (Loss) Before Cumulative Effect                                     |      | $2.48    |     
|Cumulative Effect of a Change in Accounting Principle                          |      | ---      |     
|Net Income (Loss)                                                              |      | $2.48    |     
|Diluted Weighted Average Shares Outstanding                                    |      | 8,678    |     

See Accompanying Notes to
Consolidated Financial Statements.

---

# MESTEK, INC.

| | CONSOLIDATED
STATEMENTS OF SHAREHOLDERS EQUITY AND COMPREHENSIVE INCOME (LOSS) For the
years ended December 31, 2004, 2003, and 2002
| | -------------------------------------------------------------------------------------------------------------------------------------

|                                   | Common | Paid In | Retained | Treasury  | Accumulated Other Comprehensive |         
|---------------------------------- | ------ | ------- | -------- | --------- | ------------------------------- | --------
|
|Balance - December 31, 2001        | $479   | $15,434 | $164,201 | ($10,101) | ($1,390)                        | $168,623
|Net Loss                           |        |         | (30,405) |           |                                 | (30,405)
|Additional Minimum Liability      
|Defined Benefit Plan--Net of Tax   |        |         |          |           | (559)                           | (559)   
|Cumulative Translation Adjustment  |        |         |          |           | 55                              | 55      
|Net Comprehensive (Loss)           | ---    | ---     | ---      | ---       | ---                             | (30,909)
|Balance - December 31, 2002        | $479   | $15,434 | $133,796 | ($10,101) | ($1,894)                        | $137,714
|Net Loss                           |        |         | (43,165) |           |                                 | (43,165)
|Additional Minimum Liability      
|Defined Benefit Plan--Net of Tax   |        |         |          |           | (247)                           | (247)   
|Cumulative Translation Adjustment  |        |         |          |           | 1,171                           | 1,171   
|Net Comprehensive (Loss)           | ---    | ---     | ---      | ---       | ---                             | (42,241)
|Balance - December 31, 2003        | $479   | $15,434 | $90,631  | ($10,101) | ($970)                          | $95,473 
|Net Income                         |        |         | 21,534   |           |                                 | 21,534  
|Cumulative Translation Adjustment  |        |         |          |           | 803                             | 803     
|Cash Flow Hedge-Interest Rate Swap |        |         |          |           | 88                              | 88      
|Additional Minimum Liability      
|Defined Benefit Plan--Net of Tax   |        |         |          |           | (172)                           | (172)   
|Net Comprehensive Income           |        |         |          |           |                                 | 22,253  
|Common Stock Grants (See Note 13)  |        |         |          | 51        |                                 | 51      
|Common Stock Repurchased           | ---    | ---     | ---      | (2,053)   | ---                             | (2,053) 
|Balance - December 31, 2004        | $479   | $15,434 | $112,165 | ($12,103) | ($251)                          | $115,724

See Accompanying Notes to
Consolidated Financial Statements

---

# MESTEK, INC.

# CONSOLIDATED
STATEMENTS OF CASH FLOWS

# For the years ended
December 31,

|                                                     | 2004     | 2003      | 2002     
|---------------------------------------------------- | -------- | --------- | ---------
|
|Cash Flows from Operating Activities:                |          |           |          
|Net Income (Loss)                                    | $ 21,534 | ($43,165) | ($30,405)
|Adjustments to Reconcile Net Income (Loss) to       
|Net Cash (Used In) Provided by Operating Activities:
|Cumulative Effect of Change in Accounting Principle  | --       | --        | 29,334   
|Goodwill Impairment                                  | --       | 9,975     | --       
|Depreciation and Amortization                        | 7,778    | 8,301     | 8,818    
|Provision for Deferred Taxes                         | 2,107    | (16,192)  | (1,453)  
|Non cash Compensation Expense                        | 868      | 668       | 634      
|Provision for Losses on Accounts                    
|Receivable, net of write-offs and recoveries         | (669)    | 157       | (1,009)  
|Net Change in Minority Interests net of             
|effects of acquisitions and dispositions             | (763)    | 58        | 12       
|Changes in assets and liabilities net of            
|effects of acquisitions and dispositions:           
|Accounts Receivable                                  | (5,823)  | (663)     | 5,450    
|Inventory                                            | (9,759)  | 6,867     | 4,001    
|Accounts Payable                                     | (1,503)  | 1,071     | (1,044)  
|Liabilities Subject to Compromise                    | (57,359) | 57,359    | --       
|Environmental Reserves                               | 24,689   | --        | --       
|Other Liabilities                                    | (40)     | (3,407)   | 12,353   
|Other Assets                                         | 5,760    | (5,390)   | (1,129)  
|Net Cash (Used In) Provided by Operating Activities  | (13,180) | 15,639    | 25,562   
|Cash Flows from Investing Activities:               
|Capital Expenditures                                 | (4,404)  | (13,604)  | (7,526)  
|Disposition of fixed assets                          | 5,407    | 223       | 785      
|Acquisition of Businesses                           
|and Other Assets, Net of Cash Acquired               | (1,000)  | (6,360)   | ---      
|Net Cash Provided by (Used In) Investing Activities  | 3        | (19,741)  | (6,741)  
|Cash Flows from Financing Activities:               
|Net Borrowings (Payments) Under                     
|Revolving Credit Agreement                           | 2,533    | 11,203    | (22,747) 
|Principal Payments Under Long                       
|Term Debt Obligations                                | (722)    | (674)     | (1,281)  
|Proceeds from Issuance of Long Term Debt             | 3,720    | ---       | 5,512    
|Common Stock Grants (See Note 13)                    | 51       | ---       | ---      
|Repurchase of Common Stock                           | (2,053)  | ---       | ---      
|Net Cash Provided by (Used In) Financing Activities  | 3,529    | 10,529    | (18,516) 
|Net Increase (Decrease) in Cash and Cash Equivalents | (9,648)  | 6,427     | 305      
|Translation effect on cash                           | 803      | 1,171     | 55       
|Cash and Cash Equivalents - Beginning of Year        | 10,273   | 2,675     | 2,315    
|Cash and Cash Equivalents - End of Year              | $1,428   | $10,273   | $2,675   
|                                                    

See Accompanying Notes to
Consolidated Financial Statements.

---

# MESTEK, INC.

# NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

# DECEMBER 31, 2004

# 1. SIGNIFICANT
ACCOUNTING POLICIES

# Basis of Presentation

The
Consolidated Financial Statements include the accounts of Mestek, Inc. (Mestek) and its
majority owned subsidiaries (collectively the Company). All material
inter-company accounts and transactions have been eliminated in consolidation. In the
opinion of management, the financial statements include all material adjustments necessary
for a fair presentation of the Companys financial position, results of operations
and cash flows.

# Use of Estimates

The
preparation of financial statements in conformity with accounting principles generally
accepted in the United States, requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the disclosure of contingent
assets and liabilities at the dates of the financial statements and the reported amounts
of revenues and expenses during the reporting periods. The most significant estimates and
assumptions relate to revenue recognition, accounts receivable valuations, inventory
valuations, goodwill valuation, intangible asset valuations, warranty costs, product
liability costs, environmental reserves, workers compensation claims reserves, health care
claims reserves, accounting for income taxes and the realization of deferred tax assets.
Actual amounts could differ significantly from these estimates.

# Revenue Recognition

The
Companys revenue recognition activities relate almost entirely to the manufacture
and sale of heating, ventilating and air conditioning (HVAC) products and equipment and
metal forming equipment. Under generally accepted accounting principles, revenues are
considered to have been earned when the Company has substantially accomplished what it
must do to be entitled to the benefits represented by the revenues. With respect to sales
of the Companys HVAC or metal forming equipment, the following criteria represent
preconditions to the recognition of revenue:

| | *
persuasive evidence of an arrangement must exist; * delivery has occurred or services
rendered; * the sales price to the customer is fixed or determinable; and * collection is
reasonably assured.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# Cash Equivalents

The
Company considers all highly liquid investments with a maturity of 90 days or less at the
time of purchase to be cash equivalents. Cash equivalents include investments in an
institutional money market fund, which invests in U.S. Treasury bills, notes and bonds,
and/or repurchase agreements, backed by such obligations.

# Accounts Receivable

Accounts
receivable are reduced by an allowance for amounts that may become uncollectible in the
future. The estimated allowance for uncollectible amounts is based primarily on specific
analysis of accounts in the receivable portfolio and historical write-off experience.

# Inventories

Inventories
are valued at the lower of cost or market. Cost of inventories is principally determined
by the last-in, first-out (LIFO) method. Approximately 73% and 77% of the cost of
inventories were determined using the LIFO method for the years ended December 31, 2004
and 2003, respectively, with the remaining inventories determined using the first-in,
first-out method.

# Property and Equipment

Property
and equipment are carried at cost. Depreciation and amortization are computed using the
straight-line and accelerated methods over the estimated useful lives of the assets or,
for leasehold improvements, the life of the lease, if shorter. When assets are retired or
otherwise disposed of, the cost and related accumulated depreciation are removed from the
accounts and any resulting gain or loss is reflected in income for the period. The cost of
maintenance and repairs is charged to income as incurred; significant improvements are
capitalized.

# Goodwill

The
Company follows statement of Financial Accounting Standards (SFAS) No. 142 in accounting
for goodwill. Under SFAS No. 142, amortization of goodwill to earnings ceased and instead,
the carrying value of goodwill is evaluated for impairment on at least an annual basis.

The
Company ceased recording amortization of goodwill and intangible assets with indefinite
lives effective January 1, 2002. In addition, the Company completed the first step of the
transitional goodwill impairment test based on the amount of goodwill as of the beginning
of fiscal year 2002, as required by FAS 142. The Company performed a valuation to
determine the fair value of each of the reporting units. Based on the results of the first
step of the transitional goodwill impairment test, the Company determined that goodwill
impairment existed as of January 1, 2002, in the Companys Metal Forming Segment,
which the Company determined constituted a reporting unit under FAS 142.

The
Companys analysis under the second step of FAS 142 indicated that the Metal Forming
Segments goodwill was impaired as of January 1, 2002 in the amount of $31,633,000 as
reflected in the accompanying Statement of Operations for the year ended December 31,
2002. The related tax benefit, $2,299,000, is substantially lower than what would be
expected on the basis of statutory rates due to the fact that the majority of the goodwill
impaired has a zero basis for tax purposes as a result of having been acquired in stock
rather than asset purchase transactions.

The
Company performed annual impairment tests in accordance with FAS 142 as of December 31,
2004 and 2003 for both its HVAC Segment and its Metal Forming Segment. The analysis under
step one of FAS 142 indicated impairment of goodwill existed in the Metal Forming Segment
as of December 31, 2003 and computations done in accordance with step two of FAS 142
indicated that all of this Segments remaining goodwill of $9,975,000 was impaired
and accordingly was written off in the accompanying financial statements under the heading
Goodwill Impairment. No impairment was noted in the HVAC Segment. The analysis
under step one of FAS 142 indicated no impairment in either the HVAC Segment or the Metal
Forming Segment at December 31, 2004.

The
acquisition of the stock of Engel Industries, Inc. on August 29, 2003, as more fully
described in Note 2, resulted in goodwill of approximately $4.2 million, which, in
accordance with FAS 142, was included in the Goodwill Impairment assessment described
above.

Accumulated
amortization (including goodwill impairments) of goodwill and other intangibles was
$50,512,000 and $50,289,000 at December 31, 2004 and 2003, respectively.

# Advertising Expense

Advertising
costs are charged to operations as incurred. Such charges aggregated $5,007,000,
$5,022,000, and $5,039,000, for the years ended December 31, 2004, 2003, and 2002,
respectively, and are included in Selling Expense in the accompanying statements of
operations.

# Research and Development
Expense

Research
and development expenses are charged to operations as incurred. Such charges aggregated
$5,441,000, $5,746,000, and $5,332,000, for the years-ended December 31, 2004, 2003,and
2002, respectively.

# Treasury Shares

Common
stock held in the Companys treasury has been recorded at cost.

# Earnings per Common Share

Basic
earnings per share have been computed using the weighted average number of common shares
outstanding. Common stock options of the Company, as more fully described in Note 15, were
considered in the computation of diluted earnings per share, except when such effect would
be antidilutive.

# Stock-based Compensation

Through
December 31, 2002 the Company had accounted for stock based compensation in accordance
with the provisions of Statement of Financial Accounting Standards No. 123, Accounting for
Stock-Based Compensation, (FAS No. 123). As permitted by the statement, the
Company has chosen to continue to account for stock-based compensations using the
intrinsic value method as prescribed by Accounting Principles Board (APB)
Opinion No. 25. Accordingly, no compensation expense has been recognized for its
stock-based compensation plan except as explained below.

Beginning
January 1, 2003 the Company elected to account for stock based compensation in accordance
with FAS No 148, Accounting for Stock-Based Compensation  Transition and Disclosure,
under the fair value method. The Company further elected to account for the
change in accounting principle under the Prospective Method as described in
amended paragraph 52b of FAS No. 123. The Company made no option grants, modifications of
option grants, or settlement of option grants during the two-year period ended December
31, 2004, except as explained below, and accordingly the change to the fair value method
had no effect during the two-year period ended December 31, 2004 on Net Income, Basic
earnings per share or Diluted earnings per share, except as explained below. Under the
Prospective Method any future option grants will affect Net Income, Basic
earnings per share and Diluted earnings per share.

On
October 27, 2004, the Company re-priced 25,000 options expiring in 2011 from
$23.25 per share to the then current market value of $17.85 per share, and 70,000
additional options expiring in 2009 from $20.00 per share to the then current market value
of $17.85 per share. In accordance with FAS 148, the Company has accounted for these
options subsequent to October 27, 2004 using variable accounting which
resulted in a pre-tax charge to earnings of $23,750 in the fourth quarter of 2004. In
accordance with FAS 123, the effect of the above re-pricing was also included in the
computation of compensation cost under the fair value method described below.

In
September 2004, the Company granted 3,000 unrestricted common shares to certain executives
of the Company. The shares were issued from treasury shares and for accounting purposes
were charged to compensation at fair value as of that date which approximated $51,000.

Had
the fair value method of accounting been applied to the Companys stock option plan
for options granted prior to January 1, 2004, with compensation cost for the Plan
determined on the basis of the fair value of the options at the grant date or modification
date, the Companys net income and earnings per share would have been as follows (in
thousands except EPS data):

`Years Ended
                                                    December 31,           December 31,           December 31
                                                        2004                   2003                  2002

     Net (loss) income - as reported                 $21,534               ($43,165)               ($30,405)
     Net (loss) income - pro forma                   $21,402               ($43,236)               ($30,541)

     Basic (Loss) Earnings per share - as reported     $2.49                 ($4.95)                 ($3.48)
     (Loss) Earnings per share - pro forma             $2.49                 ($4.96)                 ($3.50)`

The
application of FAS 123 for pro forma disclosure may not be representative of future
effects of applying the statement.

---

# Currency Translation

Assets
and liabilities denominated in foreign currencies are translated into U.S. dollars at
exchange rates prevailing on the balance sheet date. The Statement of Operations is
translated at average exchange rates. Net foreign currency transactions are reported in
the results of operations in U.S. dollars at average exchange rates. Adjustments resulting
from the translation of financial statements are excluded from the determination of income
and are accumulated in a separate component of shareholders equity.

# Income Taxes

Deferred
tax assets and liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled. The effect on
deferred tax assets and liabilities of a change in tax rates is recognized in income in
the period that includes the enactment date. A valuation allowance is provided for
deferred tax assets if it is more likely than not that these items will either expire
before the Company is able to realize the benefit, or that future deductibility is
uncertain.

# Other Comprehensive
(Loss) Income

For
the years ended December 31, 2004, and 2003, respectively, the components of Other
Comprehensive (Loss) Income consisted of foreign currency translation adjustments, an
additional minimum liability from a defined benefit pension plan, as more fully explained
in Note 10 to these Consolidated Financial Statements, and in 2004 a gain on the change in
the market value of an interest rate swap, as more fully explained in Note 6.

The components of accumulated other
comprehensive loss (net of tax) at December 31:

`2004                2003
                                                                         (in thousands)

Cash Flow Hedge--Interest Rate Swap                                    $88             $---
Cumulative translation adjustment                                     638               (164)
Additional Minimum Liability Defined Benefit Plan                   (977)               (806)

         Accumulated Other Comprehensive Loss                      ($251)              ($970)`

Fair Value of Financial
Instruments, Concentration of Credit Risk and Significant Customers

The
Company has estimated the fair value of financial instruments using available market
information and appropriate valuation methodologies. The carrying values of cash, cash
equivalents, accounts receivable, accounts payable and accrued expenses approximate fair
market value due to the short-term nature of these financial instruments. Given the
relatively stable interest rate environment, the Company believes the fair value of its
long and short-term debt obligations approximate their carrying values. Financial
instruments that potentially subject the Company to concentrations of credit risk are
principally cash, cash equivalents, and accounts receivable. The Company has no
significant off-balance-sheet or concentration of credit risk exposure such as foreign
exchange contracts or option contracts. The Company maintains its cash and cash
equivalents with established financial institutions. Concentration of credit risk with
respect to accounts receivable is limited to certain customers to whom the Company makes
substantial sales. To reduce its credit risk, the Company routinely assesses the financial
strength of its customers. The Company maintains an allowance for potential credit losses
but historically has not experienced any significant losses related to individual
customers or groups of customers beyond what is provided for in the allowance. No
individual customer accounted for more than 10% of revenues in 2004, 2003 or 2002. No
individual customer accounted for more than 10% of the Companys accounts receivable
at December 31, 2004 or 2003.

# Reclassification

Reclassifications
are made periodically to previously issued financial statements to conform to the current
year presentation.

# New Accounting
Pronouncements

In
January 2003, FASB issued FASB Interpretation No. 46, Consolidation of Variable
Interest Entities(FIN 46). FIN 46 requires a variable interest entity to
be consolidated by a company if that company is subject to a majority of the risk of loss
from the variable interest entitys activities or entitled to receive a majority of
the entitys residual returns, or both. FIN 46 also requires disclosures about
variable interest entities that a company is not required to consolidate, but in which it
has a significant variable interest. In December of 2003 FASB issued FIN 46 (R) which,
among other things, deferred the consolidation requirements for existing entities until
the first reporting period ending after March 15, 2004. Certain of the disclosure
requirements apply in all financial statements issued after January 31, 2003, regardless
of when the variable interest entity was established. The adoption of FIN 46 did not have
a material impact on these Consolidated Financial Statements.

In
December 2003, FASB issued FAS No. 132R, Employers Disclosures about Pensions and
other Post-retirement Benefits. This Statement revises employers disclosures
about pension plans and other postretirement benefit plans. It does not change the
measurement or recognition of those plans required by FAS No. 87, Employers
Accounting for Pensions, FAS No. 88, Employers Accounting for Settlements and
Curtailments of Defined Benefit Pension Plans and for Termination Benefits, and FAS
No. 106, Employers Accounting for Postretirement Benefits Other Than
Pensions. This Statement retains the disclosure requirements contained in FAS No. 132,
Employers Disclosures about Pensions and Other Postretirement Benefits, which
it replaces. It requires additional disclosures to those in the original FAS No. 132 about
the assets, obligations, cash flows, and net periodic benefit cost of defined benefit
pension plans and other defined benefit postretirement plans. The Company has adopted the
disclosure provisions of FAS No. 132R. The adoption of this pronouncement did not have a
material effect on the Companys financial position, results of operations or cash
flows.

In
December 2003, the SEC issued Staff Accounting Bulletin (SAB) No. 104, Revenue
Recognition, which codifies, revises and rescinds certain sections of SAB No. 101,
Revenue Recognition, in order to make this interpretive guidance consistent with
current authoritative accounting and auditing guidance and SEC rules and regulations. The
changes noted in SAB 104 did not have a material effect on the Companys financial
position, results of operations and cash flows.

# 2. BUSINESS ACQUISITIONS

On
August 29, 2003 the Company acquired 100% of the outstanding capital stock of Engel
Industries, Inc., (Engel), a St. Louis, MO based manufacturer of metal forming
equipment for the HVAC industry and other industrial forming users. The price paid for the
stock was approximately $5,687,000 after final adjustments and included goodwill of
approximately $4,200,000. Engel is reflected herein in the Companys Metal Forming
Segment.

On
October 6, 2004, Engel announced the acquisition of certain of the operating assets of
Lion Machinery (Lion), a privately held company based in Pacific, Missouri for
approximately $1 million. Lion operations and key employees have been relocated to the
Engel facility in St. Louis. The Company recorded goodwill of $909,000 in connection with
the acquisition of Lion.

The
above acquisitions were accounted for using the purchase method of accounting and
accordingly their results of operation have been included in these financial statements
since the date of the acquisition. The pro forma impact of these acquisitions was not
material to any period presented.

---

# 3. INVENTORIES

Inventories
consisted of the following at December 31:

`2004                                  2003
                                                                                 (in thousands)

         Finished Goods                                      $ 21,805                             $ 13,866
         Work-in-progress                                      23,638                               18,064
         Raw materials                                         30,851                               31,269
                                                               76,294                               63,199
         Less provision for LIFO
           method of valuation                               (11,331)                              (8,005)
                                                              $64,963                             $ 55,194`

# 4. PROPERTY AND EQUIPMENT

Property
and equipment consisted of the following at December 31:

`Depreciation and
                                                                                               Amortization Est.
                                                     2004                  2003                    Useful Lives
                                                              (in thousands)

         Land                                           $4,957             $  4,929
         Buildings                                      31,554               30,831                  19-39 Years
         Leasehold Improvements                          5,438                5,033                  15-39 Years
         Equipment                                     100,415              103,499                   3-10 Years
                                                       142,364              144,292
         Accumulated Depreciation                      (88,518)             (82,258)
                                                      $ 53,846             $ 62,034`

The
above amounts include $908,000 and $4,714,000 at December 31, 2004 and 2003, respectively,
in assets that had not yet been placed in service by the Company. No depreciation was
recorded in the related periods for these assets.

Depreciation
and amortization expense related to continuing operations was $7,778,000, $8,301,000, and
$8,818,000 for the years ended December 31, 2004, 2003, and 2002, respectively.

# 5. INVESTMENTS

CareCentric, Inc.
(CareCentric):

The
Company has certain equity and debt investments in CareCentric, Inc., a healthcare
software company based in Atlanta, GA. Prior to March 2002, the Company had accounted for
this investment under the Equity Method of Accounting. In March of 2002, the Company made
an offer proposing to make available to CareCentric up to $1.1 million of short-term
financing to assist CareCentric with its near term working capital needs. Coincident with
Mesteks offer, John E. Reed, Mesteks Chairman and CEO, as an individual, made
an offer proposing to make available to CareCentric approximately $900,000 of short-term
financing as well. In connection with these offers, the Company transferred to John E.
Reed, effective March 29, 2002, certain of its voting and other rights associated with the
Series B Preferred Stock of CareCentric held by the Company. As a result of this transfer,
the Company no longer had significant influence over CareCentric and, accordingly,
discontinued accounting for this investment under the Equity Method of Accounting
subsequent to March 29, 2002.

Pursuant
to the offer made by the Company in March, on July 1, 2002, the Company exchanged certain
investments in CareCentric, Inc. for certain other securities pursuant to a
Re-capitalization and Refinancing Transaction (the Transaction) approved by
the shareholders of CareCentric on June 6, 2002 and the Board of Directors of Mestek on
April 15, 2002. As a result of the Transaction, the Company agreed to extend its guaranty
of CareCentrics $6.0 million line of credit from Wainwright Bank and Trust Company
until June 30, 2003 and surrendered or canceled the following:(i) a warrant to purchase
104,712 shares of common stock of CareCentric; (ii) two short term notes totaling $884,883
from CareCentric; (iii) two interest notes totaling $1,059,059; (iv) 850,000 shares of
CareCentric Series C Preferred stock with 170,000 votes attributable thereto; (v) the
obligation to repay $1,092,000 advanced to CareCentric; (vi) the obligation to repay
$114,117 advanced to CareCentric; and (vii) options to purchase up to 159,573 shares of
common stock of CareCentric. In exchange for the foregoing, the Company received the
following: (i) a secured, subordinated, convertible term promissory note (the
Promissory Note) in the amount of $4,000,000 convertible into common stock of
CareCentric at $1.00 per share and bearing interest at 6.25% per annum and maturing on
July 1, 2007; (ii) a convertibility feature on the Companys existing 5,600,000
shares of CareCentric Series B Preferred Stock, convertible at an exchange rate of 1.072
shares of common stock for each share of Series B Preferred Stock; and (iii) 890,396
existing warrants re-priced to purchase CareCentric common stock at $1.00 per share, for a
period extended until June 15, 2004. These warrants lapsed without being exercised on June
15, 2004. Except for cash advances made in the second quarter of 2002 totaling $963,000,
and $129,000 advanced on July 1, 2002, (which advances have now been re-financed as part
of the Promissory Note), the above assets were carried on the Companys balance sheet
as of June 30, 2002 at a zero valuation, reflecting the effect of cumulative equity method
losses. Accordingly, the Promissory Note is carried for accounting purposes at December
31, 2003 and December 31, 2004 at a basis of $1,092,000, reflecting the cash advances
noted above. The Company continues to monitor these advances for collectibility and make
any valuation adjustments appropriate in accordance with the FAS No. 114, Accounting by
Creditors for Impairment of a Loan.See also Note 11. Accrued interest of $500,000
was added to the face value of the July 1, 2002 $4 million Promissory Note on July 1,
2004. On December 14, 2004, the Company exchanged its $4.5 million convertible Promissory
Note for a $3.5 million 6.25% convertible Promissory Note and a $1 million 7.25%
non-convertible Promissory Note.

Pursuant
to the offer made by John E. Reed in March of 2002, on July 1, 2002, John E. Reed
exchanged certain investments in CareCentric, Inc. for certain other securities pursuant
to the Transaction described above. As a result of the Transaction, John E. Reed
surrendered certain notes receivable and other advances totaling approximately $3.555
million and received in return a $3.555 million secured convertible note maturing on July
1, 2007 and bearing interest at 6.25% per annum. The conversion feature reflects an
exercise price of $1 per share of CareCentric common stock. In addition, 398,406 shares of
CareCentrics Series D Preferred Stock held by Mr. Reed were made convertible into
CareCentric common stock at an exchange rate of 2.51 shares of common stock per share of
Series D Preferred Stock. The Companys Promissory Note, described in the previous
paragraph, is subordinated to the $3,555,000 facility owed by CareCentric to John E. Reed
and also to a $600,000 Note payable to an unrelated third party.

The
Company has determined that it is not required to consolidate the operations of
CareCentric into the Companys financial statements under the provisions of FIN 46.

The H. B. Smith Company, Inc.
(HBS):

Prior
to June 27, 2003 the Company held an investment in HBS common stock which was sold on June
27, 2003 for $103,413 and a gain in this amount was recorded in connection with the sale.
The Companys note receivable from HBS, carried at a value of $1,264,000 as of
December 31, 2002, was purchased by HBS on June 30, 2003 for $1,264,000. No gain or loss
was recorded on the disposition of the note. The Company purchases certain products from
HBS under a Supply Agreement and purchases and provides certain services from and to HBS
under a Manufacturing Agreement, both through a subsidiary.

# 6. DEBT

Short-term Debt:

Short-term
debt consisted of the following at December 31:

`2004                       2003
                                                                  (in thousands)

              Revolving Loan Agreement                 $20,000                    $17,467`

Revolving
Loan Agreement  On October 19, 2004, the Company entered into a three year,
$70,000,000, committed, unsecured, multi-bank revolving loan and letter of credit facility
(the Facility), led by Bank of America (successor to Fleet National Bank, the
Companys long-term lender), refinancing the Companys existing $50,000,000
credit facility which would have otherwise matured on October 29, 2004. As with the prior
facility, borrowings under the Facility bear interest, at the Companys election, at
a floating rate based on the lenders prime or base rate or, for short term
borrowings, at a rate based upon the daily British Bankers Association (BBA)
LIBOR rate. The Facility contains affirmative and negative covenants, typical of such
financing transactions, and specific financial covenants which require the Company to
maintain a minimum consolidated net worth, a minimum cash flow coverage ratio and a
maximum cash flow leverage ratio. As of December 31, 2004, the Company was in compliance
with all of the financial covenants required under the Facility. Revolving borrowings
under the Facility are due and payable in full on the maturity date of the Facility, which
is October 19, 2007. Most of the Companys operating subsidiaries guaranty the
obligations of the Company under the Facility. The Credit Agreement relating to the
Facility also contains restrictions regarding the creation of indebtedness, the occurrence
of mergers or consolidations, the sale of subsidiary stock and the payment of dividends in
excess of 50 percent (50%) of net income. The Company had outstanding at December 31,
2004, $16,977,796 in standby letters of credit issued in connection with the Met-Coil
bankruptcy reorganization plan, as more fully explained in Note 15, and $8,406,102 issued
principally in connection with its commercial insurance programs. The Facility was used to
refinance balances outstanding under the Companys existing $50 million revolving
loan and letter of credit facility and to fund the Met-Coil bankruptcy reorganization
plan. The balance outstanding under the facility was $20,000,000 at December 31, 2004.

Hedge
Transaction  On February 6, 2004, the Company entered into a single interest
rate swap transaction, to effectively fix the Companys 30 day-LIBOR-based, variable
rate interest obligations on a principal amount of $14,000,000 of debt at a rate of 2.87%
for three years.

The
Company entered into this swap transaction to manage interest cost and cash flows
associated with variable interest rates, primarily short-term changes in LIBOR, as changes
in cash flows of the interest rate swap offsets changes in the interest payments on the
covered portion of the Companys revolving credit facility, and based upon the
Companys belief that short term rates will be rising over the next several years.

The
Company is accounting for the interest rate swap as a cash flow hedge under SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities as amended by SFAS No.
138, Accounting for Certain Derivative instruments and Certain Hedging Activities.
These statements require that all derivatives be recognized as either assets or
liabilities on the balance sheet at fair value.

Changes
in the fair value of the swap, designated as a cash flow hedge, are reflected as a
component of Other Comprehensive Income (Loss) and reclassified into earnings (interest
expense) in the same period or periods during which the hedged transaction affects
earnings. The derivative instrument is carried at marked-to-market fair value
on the Consolidated Balance Sheet in the applicable line item Other Assets or
Other Liabilities.

In
connection with this interest rate swap transaction, the Company recorded an after-tax
credit of $87,500 in Other Comprehensive Income (Loss) during the year ended December 31,
2004 reflecting interest rate fluctuations during this period. The Companys exposure
to credit loss on its interest rate swap in the event of nonperformance by the
counterparties is believed to be remote as the Company effected this swap through its
principal bank, Bank of America, requiring that the counterparty have a strong credit
rating.

Long-term Debt:

Long-term
debt consisted of the following at December 31:

`2004                       2003
                                                                  (in thousands)

              Industrial Development Bond               $4,297                   $  4,771
              Note Payable - Sovereign Bank              3,597                     ---
              Other Bonds and Notes Payable                 86                       211
                                                         7,980                      4,982
              Less Current Maturities                     (768)                      (596)
                                                      $  7,212                   $  4,386`

Note
Payable-Sovereign Bank On April 16, 2004, the Companys second tier
subsidiary, Exton Ranch, Inc. (Exton Ranch), borrowed $3,720,000 from
Sovereign Bank, secured by the manufacturing facility owned by Exton Ranch and occupied,
in part, by the Companys subsidiary, Omega Flex, Inc. (Omega) in Exton,
PA. The loan bears interest at a LIBOR-based variable rate, payable monthly in arrears.
Principal under the loan is amortized over a 20-year period with a ten-year maturity. The
borrower also has the ability to prepay the loan during the term thereof without penalty.
The loan is secured by a first priority mortgage on the property, and a collateral
assignment of leases, and fixture filing. Exton Ranch is a wholly-owned subsidiary of
Omega, the primary tenant of the building, and Omega guaranteed the payment and
performance of the obligations of Exton Ranch under the various loan agreements.

Industrial
Development Bond  On April 19, 2002, the Companys subsidiary, Boyertown
Foundry Company, Inc. (BFC), borrowed $5,512,490 under a note issued through
the Berks County Industrial Development Authority in Berks County, PA in connection with a
project to upgrade BFCs foundry equipment in Boyertown, PA. The note bearing
interest at 4.93% per annum, matures on April 19, 2012, and is payable in equal monthly
payments of principal and interest over the term of the loan. The note is secured by a
Loan and Security Agreement under which the equipment purchased by BFC with the loan
proceeds is pledged as security for the note. The note is expected to be a Qualified
Small Issue Bond under Section 144 (a)(12) of the Internal Revenue Code, entitling
the holder to tax exempt treatment on the interest. In the event the note is found to be
not in compliance with Section 144 (a)(12), the interest rate on the note may be
increased.

Maturities
of debt in each of the next five years and thereafter are as follows in thousands:

`Long-term
                                                                    Debt

                           2005                                       768
                           2006                                       710
                           2007                                       736
                           2008                                       764
                           2009                                       793
                           Thereafter                               4,209


                              Total                                $7,980`

The
fair value of the Companys long-term debt is estimated based on the current interest
rates offered to the Company for debt of the same remaining maturities. Management
believes the carrying value of debt and the contractual values of the outstanding letters
of credit approximate their fair values as of December 31, 2004.

Cash
paid for interest was $1,061,000, $623,000, and $969,000, during the years ended December
31, 2004, 2003, and 2002, respectively.

# 7. INCOME TAXES

Income
tax (expense) benefit consisted of the following:

`2004                   2003                 2002
                                                                               (in thousands)
Federal Income Tax:
                  Current                                     $800                $ 4,121              ($  784)
                  Deferred                                  (4,224)                14,368                1,386
State Income Tax:
                  Current                                     (979)                (1,049)                (902)
                  Deferred                                     155                  1,376                   41
Foreign Income Tax:
                  Current                                     (415)                  (761)                (633)
                  Deferred                                      36                    448                   26
         Income Tax (Expense) Benefit                      ($4,627)              $ 18,503              ($  866)`

Income tax
benefit from a change in accounting method in 2002 was $2,299,000. The change in
accounting method for goodwill is discussed at greater length in Note 1. Income from
Continuing Operations before income taxes included foreign income of $1,057,000,
$1,559,000, and $1,689,000, in 2004, 2003, and 2002, respectively.

Total
income tax expense from continuing operations differed from expected  income
tax expense, computed by applying the U.S. federal income tax rate of 35% to earnings
before income tax, as follows:

`2004                   2003                 2002
                                                                               (in thousands)

Computed "expected" income tax (benefit) expense           ($9,156)              $21,584                $   72
State income tax, net of federal tax benefit                  (699)                  (21)                 (767)
Foreign tax rate differential                                  117                   172                   186
Goodwill Impairment - permanent portion                        ---                (3,089)                ---
Worthless Stock - permanent portion                          5,799                 ---                   ---
Other - net                                                   (688)                 (143)                 (357)
Income Tax (Expense) Benefit                               ($4,627)             $ 18,503               ($  866)`

A
deferred income tax (expense) benefit results from temporary timing differences in the
recognition of income and expense for income tax and financial reporting purposes. The
components of and changes in the net deferred tax assets (liabilities) which give rise to
this deferred income tax (expense) benefit for the year ended December 31, 2004 are as
follows:

`December 31,
                                                                     2004                      2003
                                                                            (in thousands)

Deferred Tax Assets:
Warranty Reserve                                                   $1,720                      $830
Environmental Reserve                                               8,975                    18,288
Compensated Absences                                                1,006                     1,070
Inventory Valuation                                                   962                       835
Workers Compensation Reserve                                          533                       531
Equity Losses in Investee                                           4,937                     5,734
Accounts Receivable Valuation                                         989                     1,343
Federal Tax Operating Loss/Credit Carryforward                      4,415                       660
State Tax Operating Loss/Credit
   Carryforward                                                       959                       946
Deferred Income on Sale of Assets
   to Non-consolidated Investees                                    ---                         159
Other                                                               2,658                     1,667
Total Gross Deferred Tax Assets                                    27,154                    32,063

Deferred Tax Liabilities:
Prepaid Expenses                                                   (1,353)                   (1,240)
Depreciation and Amortization                                      (4,894)                   (3,767)
       Deferred Tax Liabilities                                    (6,247)                   (5,007)
       Net Deferred Tax Asset                                     $20,907                   $27,056`

At
December 31, 2004, the Company has a Federal tax operating loss of approximately
$14,800,000 of which $3,300,000 will be carried back to offset 2002 federal taxable
income, resulting in a tax refund of approximately $800,000. The remaining Federal tax
operating loss of approximately $11,500,000 will carry forward to 2005 and beyond. At
December 31, 2004, the Company has foreign tax operating loss carry forwards of
approximately $1,168,000 and state tax operating loss carry forwards of approximately
$13,500,000, which are available to reduce future income taxes payable, subject to
applicable carry forward rules and limitations. These losses begin to expire
after the year 2009.

Management
believes it is more likely than not that the Company will have sufficient taxable income
when these timing differences are reversed and that the deferred tax asset will be
realized and accordingly no valuation allowance is deemed necessary.

Net
Cash paid by or (refunded) to the Company for income taxes was ($1,737,000), $357,000, and
$3,532,000, for the years ended December 31, 2004, 2003, and 2002, respectively.

# 8. LEASES

The
Company leases various manufacturing facilities and equipment from companies owned by
certain officers and directors of the Company, either directly or indirectly, through
affiliates. The leases generally provide that the Company will bear the cost of property
taxes and insurance.

Details
of the principal operating leases with related parties as of December 31, 2004, including
the effect of renewals and amendments executed subsequent to December 31, 2004, are as
follows:

`Basic            Minimum
                                            Date of                             Annual           Future
                                            Lease             Term              Rent             Rentals
                                                                                (in thousands)   (in thousands)

Sterling Realty Trust
   Land and Building-Main                   11/08/00       8.67 years           $282           $  973
   Land and Building Beacon Morris          07/01/03          5 years             83              303
   Land and Building-South Complex          01/01/94         14 years            257            1,027
   Land and Building Torrington             05/01/04          5 years            279            1,263
Rudbeek Realty Corp.
   (Farmville Location)                     07/01/97       13.5 years            436            2,614
MacKeeber
   (South Windsor, CT)                      01/01/97       10.7 years            325              541
SNS
   (Formtek Cleveland)                      07/02/01          8 years            345            1,401`

# All Leases

Rent
expense for operating leases, including those with related parties, was $3,469,000,
$3,602,600, and $3,728,000, for the years ended December 31, 2004, 2003, and 2002,
respectively. Rents to related parties were approximately $1,990,000, $1,907,000, and
$1,562,000 for the years ended December 31, 2004, 2003 and 2002, respectively.

Future
minimum lease payments under all non-cancelable leases as of December 31, 2004 are as
follows:

`Year Ending December 31,                 Operating
                                                                                           Leases
                                                                                    (in thousands)

                                               2005                                       $ 3,426
                                               2006                                         2,767
                                               2007                                         2,346
                                               2008                                         2,126
                                               2009                                         1,083
                                         Thereafter                                           463

                                    Total Minimum Lease payments                          $12,211`

# 9. EMPLOYEE BENEFIT PLANS

# Defined Contribution
and 401-K Plans

The
Company maintains a qualified non-contributory profit-sharing plan (Profit-Sharing
Plan) covering all eligible employees. Contributions to the Profit-Sharing Plan were
$1,947,000, $1,784,000, and $1,513,000, for the years ended December 31, 2004, 2003, and
2002, respectively. Contributions to the Profit-Sharing Plan are defined as three percent
(3%) of gross wages up to the current Old Age, Survivors, and Disability (OASDI) limit and
six percent (6%) of the excess over the OASDI limit, subject to the maximum allowed under
the Employee Retirement Income Security Act of 1974, (ERISA). The Profit-Sharing
Plans vesting terms are twenty percent (20%) vesting after 3 years of service, forty
percent (40%) after 4 years, sixty percent (60%) after 5 years, eighty percent (80%) after
6 years, and one hundred percent (100%) vesting after 7 years.

The
Company maintains a retirement savings plan (Retirement Savings Plan)
qualified under Internal Revenue Code Section 401(k) for employees covered under certain
collective bargaining agreements. Service eligibility requirements differ by division and
collective bargaining agreement. Participants may elect to have up to fifty percent (50%)
of their compensation withheld, up to the maximum allowed by the Internal Revenue Code.
Participants may also elect to make after tax voluntary contributions up to an additional
ten percent (10%) of their gross earnings each year within the legal limits. The Company
contributes differing amounts depending upon the divisions collective bargaining
agreement. Contributions are funded on a current basis. Company contributions to the
Retirement Savings Plan were $418,000, $445,000, and $393,000, for the years ended
December 31, 2004, 2003, and 2002, respectively.

The
Company maintains a separate qualified 401(k) plan (401(k) Plan) for salaried
employees not covered by a collective bargaining agreement who choose to participate.
Participants may elect to have up to fifty percent (50%) of their compensation withheld,
up to the maximum allowed by the Internal Revenue Code. Participants may also elect to
make after tax voluntary contributions up to an additional ten percent (10%) of their
gross earnings each year within the legal limits. The Company contributes $0.25 of each
$1.00 deferred by participants and deposited in to the 401(k) Plan not to exceed one and
one half percent (1.5%) of an employees compensation. The Company does not match any
amounts for withholdings from participants in excess of six percent (6%) of their
compensation or for any after tax voluntary contributions. Contributions are funded on a
current basis. Contributions to the Plan were $646,000, $655,000, and $643,000, for the
years ended December 31, 2004, 2003, and 2002, respectively.

# Defined Benefit Plans

The
Companys second-tier subsidiary, Met-Coil, maintained, prior to its acquisition by
the Companys subsidiary, Formtek, Inc. on June 3, 2000, several defined benefit
pension plans (the Met-Coil Plans) covering certain of its employees. The Met-Coil Plans
were frozen and merged prior to the acquisition, locking in
retirement benefits earned to that date and precluding any further benefits for future
service. Due to recent adverse investment performance and reduced expectations of future
investment earnings, the combined Met-Coil Plans administrator has determined that
the Accumulated Benefit Obligation, the present value of future pension obligations to
Met-Coil Plan participants, exceeds the fair market value of the Met-Coil Plans
assets as of December 31, 2004 and 2003. In accordance with the requirements of FAS 87,
Employers Accounting for Pensions, the Company has recorded charges in 2004 and 2003
net of related tax benefit, to the Shareholders Equity section of the consolidated
Balance Sheet contained herein of $8,000, and $205,000 respectively, under the heading
Additional Minimum Liability-Defined Benefit Plan. There was no pension
expense under this plan for the years ended December 31, 2004, 2003, and 2002.

In
connection with the acquisition of the assets of Airtherm Manufacturing Company and
Airtherm Products, Inc. in 2000, the Company assumed certain obligations related to the
defined benefit plan maintained by Airtherm, the Airtherm LLC Retirement Income Plan,
prior to the acquisition date. The Airtherm LLC Retirement Income Plan was
frozen prior to acquisition in a manner similar to the Met-Coil Plans
described above. In accordance with the requirements of FAS 87, Employers Accounting
for Pensions, the Company recorded charges in 2004 and 2003, net of related tax benefits,
to the Shareholders Equity section of the Consolidated Balance Sheet contained herein of
$164,000 and $42,000, respectively, relating to the Airtherm LLC Retirement Income Plan
under the heading Additional Minimum Liability-Defined Benefit Plan. Pension expense
under the Airtherm LLC Retirement Income Plan was $0 for the years ended December 31, 2004
and December 31, 2003, and $164,000 for the year ended December 31, 2002.

The
Company uses a December 31, measurement date for the Airtherm LLC Retirement Income Plan
and September 30, for the Met-Coil Plans.

`Met-Coil                       Airtherm
                                                                   September 30,                  December 31,
                                                                2004          2003             2004         2003
                                                                                 (in thousands)

       Change in benefit obligation
       Benefit obligation at beginning of year               $4,502         $4,004           $3,528       $3,294
       Interest cost                                            270            272              210          209
       Actuarial loss                                           207            466              169          219
       Benefits paid                                           (441)          (240)            (199)        (194)
       Benefit obligation at end of year                     $4,538         $4,502           $3,708       $3,528

       Change in plan assets
       Fair value of plan assets at beginning of year        $3,767         $3,625           $3,295       $3,196
       Actual return on plan assets                             401            349              104          293
       Employer contribution                                    111             33              ---          ---
       Benefits paid                                           (441)          (240)            (199)        (194)
       Fair value of plan assets at end of year               3,838          3,767            3,200        3,295
       Funded status                                           (700)          (735)            (508)        (233)
       Unrecognized transition (asset) obligation             ---               (8)             ---          ---
       Unrecognized net actuarial loss (gain)                 1,264          1,273              349           76
       Unrecognized prior service cost (benefit)                15           ---              ---            ---
       Net amount recognized                                   $579           $530            ($159)       ($157)`

Amounts
recognized in the statement of financial position consist of:

`Met-Coil                       Airtherm
                                                                   September 30,                  December 31,
                                                                2004          2003             2004         2003
                                                                                 (in thousands)

       Accrued benefit cost                                     ($700)       ($735)           ($508)       ($233)
       Accumulated other comprehensive income                   1,279        1,265              349           76
       Net amount recognized                                     $579         $530            ($159)       ($157)`

The
accumulated benefit obligation for all defined benefit pension plans was $8,246,000 and
$8,030,000 at December 31, 2004 and 2003, respectively.

Information
for pension plans with an accumulated benefit obligation in excess of plan assets:

`Met-Coil                       Airtherm
                                                                   September 30,                  December 31,
                                                                2004          2003             2004         2003

       Projected benefit obligation                              $4,538       $4,502           $3,708        $3,528
       Accumulated benefit obligation                            $4,538       $4,502           $3,708        $3,528
       Fair value of plan assets                                 $3,838       $3,767           $3,200        $3,295`

---

`Met-Coil                       Airtherm
                                                                   September 30,                  December 31,
                                                                2004          2003             2004         2003

       Interest cost                                             $270         $272             $210         $209
       Expected return on plan assets                            (263)        (282)            (208)        (216)
       Amortization of transition (asset) obligation               59          (10)            ---           ---
       Amortization of prior service cost                           4            4            ---            ---
       Amortization of net (gain) loss                             (7)          33            ---            ---
       Other                                                    ---            (17)           ---              7
       Net periodic benefit cost                                  $63         $---               $2         $---`

`Met-Coil                       Airtherm
                                                                   September 30,                  December 31,
                                                                2004          2003             2004         2003
                                                                                 (in thousands)

       Increase in minimum liability included
         in other comprehensive income (gross)                      $18         $356             $274           $76

       Increase in minimum liability included
         in other comprehensive income (net of tax)                 $11         $205             $164           $42`

Weighted-average
assumptions used to determine benefit obligations at December 31

`Met-Coil                       Airtherm
                                                                   September 30,                  December 31,
                                                                2004          2003               2004       2003

       Discount rate                                             6%              6%               5.75%     6%
       Rate of compensation increase                             n/a             n/a              n/a        n/a`

Weighted-average assumptions
used to determine net periodic benefit cost for years ended December 31:

`Met-Coil                       Airtherm
                                                                   September 30,                  December 31,
                                                                2004          2003             2004         2003

       Discount rate                                             6%            6%               5.75%        6%
       Expected long-term return on plan assets                  7%            8%               6.5%         6.5%
       Rate of compensation increase                             n/a           n/a              n/a          n/a`

Each
plan utilizes the services of its own actuary. The actuaries apply rates of return based
on historic performance of the type of investments which comprise the respective plans,
and analysis of the current trends of return rates for these types of investments and the
investment policy adopted by the respective plans. The expected rates are based on
published surveys of expected long-term rates.

---

Mesteks
frozen defined benefit pension plan weighted-average asset allocations at
December 31, 2004, and 2003, by asset category are as follows:

`Met-Coil                       Airtherm
                                                                   September 30,                  December 31,
                                                                2004          2003             2004         2003
       Asset Category

       Equity securities                                        40%           38%               0%             0%
       Debt securities                                          60%           30%               0%             0%
       Real estate                                               0%            0%               0%             0%
       Other                                                     0%           32%             100%           100%
            Total                                              100%          100%             100%           100%`

The
Airtherm defined benefit plan is invested in a guaranteed investment contract or
guaranteed account of a life insurance company. This contract obligates the
issuer to pay an annually or semi-annually adjusted fixed rate of return on the amount
invested, which itself does not appreciate or depreciate in value, other than by reason of
the interest or guaranteed investment return, benefit payments or additional employer
contributions. The investment strategy is to conserve the capital for these
frozen defined benefit plans. The Met-Coil defined benefit plan has
approximately 32% of its assets similarly invested, with the balance, or approximately 68%
of its assets in a bank-managed portfolio of debt and equity securities. Conservation of
capital with some conservative growth potential is the strategy for this plan.

# 10. COMMITMENTS AND
CONTINGENCIES

The
Company is obligated under Indemnity Agreements (Indemnity Agreements)
executed on behalf of 23 of the Companys Officers and Directors. Under the terms of
the Indemnity Agreements, the Company is contingently liable for costs which may be
incurred by the Officers and Directors in connection with claims arising by reason of
these individuals roles as Officers and Directors.

The
Company is obligated under the Indemnity and Guaranty Agreement with Airtherm Products,
Inc. (Airtherm) to indemnify Airtherm against certain claims arising out of
the acquisition of Airtherm in August 2001, including potential claims involving alleged
violations of the Worker Adjustment and Retraining Notification Act (WARN
Act). Certain former employees of Airtherm have filed suit alleging such WARN Act
claims, and defense of the matter was tendered by Airtherm to the Company pursuant to the
above indemnity agreement. The U.S. District Court in Arkansas subsequently awarded
summary judgment to plaintiffs, and assessed liability of approximately $520,000, plus
interest and attorneys fees. The Company has appealed the summary judgment verdict
on behalf of Airtherm to the Eight Circuit Court of Appeals, and the matter is scheduled
for briefing and oral argument in the first half of 2005. The Company expects that the
trial court judgment will be overturned as being inconsistent with the statute and prior
judicial decisions.

The
Company is contingently liable under standby letters of credit totaling $25,384,000 issued
principally in connection with its commercial insurance coverages and in connection with
the funding of the Met-Coil TCE PI Trust discussed below. For losses occurring in the
policy years ending October 1, 2004 and October 1,2005, the Company retained liability for
the first $2,000,000 per occurrence of commercial general liability claims (including
products liability claims), subject to an agreed aggregate. For losses occurring in the
policy year ended October 31, 2003, the Company retained liability for the first $500,000
per occurrence of commercial general liability claims (including product liability),
subject to an agreed aggregate. In addition, the Company retained liability for the first
$250,000 per occurrence of workers compensation coverage, subject to an agreed aggregate.

The
Company is obligated as a guarantor with respect to certain debt of CareCentric, Inc.
(formerly Simione Central Holdings, Inc.  see Note 5) to CareCentrics primary
commercial bank, Wainwright Bank & Trust Company, in the amount of $4 million. The $4
million Wainwright credit line is secured by substantially all of CareCentrics
assets and the Companys guarantee expires coincident with the credit line on August
31, 2005. The balance outstanding under CareCentrics credit line with Wainwright
Bank & Trust Company as of December 31, 2004 was $500,000, a reduction of $1,625,000
since December 31, 2003. Under the Equity Method of Accounting, in December 2001, the
Company accrued this guarantee (originally in the amount of $6 million and now reduced to
$4 million) as a reserve for Equity Investment Losses. John E. Reed, the Companys
Chairman and Chief Executive Officer, is a shareholder and director of Wainwright Bank
& Trust Company.

The
Company is subject to several legal actions and proceedings in which various monetary
claims are asserted. Management, after consultation with its corporate legal department
and outside counsel, does not anticipate that any ultimate liability arising out of all
such litigation and proceedings will have a material adverse effect on the financial
condition of the Company except as set forth below.

Berry, et al. v. Titeflex Corp., et
al. Case No. 05-6001, U.S.D.C., W.D. Ark., Hot Springs Div.

| | (Originally
filed in Circuit Court of Clark County, Arkansas as Case No. CV-2004-211 on November 15,
2004.)
| | -----------------------------------------------------------------------------------------------------------

Defendant: Omega Flex,
Inc., a Pennsylvania Corporation

Four
individual residents of Arkansas and an individual Texas resident have sued the top four
manufacturers of corrugated stainless steel tubing (CSST), including the
Companys subsidiary Omega Flex, Inc., (Omega) the manufacturer of
TracPipe®-brand CSST. The complainants have proposed a national class action on behalf
of all owners of installed CSST. Installed CSST is alleged to be defective because it is
alleged to be more susceptible to failure from near-lightning strikes than traditional
black iron pipe and because the manufacturers allegedly failed to warn of CSSTs
allegedly heightened susceptibility.

A
federal court has recently remanded the case to state court in Arkansas. The parties will
next engage in discovery and disposition of the issue of class certification. Omega will
oppose both class certification and any request for a national class. The Company believes
Omega has valid defenses to the issues of both class certification and product liability
and Omega will contest these claims vigorously. At this time the Company believes that no
estimation of Omegas potential liability in the matter can be reasonably made. It is
the nature of class action litigation in general, and, accordingly, this matter in
particular, that if there should be an adverse decision on the issue of certification of a
national class of CSST owners and an adverse decision on the issue of product liability,
the financial position and results of operation of Omega could be materially adversely
affected.

ENVIRONMENTAL DISCLOSURE

As
disclosed in previous filings, the Lockformer Company (Lockformer), a division
of the Companys second tier subsidiary, Met-Coil Systems Corporation, now Met-Coil
Systems, LLC (Met-Coil), and Mestek directly (under various legal theories)
were defendants in various actions relating to the alleged release and presence of
trichloroethylene (TCE) contamination on and in the vicinity of
Lockformers manufacturing facility in Lisle, IL. On August 26, 2003, Met-Coil filed
a voluntary petition for relief under Chapter 11 of Title 11 of the United States Code
(the Bankruptcy Code) in the United States Bankruptcy Court for the District
of Delaware (the Bankruptcy Court) (Case No. 03-12676-MFW).

On
August 17, 2004, the Bankruptcy Court confirmed the Fourth Amended Chapter 11 Plan of
Reorganization (the Amended Plan) proposed by Met-Coil and Mestek, as
co-proponents, and recommended to the United States District Court (N. D. Del.) (the
District Court) that it approve and enter the channeling injunction
discussed below, and certain related third party releases in favor of, among others,
Mestek and its affiliates. On September 14, 2004, the District Court entered and approved
the recommended findings and conclusions and issued the channeling injunction.

This
Amended Plan, supported by all major parties in interest in the Met-Coil Chapter 11 case,
became effective on October 19, 2004.

The
Amended Plan settled the various legal actions which had been commenced against Met-Coil
and Mestek with respect to an alleged release of TCE into the soils, groundwater or air in
or around Met-Coils Lockformer Company facility in Lisle, Illinois, including the
class action captioned Mejdrech, et al. v. The Lockformer Company, et al.and all other personal injury and indemnification actions brought against the Company
relating to the alleged release of TCE.

In
addition, the Amended Plan established a trust (the TCE PI Trust) for the
holders of future claims or demands, who reside, resided or may reside in a certain
geographic area in the vicinity of the facility in Lisle, Illinois, and who assert or may
assert personal injury claims in the future. Pursuant to the channeling
injunction the TCE PI Trust was established to assume all such future personal
injury claims and demands and pay and administer verified claims for up to 45 years.
Pursuant to the Amended Plan, the Company and Met-Coil are committed to fund up to $26
million (on a present value basis) to the TCE PI trust over time and based on actual
claims paid. Upon establishment of such TCE PI Trust, Mestek and its affiliates were
released from any liabilities assumed by the TCE PI Trust for up to 45 years. Pursuant to
the Amended Plan, all such future claims and demands will be channeled to the
TCE PI Trust and be paid in accordance with the distribution procedures established for
such trust. This TCE PI Trust is being administered by an independent trustee, with power
to mediate, arbitrate and, if necessary, litigate claims.

The
Companys Environmental and Litigation Reserve as of the year ended December 31, 2003
was approximately $50.8 million. The confirmation of the Amended Plan resulted in the
collection of certain insurance proceeds and the resolution of settlements with various
claimants and creditors, the result of which is a reduction of these reserves as of
December 31, 2004 to $24.7 million and the recording of Environmental
Litigation/Remediation income of $17,738,000 in the twelve month period ended December 31,
2004. The reduction in the reserve also reflected approximately $2,011,000 for remediation
expenditures made during the twelve months ended December 31, 2004. Based on recent
estimates of ongoing remediation costs, management has increased the remediation portion
of the reserve to $7,018,000, as of December 31, 2004, which amount is included in the
$24.7 million reserve discussed above. See Note 15 to the Consolidated Financial
Statements for a tabular illustration of the effects of the Amended Plan on the
Companys liabilities. The reserve balance at December 31, 2004 relates to future
obligations under the Plan relating to soil and groundwater remediation, municipal water
connections, the TCE PI Trust described above and other administrative expenses of the
Met-Coil bankruptcy. Management believes that no additional reserves, beyond those set
forth above, are required to be taken at this time. These reserves have been established
in accordance with Financial Accounting Standard Board Statement No. 5 and Staff
Accounting Bulletin No. 92. However, while these reserves represent managements best
estimate of these liabilities, and are based upon known or anticipated claims analysis
estimated by various legal, scientific and economic experts, there is no assurance that
these reserves will be adequate to meet all potentials claims arising from the
environmental contamination at the Lisle, Illinois site. In addition, there can be no
assurance that future claims for personal injury or property damage will not be asserted
by other plaintiffs against Met-Coil and Mestek with respect to the Lockformer site and
facility. See Remediation  Lisle, IL section below.

The
immediate cash requirements of funding the Amended Plan required borrowing, net of
insurance recoveries, of approximately $9,900,000 in October of 2004, under the
Companys $70 million commercial bank credit facility (see Note 6 to the Consolidated
Financial Statements). In addition, letters of credit of approximately $17,000,000 were
issued against the credit facility in connection with the funding of the Amended Plan and
the TCE PI Trust.

Met-Coil
is continuing the hook-up of certain residences to public water supply and the remediation
of the Lockformer facility in Lisle, IL, pursuant to a Work Plan for the site
(on-site remediation) approved by the Environmental Protection Agency
(EPA) and is awaiting approval of the remedial standards to be achieved by
such Work Plan, as well as the methodology for groundwater remediation, from the IEPA. In
the three months ended December 31, 2004, Met-Coil paid $442,000 in costs related to
hook-up costs and on-site remediation, and has a remaining reserve of $7,018,000, as
described above,for future remediation costs as of December 31, 2004. The Company
has guaranteed to the IEPA up to $3 million of remediation costs incurred by either
Met-Coil or, if met-Coil fails to perform the remediation, the IEPA.

In
light of the remaining uncertainties surrounding the effectiveness of the available
remediation technologies and the future potential changes in methodology, remedial
objectives and standards, still further reserves may be needed in the future with respect
to the on-site remediation of the Lisle facility. The complexity of aforementioned factors
makes it impossible at this time to further estimate any additional costs.

---

The
Companys Environmental Litigation and Remediation Reserve is comprised of the
following at December 31, 2004 and 2003.

`December 31,
                                                                          2004              2003
                                                                             (in thousands)

Mejdrech and Schreiber litigation claim (Letter Agreement)                    $0          $18,500
Devane Litigation Claims                                                       0            2,368
Estimated Future Remediation costs                                         7,018            7,632
The Illinois Actions, The Honeywell Claims, The Attorney General Action
     and all matters related to pending
     Future personal Injury claims in the Lockformer area                  1,500           22,300
Potential Future Obligations to the TCE PI Trust                          16,171            ---

     Total Environmental Litigation and Remediation Reserve              $24,689          $50,800`

Other Claims Alleging
Releases of Hazardous Materials or Asbestos Related Liability

The
Company is currently a party to approximately 265 asbestos-related lawsuits, and in the
past twelve months has been named in approximately 5 new such lawsuits each month,
primarily in one county in Illinois where numerous asbestos-related actions have been
filed against numerous defendants.

Almost
all of these suits seek to establish liability against the Company as successor to
companies that may have manufactured, sold or distributed asbestos-related products, and
who are currently in existence and defending thousands of asbestos related cases, or
because the Company currently sells and distributes boilers, an industry that has been
historically associated with asbestos-related products. The Company believes it has valid
defenses to all of the pending claims and vigorously contests that it is a successor to
companies that may have manufactured, sold or distributed any product containing asbestos
materials. However, the results of asbestos litigation have been unpredictable, and
accordingly, an adverse decision or adverse decisions in these cases, individually or in
the aggregate, could materially adversely affect the financial position and results of
operation of the Company and could expose the Company to substantial additional asbestos
related litigation and the defense costs thereof, which defense costs, because of the
sheer number of asbestos claimants and the historical course of the litigation process in
this area has the potential to become substantial, though these costs are not capable of
estimation at this time. The total requested damages of these cases are over $3 billion.
To date, however, the Company has had over 40 asbestos-related cases dismissed without any
payment and it settled approximately twenty-five asbestos-related cases for a de minimis
value. However, there can be no assurance the Company will be able to successfully defend
or settle any pending litigation.

In
addition to the Lisle, IL site, the Company has been named or contacted by state
authorities and/or the EPA regarding the Companys asserted liability or has
otherwise determined it may be required to expend funds for the remediation of certain
other sites in North Carolina, Connecticut and Pennsylvania.

The
Company continues to investigate all of these matters. Given the information presently
known, no estimation can be made of any liability which the Company may have with respect
to these matters. There can be no assurance, but based on the information presently
available to it, the Company does not believe that any of these matters will be material
to the Companys financial position or results of operations.

Warranty Commitments

Products
sold by the Company are covered by various forms of express limited warranty with terms
and conditions that vary depending upon the product. The express limited warranty
typically covers the equipment, replacement parts and, in very limited circumstances,
labor necessary to satisfy the warranty obligation for a period which is generally the
earlier of 12 months from date of installation or 18 months from date of shipment from the
Company factory, although some products or product components are warranted for periods
ranging from eighteen months to ten years. The Company estimates the costs that may be
incurred under its warranty obligations and records a liability in the amount of such
costs at the time product revenue is recognized. Factors that affect the Companys
warranty liability include the number of units sold, historical and anticipated rates of
warranty claims, and allowable costs per claim and recoveries from vendors. At least once
a quarter the Company assesses the adequacy of its recorded warranty liabilities and
adjusts the amounts as necessary. Costs to satisfy warranty claims are charged as incurred
to the accrued warranty liability.

Following
is a summary of changes in the Companys product warranty liability for the twelve
months ended December 31, 2004 and 2003.

`Twelve months ended
                                                                   December 31,
                                                            2004                      2003
                                                                    (in thousands)

Balance at beginning of period                              $2,524                       $2,662
Provision for warranty claims                                2,824                        1,271
Warranty claims incurred                                    (1,484)                      (1,453)
Balance at end of period                                    $3,864                       $2,480`

# 11. SEGMENT INFORMATION

# Description of the types
of products and services from which each reportable Segment derives its revenues:

The
Company has two reportable Segments: the manufacture of heating, ventilating and
air-conditioning equipment (HVAC) and the manufacture of metal handling and
metal forming machinery (Metal Forming).

The
Companys HVAC Segment manufactures and sells a variety of complementary residential,
commercial and industrial heating, cooling and air control and distribution products. The
HVAC Segment sells its products to independent wholesale supply distributors, mechanical,
sheet metal and other contractors and, in some cases, to other HVAC manufacturers under
original equipment manufacture (OEM) agreements and direct to certain
retailers pursuant to national account agreements. The HVAC Segment is comprised of three
interrelated HVAC product groups: Hydronics Products, Gas and Industrial Products, and Air
Distribution and Cooling Products, described in more detail as follows:

Hydronics
Products consist of residential baseboard heating products, commercial finned tube heating
products, residential boilers, commercial boilers, convectors, kickspace heaters, fan coil
units, steam & hot water unit heaters, finned-copper tube boilers and water heaters.

Gas
Products consist of commercial gas fired heating and ventilating equipment and corrugated
stainless steel gas tubing. Industrial Products consist of commercial and industrial
indoor and outdoor heating and air conditioning products.

Air
Distribution Products consist of fire, smoke and air control dampers, louvers, grilles,
registers, VAV boxes and diffusers. Cooling Products consist of residential and commercial
air conditioning products.

Collectively,
the HVAC Segments products provide heating, cooling, ventilating, or some
combination thereof, for residential, commercial and/or industrial building applications.

The
Metal Forming Segment, operating under the umbrella name Formtek, is comprised
of several subsidiaries and divisions, all manufacturers of equipment used in the metal
forming industry (the uncoiling, straightening, leveling, feeding, forming, bending,
notching, stamping, cutting, stacking, bundling or moving of metal in the production of
metal products, such as steel sheets, office furniture, appliances, vehicles, buildings,
and building components, among many others).

# Measurement of Segment
profit or loss and Segment assets:

The
Company evaluates performance and allocates resources based on profit or loss from
operations before interest expense and income taxes (Operating Profit), not including
non-operating gains and losses. The accounting policies of the reportable Segments are the
same as those described in the significant accounting policies. Inter-Segment sales and
transfers are recorded at prices substantially equivalent to the Companys cost;
inter-company profits on such inter-Segment sales or transfers are not material.

# Factors management used
to identify the enterprises reportable segments:

The
factors which identify the HVAC Segment as a reportable Segment are as follows:

The HVAC
industry in which the HVAC Segment operates has been characterized for many years by a
gradual consolidation or roll-up process in which smaller companies, typically
built around one or two niche products, are subsumed into the larger product family of
more established HVAC companies. The HVAC Segment has grown incrementally over many years
by internal growth and by adding complementary HVAC product lines via acquisition on a
regular basis. The HVAC Segment has acquired in this manner over 20 companies since 1986
at an average transaction size of approximately $5 million. By design, the HVAC
Segments acquisition strategy has been to acquire complementary HVAC products in
order to exploit specific marketing, distribution, manufacturing, product development and
purchasing synergies. Management, accordingly, views and operates the HVAC Segment as a
single cohesive business made up of a large number of mutually reinforcing HVAC product
lines acquired over a number of years.

All
of the Segments HVAC Products described above share common customers, common
distribution channels, common manufacturing methods (and in many cases shared
manufacturing facilities), common manufacturing services, common purchasing services,
common executive and financial management, and common engineering and product development
resources. The business decisions regarding Sales, Marketing, Operations, Engineering, and
Product Development are made on a centralized basis by the Segments core management
group.

Common
Sales/Marketing Management: Executive sales/marketing management is provided for
substantially all of the HVAC product groups from the HVAC Segments headquarters in
Westfield, MA. Most, if not all, of the HVAC Segments customers are current
customers or potential future customers for more than one of the Segments product
groups. As explained above, the HVAC Segments acquisitions are typically based in
fact upon just such cross-selling and common distribution synergy opportunities.

The
HVAC industrys most significant trade association, ASHRAE, (American Society of
Heating, Refrigeration, and Air conditioning Engineers), hosts an annual trade show at
which all of the HVAC Segments products and brand names are represented at a single
consolidated physical location under the Mestek name. Representatives of the HVAC industry
customer base  independent manufacturers representatives, contractors, engineers,
wholesale distributors etc.  are all typically in attendance at this event which
underscores the interrelated nature of the HVAC industry.

Common
Manufacturing Management. Substantially all of the products made at the HVAC
Segments 20 manufacturing locations involve sheet metal fabrication, paint, packing
and assembly. As such, they share many common characteristics and, in fact, a centralized
Manufacturing Services Group serving the Segment based in Westfield, MA provides a wide
variety of manufacturing related services to these locations. Opportunities to combine
similar manufacturing operations are commonplace and the HVAC Segment routinely undertakes
such consolidations resulting in numerous instances where several HVAC product groups
share a single manufacturing facility.

Common
Purchasing Management. The HVAC Segment, composed primarily of HVAC sheet metal
fabrication and assembly operations, presents a great deal of common purchasing
opportunities. A centralized Purchasing Department serving the HVAC Segment based in
Westfield, MA, therefore serves all of the 20 manufacturing locations in the Segment by
aggregating the more significant purchasing opportunities. Common items purchased include
copper tube, aluminum fin stock, cold rolled steel, pre-painted steel, motors, controls,
and freight, among many others.

Common
Financial Management. Income statements are prepared at the HVAC Segments
Westfield MA headquarters each month for substantially all of the products made at the 20
HVAC locations mentioned above with further breakdown among specific product lines, and
these are reviewed by the appropriate Chief Operating Decision Maker.

The
factors which identify the Metal Forming Segment as a reportable Segment are as follows:

The companies
acquired by the Metal Forming Segment in the past were selected for their synergies with
the existing metal forming franchises: complementary products and distribution channels,
potential manufacturing synergies, shared technologies and engineering skills, potential
purchasing synergies, common field service skills and organizations, and shared customer
bases. The most significant synergistic theme has been the real and potential common
customer base. To a large degree, any historical customer of one of the companies is a
potential customer for any of the others. Exploiting this cross selling opportunity is a
central factor in the creation of the Formtek family of metal forming products and
underscores the Segments goal of creating a single integrated metal forming solution
provider for the metal forming marketplace worldwide. Accordingly, there is a substantial
degree of inter-company sales among the formerly separate metal forming companies.

Notwithstanding
the interrelation of these subsidiaries, separate income statements and balance sheets are
maintained for each of the entities and the appropriate Chief Operating Decision Maker
reviews each of them separately on a monthly basis.

Common
Sales/Market Management. Corporate sales/marketing support is provided for all of the
Segments entities from a central office in Itasca, IL, which focuses on promoting
Formtek as a family of integrated products for the metal forming marketplace, through the
use of market managers.

Common
Manufacturing Management. Substantially all of the products made at the Segments
various entities involve the manufacture of metal forming equipment. As such, the entities
share many common characteristics and in fact a centralized Manufacturing Services Group
serving the Segment based in Westfield, MA provides a wide variety of manufacturing
related services to these locations. Opportunities to combine similar manufacturing
operations are commonplace and the Segment routinely undertakes such consolidations.

Common
Purchasing Management. The Segment, composed of manufacturers of metal forming
equipment, presents numerous common purchasing opportunities. A centralized Purchasing
Department serving the Segment based in Westfield, MA, supplemented in Cleveland, OH,
therefore serves the Segment by aggregating these purchasing opportunities.

Common
Financial Management. Income statements are prepared at the Segments Westfield,
MA headquarters each month for all of the products made at the four entities mentioned
above and these are reviewed by the appropriate Chief Operating Decision Maker. Separate
general ledgers and balance sheets for the four entities are maintained as they are
legally distinct subsidiaries necessitating this level of detail.

Shared
New Product Development. The Segments operating units utilize common resources
provided by Formtek, Inc. for new product development, including market research,
engineering and financial viability forecasting.

---

Information
presented in the following tables relates to continuing operations only.

# Year endedDecember 31,
2004

(in
thousands)

`Metal            All
                                              HVAC             Forming          Other          Totals

Revenues from External Customers
                                            $308,760           $96,033           $70          $404,863
Intersegment & Intrasegment Revenues
                                             $13,188            $7,411           ---           $20,599
Interest Expense                              $848               $373            $5            $1,226

Depreciation Expense                         $5,668             $1,912           ---           $7,580

Amortization Expense                          $170               $28             ---            $198

Segment Operating Profit (Loss)            $15,231 **          $9,556 *         ($26)          $24,761

Segment Assets                              $175,876           $62,591           $8           $238,475

Expenditures for
Long-lived Assets (1)                        $2,959             $1,445           ---           $4,404`

(1)    
          excludes long lived assets acquired via business acquisition

* includes ($17,738,000) in
Environmental Litigation/Remediation (income) expense (See Note 10) and $9,028,000 in
Subsidiary Bankruptcy Professional Fees (See Note 15)

** includes $1,789,000 in Plant
Shutdown expense (See Note 16).

# Year endedDecember 31,
2003

(in
thousands)

`Metal            All
                                              HVAC             Forming          Other          Totals

Revenues from External Customers
                                            $299,201           $66,905          $407          $366,513
Intersegment & Intrasegment Revenues
                                             $14,463            $5,262           ---           $19,725
Interest Expense                              $484               $202            $4             $690

Depreciation Expense                         $6,456             $1,664           ---           $8,120

Amortization Expense                          $175                $6             ---            $181

Segment Operating Profit (Loss)            $13,710 **        ($73,925) *       ($533)         ($60,748)

Segment Assets                              $175,098           $70,191         $1,381         $246,670

Expenditures for                             $9,543             $4,061           ---           $13,604
Long-lived Assets (1)`

* includes $53,665,000 in
Environmental Litigation/Remediation expense (see Note 10), $5,963,000 in Subsidiary
Bankruptcy Professional Fees (see Note 15) and $9,975,000 in Goodwill Impairment charges
(see Note 1).

** includes $5,239,000 in Plant
Shutdown and Other Restructuring Charges (see Note 16).

(1)    
          excludes long lived assets acquired via business acquisition

# Year endedDecember 31,
2002

(in
thousands)

`Metal            All
                                              HVAC             Forming          Other          Totals

Revenues from External Customers            $307,585           $65,855          $434          $373,874

Intersegment & Intrasegment Revenues         $15,299            $4,997           ---           $20,296

Interest Expense                              $746               $218            ---            $964

Depreciation Expense                         $6,812             $1,657           ---           $8,469

Amortization Expense                          $126               $223            ---            $349

Segment Operating Profit                     $21,801         ($20,538) *       ($558)           $705

Segment Assets                              $170,217           $49,737          $347          $220,301

Expenditures for
Long-lived Assets (1)                        $7,079              $447            ---           $7,526`

* includes $18,046,000 in
Environmental Litigation/Remediation expense

(1)    
          excludes long lived assets acquired via business acquisition

`HVAC Segment Revenues by HVAC Product Group:                          2004            2003              2002
                                                                                (dollars in thousands)

Hydronic Products                                                   $124,104          $120,793       $ 115,160
Air Distribution and Cooling Products                                 78,241            82,994          90,502
Gas and Industrial Products                                          106,415            95,414         101,923
     Total Consolidated Revenues                                    $308,760         $ 299,201       $ 307,585`

# RECONCILIATION WITH
CONSOLIDATED DATA:

`Revenues                                                              2004            2003              2002
                                                                                (dollars in thousands)

Total External Revenues For Reportable Segments                     $404,863          $366,513       $ 373,874
Inter & Intrasegment Revenues For Reportable Segments                 20,599            19,725          20,296
Elimination of Inter & Intrasegment Revenues                         (20,599)          (19,725)        (20,296)
     Total Consolidated Revenues                                    $404,863         $ 366,513       $ 373,874`

`Profit or Loss

Total Profit Or Loss For Reportable Segments
         Operating Profit (Loss)                                      24,761          ($60,748)          $ 705
Interest Expense-Net                                                    (955)             (622)          (560)
Other Income (Expense) Net                                             2,355              (298)          (350)
              Loss Before Income Taxes                               $26,161          ($61,668)         ($205)`

---

# GEOGRAPHIC INFORMATION:

# 2004 2003 2002

`Revenues:

United States                                                      $374,472          $341,104        $ 352,993
Canada                                                               17,531            15,464           13,385
Other Foreign Countries                                              12,860             9,945            7,496
     Consolidated Total                                            $404,863          $366,513         $373,874`

`Long Lived Assets:

United States                                                       $74,608           $82,089          $81,057
Canada                                                                2,069             1,966            1,712
Other Foreign Countries                                                 122                59             ---
     Consolidated Total                                             $76,799           $84,114          $82,769`

# 12. SELECTED QUARTERLY
INFORMATION (UNAUDITED)

| | The
table below sets forth selected quarterly information for each full quarter of 2004 and
2003. (Dollars in thousands except per common share amounts).
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------

`2004                                                       1st              2nd            3rd              4th
                                                         Quarter          Quarter         Quarter          Quarter

Total Revenues                                           $93,603           $97,474       $103,007          $110,779
Gross Profit                                             $27,259           $27,891        $29,415           $30,691

Net Income (Loss) (1)                                     ($327)            ($467)        $20,564            $1,764
Per Common Share:
     Basic                                               ($0.04)          ($0.05)          $2.39             $0.19
     Diluted                                             ($0.04)          ($0.05)          $2.39             $0.18`

|(1) | The Company recorded pre-tax charges (credits) of $219,000, $468,000,
                    ($18,415,000), and ($10,000) in the first, second, third, and fourth quarters of
                    2004, respectively, related to the Lisle, IL environmental matter, as more fully
                    described in Note 11.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

`2003                                                        1st              2nd            3rd             4th
                                                          Quarter          Quarter         Quarter         Quarter

Total Revenues                                           $86,156           $86,958        $97,259        $96,140
Gross Profit                                             $24,973           $24,580        $28,855        $27,658

Net Income (Loss) (1)                                       $842           ($9,509)       ($9,472)      ($25,026)
Per Common Share:
     Basic                                                $0.10           ($1.09)         ($1.09)        ($2.87)
     Diluted                                              $0.10           ($1.09)         ($1.09)        ($2.87)`

(1)    
          the Company recorded pretax charges of $1,200,000, $16,000,000, $16,700,000,
          $19,700,000 in the first, second, third, and fourth quarters of 2003,
          respectively, related to the Lisle, IL environmental matter, which is described
          in more detail in Note 11, and a pretax charge in the fourth quarter of 2003 of
          $9,975,000 for Goodwill Impairment.

---

# 13. SHAREHOLDERS
EQUITY

Mestek
has authorized common stock of 20,000,000 shares with no par value, and a stated value of
$0.05 per share. As of December 31, 2004, John E. Reed, Chairman and CEO of Mestek, and
Stewart B. Reed, a director of Mestek and son of John E. Reed, together beneficially own a
majority of the outstanding shares of Mesteks common stock.

Mesteks
Articles of Incorporation authorize 10,000,000 shares of a preferred stock (the Preferred
Stock). As of December 31, 2004 and 2003 no shares of the Preferred Stock have been
issued.

The
Company repurchased 124,500 shares of its common stock in the open market in 2004 at an
average price of $16.49 per share and did not repurchase any of its common shares in the
open market in 2003. All such shares are accounted for as treasury shares. The Company
re-issued 3,000 shares from its treasury share in accordance with the cost method in 2004,
as more fully explained in Note 1.

# 14. STOCK OPTION PLANS

On
March 20, 1996, the Company adopted a stock option plan, the Mestek, Inc. 1996 Stock
Option Plan, (Stock Option Plan), which provides for the granting of options
to purchase 500,000 shares of the Companys common stock. The Stock Option Plan
provides for the awarding of incentive and non-qualified stock options to certain
employees of the Company and other persons, including directors, for the purchase of the
Companys common stock at fair market value on the grant date. The Stock Option Plan
was approved by the Companys shareholders on May 22, 1996. Options granted under the
Stock Option Plan vest over a five-year period and expire at the end of ten years.

A
summary of transactions for the years ended December 31, 2004, 2003, and 2002 are as
follows:

`Number of              Weighted Average
                                                                         Options                Exercise Price

         Balance - December 31, 2002                                     200,000                    $17.60
         Balance - December 31, 2003                                     200,000                    $17.60
         Balance - December 31, 2004                                     200,000                  * $15.86`

Options
exercisable as of the years ended December 31, 2004, 2003, and 2002, were 175,000,
153,000, and 146,000, respectively. The weighted average exercise price for all
exercisable options, including the effect of option re-pricings described below, as of
December 31, 2004, was $15.74.

The
Company did not issue any options during 2004, 2003, or 2002:

`Re-priced in 2004

         Expected life (years)                                                             10
         Interest                                                                       4.39%
         Volatility                                                                    22.52%
         Dividend yield                                                                    0%`

The Company
accounts for stock-based compensation issued prior to January 1, 2003 under the intrinsic
value method in accordance with APB 25. Pro forma disclosure of net income and earnings
per share on the basis of the fair value method is included in Note 1.

The
Company has elected to account for stock based compensation, effective with fiscal 2003
year, in accordance with FAS No. 148, under the fair value method. The Company
has further elected to account for the change in accounting principle under the
Prospective Method as described in amended paragraph 52b of FAS No. 123. The
Company made no option grants, modifications of option grants, or settlement of option
grants in the two-year period ended December 31, 2004, except as explained below, and
accordingly the change to the fair value method had no effect in the two-year period ended
December 31, 2004 on Net Income, Basic earnings per share or Diluted earnings per share,
except as explained below. Under the Prospective Method any future option
grants will affect Net Income, Basic earnings per share and Diluted earnings per share.

On
October 27, 2004, the Company re-priced 25,000 options expiring in 2011 from
$23.25 per share to the current market value, $17.85 per share, and 70,000 additional
options expiring in 2009 from $20.00 per share to the current market value, $17.85 per
share. In accordance with FAS 148, the Company has accounted for these options subsequent
to October 27, 2004 using variable accounting which resulted in a charge to
earnings during the period ended December 31, 2004 of $23,750 which represented the change
in value of the Companys stock price subsequent to October 27, 2004 multiplied by
the number of options effected.

Effective
July 1, 1996, the Companys subsidiary, Omega adopted a stock option plan
(Omega Plan) which provides for the granting of both Incentive and
Non-Qualified Stock Options (as those terms are defined in the Internal Revenue Code) of
up to 200 shares of stock to certain employees of Omega for the purchase of Omegas
common stock at fair market value as of the date of grant. The Omega Plan was approved as
of July 1, 1996 by John E. Reed, representing Mestek, and the sole shareholder of Omega,
pursuant to authority vested in him by vote of the Board of Directors of Mestek dated May
22, 1996. Options to purchase an aggregate of 140 shares of the common stock of Omega,
representing a 14% equity share, were granted to two Omega executives effective July 1,
1996. The options vested over a five-year period ending on May 1, 2003 and expire on July
1, 2006. Through a separate agreement, the option holders currently have a put right after
exercise which allows them to sell their option shares to Omega at a figure based upon
book value and Omega currently has a corresponding call option at a figure based upon book
value. In accordance with APB 25 and related authoritative literature, the Company has
reflected pre-tax charges to earnings in 2004, 2003, and 2002 of $844,000, $668,000, and
$635,000, respectively, for the compensation value in those periods of the options
granted. These charges, which reflect the potential obligations of Omega relative to the
put rights, have been credited to Accrued Compensation which is reflected in the
accompanying financial statements in Current Liabilities.

On
October 8, 2004, the Company made a loan to each of the President and Vice President of
Omega (both non-executive officers of the Company) totaling $1,260,000 on a short-term,
fully recourse, basis pursuant to a contractual obligation created in 1996. The loans were
repaid with accrued interest on October 13, 2004. On October 12, 2004, the President and
Vice President of Omega exercised options granted in 1996 representing a 14% interest in
Omegas common stock. The minority interest in Omega has been classified as a
liability in accordance with APB 25. On October 13, 2004, Omega paid a cash dividend of
$1,260,000 to these new shareholders which was charged against the related liability.

# 15. SUBSIDIARY BANKRUPTCY

As
a result of the environmental litigation described more fully in Note 10, on August 26,
2003, Met-Coil Systems Corporation (Met-Coil or, the Debtor), a
second-tier subsidiary of Mestek, Inc. (the Company) filed a voluntary
petition for relief under Chapter 11 of Title 11 of the United States Code (the
Bankruptcy Code) in the United States Bankruptcy Court for the District of
Delaware (the Bankruptcy Court).

On
August 17, 2004, the Bankruptcy Court confirmed, the Fourth Amended Chapter 11 Plan of
Reorganization (the Amended Plan) proposed by Met-Coil and Mestek, as
co-proponents, and recommended to the United States District Court (N. D. Del.) (the
District Court) that it approve and enter the channeling injunction
discussed below, and certain related third party releases in favor of, among others,
Mestek and its affiliates. On September 14, 2004, the District Court entered and approved
the recommended findings and conclusions and issued the channeling injunction.
The Amended Plan became effective on October 19, 2004 and Met-Coil is no longer a
debtor-in-possession under bankruptcy protections laws.

As
Met-Coil retained control of its operations as a debtor-in-possession during
the period it was operating under the protection of the Bankruptcy Court, the Company has
not deconsolidated the operations of Met-Coil for accounting purposes. In
accordance with generally accepted accounting principles and the related technical
literature, the Debtor has established reserves related to the Met-Coil environmental
litigation and environmental remediation matters, as more fully described in Note 10. In
accordance with SOP 90-7, during the period it was operating as a
debtor-in-possession certain of Met-Coils pre-petition liabilities were
reclassified in its and the Companys financial statements under the heading
Liabilities Subject to Compromise.

The
following table illustrates the effect of the Amended Plan on the Companys
Consolidated Liabilities Subject to Compromise.

`Liabilities
                                                     discharged
                                                   with Insurance  Net increases    Trade       Amount
                      Liabilities Subject            Litigation    (decreases) toLiabilitiesReclassified to
                         To Compromise Funding of    settlement    EnvironmentalCompromised underEnvironmentalBalance
                          12/31/03    Amended Plan    proceeds       Reserves   Amended Plan   Reserves     12/31/04
                                                                    (in thousands)

   Accounts Payable
     and Accrued Expenses     $6,500      ($6,047)          $0          ($453)          $0           $0       $0
   Environmental Litigation
     and Remediation Reserves 50,800       (6,597)     (16,900)        (2,614)       ---        (24,689)      $0
   Commission Payable             59          (59)       ---            ---          ---          ---          0

   Consolidated Liabilities
     Subject to Compromise   $57,359     ($12,703)     (16,900)       ($2,614)       ($453)    ($24,689)      $0`

The
Company as a whole incurred $9,028,000 and $5,963,000 in legal costs during the years
ended December 31, 2004 and 2003 relating to the administration of Met-Coils
Bankruptcy which amounts are reported in the accompanying financial statements under the
heading Subsidiary Bankruptcy Professional Fees.

The
following 2003 and 2002 condensed financial statements of Met-Coil Systems Corporation
(Debtor in Possession during these years) are prepared on the same basis as the
Consolidated Financial Statements of Mestek. Inc. Liabilities Subject to Compromise on the
December 31, 2003 Met-Coil Systems Corporation balance sheet are comprised of the
following:

`(in thousands)

         Accounts Payable                                                         $4,125
         Accrued Expenses                                                         $2,375
         Environmental Litigation and Remediation Reserves                       $50,800
         Commission Payable                                                   $       59
         Total Consolidated Liabilities Subject to Compromise                    $57,359
         Plus:  Notes and Other Payables to Mestek and Affiliates               $  7,610
         Met-Coil Liabilities Subject to Compromise                              $64,969`

---

Note 15  continued

# MET-COIL SYSTEMS
CORPORATION

# DEBTOR-IN-POSSESSION

# CONDENSED BALANCE
SHEETS

# as of December 31, 2003

`(Dollars in thousands)

ASSETS
Current Assets
     Cash$ 2,218
     Accounts Receivable, net                                2,818
     Inventories                                             7,780
     Deferred Tax Asset                                     18,885
     Other Current Assets                                    1,570

         Total Current Assets                               33,271

Property and Equipment - net                                 5,405
Deferred Tax Asset                                              26
Other Assets and Deferred Charges                              307

         Total Assets                                     $ 39,009

LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
     Accounts Payable                                        1,761
     Notes Payable - Affiliates                              4,941
     Customer Deposits                                       2,084
     Liabilities Subject to Compromise                      64,969
     Other Accrued Liabilities                               2,473

         Total Current Liabilities                          76,228

Other Liabilities                                              799

         Total Liabilities                                  77,027

Shareholders' Equity
     Common Stock                                               45
     Paid in Capital                                        33,518
     Retained Earnings                                     (70,818)
     Other Comprehensive Loss                                 (763)
         Total Shareholders' Equity                        (38,018)

         Total Liabilities and Shareholders' Equity        $39,009`

The
deferred tax asset included above reflects the fact that Met-Coil has historically been
included in the Mestek consolidated federal income tax return and Mestek believes it is
more likely than not it will be so included in the future and may not be indicative of the
value assignable to this asset should Met-Coil no longer participate in a consolidated
federal income tax filing with Mestek.

---

Note 15  continued

# MET-COIL SYSTEMS
CORPORATION

# DEBTOR-IN-POSSESSION

# CONDENSED STATEMENTS
OF OPERATIONS

# For the years ended
December 31,

`2003           2002
                                                                                    (Dollars in thousands)

Net Sales                                                                        $  34,808       $  36,407

Cost of Goods Sold                                                                  25,122          28,041
     Gross Profit                                                                    9,686           8,366

Selling Expense                                                                      4,238           4,470
General and Administrative Expense                                                   3,110           3,162
Engineering Expense                                                                  1,917           1,931
Environmental Litigation/Remediation                                                53,205          17,096

     Operating Loss before Reorganization Items                                    (52,784)        (18,293)

Bankruptcy Professional Fees                                                         2,998           ---
     Operating Loss                                                                (55,782)        (18,293)

Other (Expense) Income - net                                                          (104)           (134)

Loss Before Income Taxes and Cumulative
     Effect of a Change in Accounting Principle                                    (55,886)        (18,427)

Income Taxes (Benefit)                                                             (19,732)         (5,028)

Loss Before Cumulative
     Effect of a Change in Accounting Principle                                    (36,154)        (13,399)

Cumulative Effect of a Change in Accounting Principle:
     Gross Impairment (Expense)                                                      ---           (22,329)
     Tax Benefit                                                                     --              1,623
     Net Impairment (Expense)                                                        --            (20,706)

Net Loss                                                                          ($36,154)       ($34,105)`

---

Note 15  continued

# MET-COIL SYSTEMS
CORPORATION

# DEBTOR-IN-POSSESSION

# CONDENSED STATEMENTS
OF CASH FLOWS

# For the years ended
December 31

`2003           2002
                                                                                         (Dollars in thousands)

Cash Flows from Operating Activities:

     Net Loss                                                                    ($ 36,154)      ($ 34,105)
     Adjustments to Reconcile Net Income to Net Cash
         Provided by Operating Activities:
     Cumulative Effect of Change in Accounting Principle                               ---          20,706
     Depreciation and Amortization                                                     509             733
     Provision for Losses on Accounts Receivable                                         2             (78)
     Subsidiary Bankruptcy Professional Fees                                         2,998            ---
Changes in Assets and Liabilities:
         Accounts Receivable                                                        (1,655)            480
         Inventory                                                                   1,213           2,324
         Accounts Payable                                                              439            (140)
         Accrued Expenses/Other Liabilities                                         (3,128)          1,112
         Liabilities Subject to Compromise                                          64,969            ---
         Deferred Tax Asset                                                        (15,534)         (1,326)
         Environmental Litigation/Remediation Reserves                              (8,700)          6,700
         Other Assets                                                                   31            (542)
Net Cash Provided by (Used in) Operating
     Activities before Reorganization Items                                          4,990          (4,136)

Operating Cash Flows from Reorganization Items:
     Bankruptcy Professional Fees                                                   (2,998)            ---
     Change in Accrued Expenses                                                      1,034            --
Net Cash Used in Reorganization Items                                               (1,964)           --

Net Cash Provided by (Used in) Operating Activities                                  3,026          (4,136)

Cash Flows from Investing Activities:
     Capital Expenditures                                                             (305)            (65)
Net Cash Used in Investing Activities                                                 (305)            (65)

Cash Flows from Financing Activities:
     Net Borrowings
         Under Revolving Credit Agreements                                           4,941           5,500
         Principal Payments Under Long Term Debt Agreements                         (5,500)         (1,432)
Net Cash (Used In) Provided by Financing Activities                                   (559)          4,068

Net Increase (Decrease) in Cash and Cash Equivalents                                 2,162            (133)
Cash and Cash Equivalents - Beginning of Period                                         56             189

Cash and Cash Equivalents - End of Period                                         $  2,218        $     56`

---

# 16. PLANT SHUTDOWN AND
OTHER RESTRUCTURING CHARGES

In
April of 2003, the Company announced the closing of its Scranton, PA, (Anemostat
East) and Bishopville, SC, (King Company) manufacturing facilities. In
connection with these closings, Mestek, Inc. restructured and relocated manufacturing
operations of the Anemostat and King products to Wrens, GA; Florence, KY; Dallas, TX;
Carson, CA and Westfield, MA. The Scranton, Pennsylvania manufacturing facility was sold
on December 30, 2004 at a loss of $271,000, which is included in Other Income (Expense) in
the accompanying financial statements.

On
March 9, 2004, the Company announced plans to close its Milford, OH, (Air Clean
Damper) manufacturing operations. The Company sold the principal assets associated
with this business and the transaction closed on March 31, 2004. A nominal gain was
recorded in the three-month period ended March 31, 2004 and is reflected in Other Income
(Expense) for that period. The Milford, OH facility is reflected in the accompanying
Consolidated Financial Statements under the heading Property Held for Sale.

The
Company is accounting for the costs related to these exit and disposal
activities, employee severance and related costs of shutting down manufacturing
operations, in accordance with FAS 146, Accounting for Costs Associated with Exit or
Disposal Activities(FAS 146). In the years ended December 31, 2004 and
2003, the Company incurred $1,789,000 and $4,259,000, respectively, of such exit and
disposal costs which are classified separately in the accompanying financial
statements in accordance with FAS 146.

17.    
          SUBSEQUENT EVENTS  OMEGA FLEX SPINOFF/MESTEK GOING PRIVATE

Omega Flex Spin-Off

On
January 19, 2005, the Company announced that John E. Reed, the Chairman and Chief
Executive Officer of the Company, proposed to a Special Committee of independent directors
appointed at the Companys December 14, 2004 regular Board meeting, (the
Special Committee), acting on behalf of the Board of Directors, that the
Companys 86% equity interest in Omega Flex, Inc. be spun-off, pro rata, to
all of the Companys public shareholders as of a record date to be established (the
Spin-Off). In conjunction with the Spin-Off, Omega Flex, Inc. proposes to file
a Form 10 registration under the Securities Exchange Act of 1934 and would expect to be a
publicly traded, reporting company following the Spin-Off. It is not expected that the
Spin-Off will require any vote of the Companys shareholders; however, the approval
of its Board of Directors will be necessary.

Mestek Going
Private

On
January 19, 2005, the Company also announced that John E. Reed further proposed to the Special
Committee that, following the Spin-Off, the Company enter into a going private
transaction. Specifically, it was proposed that the Companys Articles of
Incorporation be amended by shareholder vote, whereby the existing 8,600,103 issued and
outstanding shares of Company common stock, together with treasury shares, as of a record
date to be established, be reclassified in a reverse stock split of 1 share
for each 2,000 issued, with provisions in the amendment to the charter such that
fractional shares of those owning less than one share will not be issued.

It
was further proposed that the Special Committee, with the advice of its independent
financial adviser, determine a fair and equitable per share value for a
pre-reverse stock split share of Company common stock,reflecting the
value of the Company following the Spin-Off, which is proposed to occur before the
going private transaction is consummated. This would then form the basis for
the full Board of Directors determination of the per share value to be
used to effect a cash redemption of those shareholders who, by reason of the reverse
stock split become owners of less than one share.

It
was further proposed that a vote on any required amendments to the Companys Articles
of Incorporation be put before the shareholders at the Annual Meeting of Shareholders,
currently scheduled for May 24, 2005 at the Companys headquarters in Westfield,
Massachusetts. At this time it is likely that a special meeting of the shareholders will
have to be called at sometime subsequent to the Annual Meeting for the purpose of
considering and voting on any matters requiring a shareholder vote in connection with the
Companys proposed going private transaction.

---

Special Committee

Managements
proposal of the Spin-Off as well as the terms, timing and structure of the going
private transaction generally are to be reviewed and considered by the Special
Committee which has been charged with making a recommendation regarding these matters to
the full Board of Directors, which will ultimately make the determination of whether to go
forward and propose the appropriate vote of the shareholders. There can be no assurances
that either the Spin-Off or going private transaction will be consummated. The
transaction had no impact on the financial statements as of December 31, 2004.

---

# Item 9  CHANGES IN
AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING FINANCIAL DISCLOSURE

# Item 9A  CONTROLS
AND PROCEDURES

(a)     Evaluation
          of Disclosure Controls and Procedures.

| | At
the end of the fiscal fourth quarter, the Company evaluated the effectiveness of the
design and operation of its disclosure controls and procedures. The Companys
disclosure controls and procedures are designed to ensure that the Company records,
processes, summarizes and reports in a timely manner the information the Company must
disclose in its reports filed under the Securities Exchange Act. Company management,
including the chief executive officer and chief financial officer, have conducted an
evaluation of the effectiveness of the design and operation of the Companys
Disclosure Controls and procedures as defined in the Rule 13a-15(e) of Securities Exchange
Act of 1934. Based on that evaluation, the chief executive officer and chief financial
officer have concluded that, as of the date of their evaluation, the Companys
disclosure controls and procedures are effective to provide reasonable assurance of
achieving the purposes described in Rule 13a-15(e), and no changes are required at this
time.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

(b)    
          Changes in Internal Controls.

| | There
was no change in the Corporations internal control over financial
reporting (as defined in Rule 13a-15(f) of the Securities Exchange Act of 1934)
identified in connection with the evaluation required by Rule 13a-15(d) of the Securities
Exchange Act of 1934 that occurred during the fourth quarter of the fiscal year covered by
this Annual Report on Form 10-K that has materially affected or is reasonable likely to
materially affect the Corporations internal control over financial reporting
subsequent to the date the chief executive officer and chief financial officer completed
their evaluation. However, during the 2004 audit process, management, in consultation with
Vitale, Caturano & Company Ltd., the Companys independent auditors, has
identified and reported to the Audit Committee of the Companys Board of Directors
the following internal control matter which Vitale, Caturano & Company Ltd. considers
to be a significant deficiency, though not a material weakness, as
both terms are defined in the authoritative accounting literature:
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Several
instances were noted where the Companys written revenue recognition procedures were
not properly adhered to. Management has undertaken a review of these instances and has
formulated a plan to take appropriate remedial steps.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# Item 9B  OTHER
INFORMATION

All
matters required to be disclosed on Form 8-K during our fiscal 2004 fourth quarter have
been previously disclosed on a Form 8-K filed with the Securities and Exchange Commission.

---

# PART III

With
respect to items 10 through 14, the Company will file with the Securities and Exchange
Commission, within 120 days of the close of its fiscal year, a definitive proxy statement
pursuant to Regulation 14A.

# Item 10  DIRECTORS
AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information
regarding directors of the Company will be set forth in the Companys proxy statement
relating to the annual meeting of shareholders to be held May 24, 2005, under the caption
Current Directors and Nominees for Election  Background Information, and
to the extent required and except as set forth therein, is incorporated herein by
reference.

Information
regarding executive officers of the Company will be set forth under the caption
Executive Officers in the Companys proxy statement, and to the extent
required and except as set forth therein, incorporated herein by reference.

Information
regarding the Companys Audit Committee and its Audit Committee Financial
Expert will be set forth in the Companys Proxy Statement also, under the
caption Board Committees, incorporated herein by reference. Information
concerning section 16(a) Beneficial Ownership Reporting Compliance will be set forth in
the Companys Proxy Statement also, under the Caption Compliance with Section
16(a) of the Securities Exchange Act incorporated herein by reference.

The
Company has adopted a Code Of Business Ethics (Code) applicable to its
principal executive officer, principal financial and accounting officers, its directors
and all other employees generally. A copy of the Code will be set forth as Appendix B in
the Companys Proxy Statement and also may be found at the Companys website
www.mestek.com. Any changes to or waivers from this Code will be disclosed on the
Companys website as well as in appropriate filings with the Securities and Exchange
Commission.

# Item 11  EXECUTIVE
COMPENSATION

Information
regarding executive compensation will be set forth in the Companys proxy statement
relating to the annual meeting of shareholders to be held May 24, 2005, and under the
caption Executive Compensation to the extent required and except as set forth
therein, is incorporated herein by reference.

The
report of the Compensation Committee of the Board of Directors of the Company shall not be
deemed incorporated by reference by any general statement incorporating by reference the
proxy statement into any filing under the Securities Exchange Act of 1934, and shall not
otherwise be deemed filed under such Act.

# Item 12  SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Information
regarding security ownership of certain beneficial owners and management as well as
information regarding equity compensation plans and individual equity contracts or
arrangements will be set forth in the Companys proxy statement relating to the
annual meeting of shareholders to be held May 24, 2005, under the caption Security
Ownership of Certain Beneficial Owners and Management, and to the extent required
and except as set forth therein, is incorporated herein by reference.

# Item 13  CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS

Information
regarding certain relationships and related transactions will be set forth in the
Companys proxy statement relating to the annual meeting of shareholders to be held
May 24, 2005, under the caption  Certain Relationships and Related
Transactions and to the extent requiredand except as set forth therein, is
incorporated herein by reference.

# Item 14  PRINCIPAL
ACCOUNTING FEES AND SERVICES

Information regarding financial
accounting fees and services will be set forth in the Companys proxy statement
relating to the annual meeting of shareholders to be held May 24, 2005, under the caption
Principal Accounting Fees and Services, and to the extent required, and except
as set forth therein, is incorporated herein by reference.

# PART IV

# Item 15  EXHIBITS,
FINANCIAL STATEMENTS, SCHEDULES, AND REPORTS ON FORM 8-K

(a)       
          The following documents are filed as part of this Form 10-K:

1.    
          All financial statements. See Index to Consolidated Financial Statements on page
          74 of this Form 10-K.

2.    
          Financial Statement Schedules. None Required.

3.    
          Exhibits. See Index to Exhibits.

---

# INDEX

`Pages of
                                                                                               this report


Reports of Independent Registered Public Accounting Firms                                          Page 35 and 36

Financial Statements:

(a)(1)   Consolidated Balance Sheets as of December 31, 2004 and 2002                      Pages 37 and 38

     Consolidated Statements of Operations for the Years
     Ended December 31, 2004, 2003, and 2002                                                       Page 39

     Consolidated Statements of Shareholders' Equity and Comprehensive Loss for
     the Years Ended December 31, 2004, 2003, and 2002                                             Page 40

     Consolidated Statements of Cash Flows for the Years
         Ended December 31, 2004, 2003, and 2002                                                   Page 41

     Notes to the Consolidated Financial Statements                                    Pages 42 through 73

(a)(2)   Financial Statement Schedules

Reports of Independent Registered Public Accounting Firms on Supplemental Schedule          Page 78 and 79

     II. Valuation and Qualifying Accounts                                                         Page 80`

All     other
financial statement schedules required by Item 14(a)(2) have been omitted because they
are inapplicable or because the required information has been included in the
Consolidated Financial Statements or notes thereto.

(a)(3)     Exhibits

The     Exhibit
Index is set forth on Pages 82 through 84

No     annual
report to security holders as of December 31, 2004 has been sent to security holders and
no proxy statement, form of proxy or other proxy soliciting material has been sent by the
registrant to more than ten of the registrant's security holders with respect to any
annual or other meeting of security holders held or to be held in 2003.  Such annual
report to security holders, proxy statement or form of proxy will be furnished to
security holders subsequent to the filing of this Annual Report on Form 10-K.

---

# REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM ON
                                               SUPPLEMENTAL SCHEDULE

The     Board of
Directors and Shareholders of Mestek, Inc.

We     have
audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States), the Consolidated Financial Statements of Mestek, Inc. and
subsidiaries as of December 31, 2004, and for the period ended December 31, 2004 included
in this Form 10-K, and have issued our report thereon dated March 21, 2005. Our audits
were made for the purpose of forming an opinion on those Consolidated Financial
Statements taken as a whole. The schedule of Valuation and Qualifying Accounts is the
responsibility of the Company's management and is presented for the purposes of complying
with the Securities and Exchange Commission's rules and is not a part of the basic
Consolidated Financial Statements. This schedule has been subjected to auditing
procedures applied in the audits of the basic Consolidated Financial Statements and, in
our opinion, fairly states, in all material respects, the financial data required to be
set forth therein in relation to the basic Consolidated Financial Statements taken as a
whole.

/s/     Vitale,
Caturano & Company Ltd

Boston,     Massachusetts
March 21, 2005

---

# REPORT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTING FIRM ON
                                               SUPPLEMENTAL SCHEDULE

Board     of
Directors and Shareholders of Mestek, Inc.

We     have
audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States), the Consolidated Financial Statements of Mestek, Inc. and
subsidiaries as of December 31, 2003 and for each of the years in the two-year period
ended December 31, 2003, referred to in our report dated March 30, 2004, which is
included in this Form 10-K.  Our audits were conducted for the purpose of forming an
opinion on the basic Consolidated Financial Statements taken as a whole.  The schedule of
Valuation and Qualifying Accounts is the responsibility of the Company's management and
is presented for the purposes of complying with the Securities and Exchange Commission's
rules and is not a part of the basic Consolidated Financial Statements. This schedule has
been subjected to the auditing procedures applied in the audits of the basic Consolidated
Financial Statements referred to above and, in our opinion, is fairly stated in all
material respects in relation to the basic financial statements taken as a whole.

/s/     Grant
Thornton LLP

Boston,     Massachusetts
March 30, 2004

---

# 

# MESTEK, INC.
                                         Valuation and Qualifying Accounts
                                   Years ended December 31, 2004, 2003, and 2002

`(Credited)
                             Bal. at           Charged                          Bad Debt               Bal.
                             at Beg.             to              Other         Write-offs             at end
Year     Description         of Year           expense            (1)                                 of Year

                                            (dollars in thousands)

2004     Allowance
         for doubtful
         accounts             $3,527           ($358)             ($75)           ($376)            $2,718
2003     Allowance
         for doubtful
         accounts             $3,230           $1,043              $165         ($1,051)            $3,387
2002     Allowance
         for doubtful
         accounts             $4,239           ($397)                $6           ($618)            $3,230`

| | (1) | Includes recoveries of amounts previously written-off, effects of currency
               translations, and other diminimis amounts.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------

---

EXHIBIT
INDEX

Those
documents followed by a parenthetical notation are incorporated herein by reference to
previous filings with the Securities and Exchange Commission as set forth below.

`Exhibit No.                                                                                          Reference
Description                                                                                             Key
*************             **********
3.1      Articles of Incorporation of Mestek, Inc., as amended                                         (F)

3.2      Amended and Restated By-laws of Mestek, Inc. as amended through December 12, 2000             (B)

10.1     Employment Agreement dated January 1, 1982 between Mestek
         and John E. Reed                                                                              (A)

10.2     Lease Agreement dated January 1, 2000 between Mestek (lessee) and
         Sterling Realty Trust (lessor); 260 North Elm                                                 (B)

10.3     Lease dated January 1, 1994 between Mestek (lessee) and
         Sterling Realty Trust (lessor); South Complex                                                 (D)

10.4     Amended and Restated Lease Agreement dated as of July 1, 1997
         between Mestek, Inc. (lessee) and Rudbeek Realty Corp. (lessor)                               (H)

10.5     Amended and Restated Lease Agreement dated as of January 1, 1997
         between Vulcan Radiator Division, Mestek, Inc. (lessee) and
         MacKeeber Associates Limited Partnership (lessor).                                            (F)

10.6     Loan Agreement dated as of May 1, 1984 among the Connecticut
         Development Authority (the "CDA"), MacKeeber Limited Partnership,
         Vulcan Radiator Corporation and the Promissory Notes there under;
         Guaranty of Vulcan Radiator Corporation and Reed National Corp.
         to the Connecticut Bank and Trust Company, NA                                                 (A)

10.7     Form of Indemnification Agreements entered into between Mestek, Inc. and
         its Directors and Officers and the Directors of its wholly-owned
         subsidiaries incorporated by reference as provided herein, except
         as set forth in the attached schedule                                                         (C)

10.8     Schedule of Directors/Officers with Indemnification Agreement

10.9     Lease Agreement dated July 1, 1998 between Mestek (lessee) and
         Sterling Realty Trust (lessor); 161 Notre Dame                                                (I)

10.10    1996 Mestek, Inc. Stock Option Plan.                                                          (E)

10.11    Credit Agreement between Mestek, Inc. and Bank of America, N.A.
         as Administrative Agent for each lender under the Credit Agreement                            (L)

10.12    Form of Supplemental Executive Retirement Agreements entered into between
         Mestek, Inc. and certain of its officers.                                                     (G)

10.13    Schedule of Officers with Supplemental Executive Retirement Agreements                        (K)

10.14    Form of Change of Control Agreement                                                           (K)

10.15    Schedule of Officers with Change of Control Agreement                                         (K)

10.16    Lease dated July 1, 1999 between Mestek (Lessee) and
         Sterling Realty Trust (Lessor) for 1st floor - Torrington Building.                           (J)

10.17    Lease dated May 1, 2004 between Mestek (Lessee) and
         Sterling Realty Trust (Lessor) for 2nd, 3rd & 4th Floors - Torrington Building.

10.19    Lease dated October 1, 2000 between Mestek (Lessee) and
         Sterling Realty (Lessor); 1st Floor Torrington Building                                       (B)

11.1     Schedule of Computation of Earnings per Common Share.

14.1     Code of Business Ethics                                                                       (K)

21.1     List of Subsidiaries of Mestek, Inc.

23.1     Consent of Vitale, Caturano & Company Ltd.

23.2     Consent of Grant Thornton LLP

31.1     CEO Certification

31.2     CFO Certification

32.1     906 CEO Certification

32.2     906 CFO Certification

99.1     Corporate Governing Guidelines                                                                (K)

99.2     New York Stock Exchange Certification of Chief Executive Officer`

Reference Key

`(A)      Filed as an Exhibit to the Registration Statement 33-7101,effective July 31, 1986

        (B)      Filed as an Exhibit to the Annual Report on Form 10-K for the year ended December 31, 2000

        (C)      Filed as an Exhibit to the Annual Report on Form 10-K for the year ended December 31, 1987

        (D)      Filed as an Exhibit to the Annual Report on Form 10-K for the year ended December 31, 1993

        (E)      Filed as an Exhibit to the Quarterly Report on Form 10-Q for the quarter
                 ended September 30, 1996.

        (F)      Filed as an Exhibit to the Annual Report on Form 10-K for the year ended December 31, 1996.

        (G)      Filed as an Exhibit to the Quarterly Report on Form 10-Q for the quarter
                 ended September 31, 1997.

        (H)      Filed as an Exhibit to the Annual Report on Form 10-K for the year ended December 31, 1997.

        (I)      Filed as an Exhibit to the Quarterly Report on Form 10-Q for the quarter ended March 31, 1999.

        (J)       Filed as an Exhibit to the Annual Report on Form 10-K for the year ended December 31, 1999.

        (K)      Filed as an Exhibit to the Annual Report a Form 10-K for the year ended December 31, 2003.

        (L)      Filed as an Exhibit to the Quarterly Report on Form 10-Q for the quarter
                  ended September 30, 2004.`

Each management contract or
compensatory plan or arrangement to be filed as an exhibit to this report pursuant to item
15 is listed in Exhibit numbers 10.1, 10.10 and 10.13.

---

# SIGNATURES

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

`MESTEK, INC.


Date:  March 31, 2005                                  By:    /S/ John E. Reed
                                                               John E. Reed, Chairman of the Board
                                                               and Chief Executive Officer


Date:  March 31, 2005                                  By:    /S/ Stephen M. Shea
                                                               Stephen M. Shea, Senior Vice President
                                                               Finance, Chief Financial Officer


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



Date:  March 31, 2005                                  By:    /S/ William J. Coad
                                                              William J. Coad, Director



Date:  March 31, 2005                                  By:    /S/ Winston R. Hindle, Jr.
                                                              Winston R. Hindle, Jr., Director



Date:  March 31, 2005                                  By:    /S/ David W. Hunter
                                                              David W. Hunter, Director



Date:  March 31, 2005                                  By:    /S/ David M. Kelly
                                                              David M. Kelly, Director



Date:  March 31, 2005                                  By:    /S/ George F. King
                                                              George F. King, Director



Date:  March 31, 2005                                  By:    /S/ Edward J. Trainor
                                                              Edward J. Trainor, Director



Date:  March 31, 2005                                  By:    /S/ Stewart B. Reed
                                                              Stewart B. Reed, Director`