UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    Form 10-K
                  Annual Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934


For the fiscal year ended                         Commission file number: 1-448
December 31, 1996

                                  MESTEK, INC.

             (Exact name of registrant as specified in its charter)


Pennsylvania                                                       25-0661650
(State or other jurisdiction of                               (I.R.S Employer
incorporation or organization)                               Identification No.)


                              260 North Elm Street
                         Westfield, Massachusetts 01085
                    (Address of principal executive offices)

        Registrant's telephone number, including area code: 413-568-9571

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


                                                         Name of each exchange
Title of each class                                        on which registered
Common Stock, no par value                             New York Stock Exchange


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, and (2) has been subject to such filing requirements
for the past 90 days.  YES   X         NO ___

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

The aggregate  market value of voting common shares held by nonaffiliates of the
registrant  based  upon the  closing  price  for  registrant's  common  stock as
reported  in The  Wall  Street  Journal  as of  March  31,  1997  such  date was
$48,174,880.

The number of shares of the registrant's  common stock issued and outstanding as
of March 31, 1997 was 8,929,771.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the proxy  statement  relating to the annual meeting of shareholders
of the registrant to be held on May 22, 1997 are  incorporated by reference into
Part III hereof and the exhibits to filings referenced on Pages 40 through 43 of
Part IV hereof are incorporated by reference into Part IV hereof.




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                                     PART I


Item 1 - BUSINESS


GENERAL

         Mestek, Inc. ("Mestek" or the "Company") 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.

         On  November  13,  1989 the  Company  purchased  the  assets of Air Fan
Engineered Products, Inc., a small manufacturer of air conditioning,  air moving
and heat transfer equipment located in Los Angeles,  California. The assets were
subsequently moved to the Company's Dallas facility.

         In March  of 1990, the Company, through a wholly-owned subsidiary,
purchased a 48.6 percent interest in The H. B. Smith Company, Incorporated,
a Westfield, Massachusetts manufacturer of boilers.

         In January, 1991, Keystone Environmental Resources,  Inc. ("Keystone"),
a  subsidiary  of  Chester  Environmental  Group,  Inc.,   ("Chester"),   formed
Environmental  Technology  Applications  Company  (ETA) in a joint  venture with
Beazer  Environmental   Services,   Inc.,  to  market  and  apply  environmental
technologies  previously  developed  by  Keystone.  ETA was  dissolved by mutual
agreement  effective  March 31, 1992. The Company  subsequently  sold a majority
interest in Chester,  as more fully  explained in the Notes to the  Consolidated
Financial Statements.

         In February 1991 the Company,  through  Chester  acquired the assets of
two corporations:  GeoSpatial Solutions, Inc. and NEA, Inc., ("NEA"). GeoSpatial
Solutions,  Inc., of Colorado,  a satellite imaging concern,  sold its assets to
Chester for  $120,000.  The NEA assets were  purchased  for  $2,600,000,  net of
liabilities  assumed.  NEA's  primary  lines  of  business  are  consulting  and
analytical  services  relative to air quality.  The Company  subsequently sold a
majority  interest  in  Chester,  as more  fully  explained  in the  Note to the
Consolidated Financial Statements.

         On July 31, 1991 Mestek, through a wholly-owned  subsidiary,  purchased
substantially all of the assets of Hydrotherm, Inc., ("Hydrotherm"),  located in
Northvale, New Jersey, and its wholly-owned subsidiary Hydrotherm (Canada) Inc.,
located in Toronto,  Ontario.  Hydrotherm  is  manufacturer  of  commercial  and
residential gas and oil-fired boilers,  residential  baseboard heating equipment
and  residential  air  conditioning   equipment.   Management  consolidated  the
manufacturing  operations  of  Hydrotherm in 1992,  closing the  Northvale,  New
Jersey plant.  The  Hydrotherm  and Hydrotherm  Canada assets  acquired  include
substantially all of Hydrotherm's inventory,  receivables and fixed tangible and
intangible  assets  relating to the commercial and residential gas and oil-fired
boiler business and other product lines mentioned  above. The purchase price for
the assets acquired, net of liabilities assumed, was $12,900,000.

         On August 9, 1991 Mestek purchased  substantially  all of the assets of
Dynaforce Corporation, a New York Corporation, and a leading manufacturer of air
curtains,  make-up air equipment and related  products.  The purchase price paid
for the assets was $586,000. The Dynaforce assets were subsequently moved to the
Company's South Windsor facility.

         On October 8, 1991 Mestek,  through a newly formed Canadian subsidiary,
acquired substantially all of the operating assets of Temprite Industries, Ltd.,
an Ontario Corporation located in Orangeville,  Ontario.  Temprite  manufactures
industrial,  institutional, and commercial air handling equipment and makeup air
units. The purchase price for the assets acquired,  net of liabilities  assumed,
was $1,819,000.






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         On October 31, 1991 Chester acquired substantially all of the assets of
Kamber Engineering,  Inc. (Kamber) of Gaithersburg,  Maryland. Kamber's business
involves water and waste projects, federal environmental projects, and corporate
land development  projects.  The purchase price of the assets  acquired,  net of
liabilities  assumed,  was $1,200,000.  The Company subsequently sold a majority
interest in Chester,  as more fully  explained in the Notes to the  Consolidated
Financial Statements.

         On August 21, 1992, pursuant to the Plan of Reorganization  approved by
the United States Bankruptcy Court for the Eastern District of Pennsylvania, the
Company acquired  substantially all of the inventory,  accounts receivable,  and
fixed tangible and intangible  assets of Mechanical  Specialties,  Inc. (MSI), a
manufacturer  of heating  and  ventilating  equipment  located in  Philadelphia,
Pennsylvania.  The purchase  price for the assets  acquired,  net of liabilities
assumed, was $6,335,000.

         On  December  15,  1992,  Mestek,  through a  wholly-owned  subsidiary,
Westcast,   Inc.,   purchased  certain  assets  of  The  H.  B.  Smith  Company,
Incorporated,  (HBS), at public auction.  Assets acquired included inventory,  a
hydronics  laboratory,  certain foundry and machine-shop  machinery and tooling,
certain  office  equipment,  and  furniture  and certain  notes and  instruments
secured by other  assets of HBS.  The  purchase  price paid for these assets was
$3,115,000. The Company, through another wholly-owned subsidiary,  owns 48.6% of
the outstanding common stock of HBS.

         On  December  22,  1992,  Mestek,  through a  wholly-owned  subsidiary,
Peritek,  Inc.,  purchased  certain  assets of The Trane Company,  ("Trane"),  a
division of American  Standard Inc. and an  affiliate,  for cash and notes which
totaled,  after adjustment,  approximately $10.1 million. The Company acquired a
manufacturing  facility in  Scranton,  Pennsylvania  and certain  inventory  and
equipment.

         In April of 1993, the Company purchased a 46.8% interest in Eafco, Inc.
Eafco  produces  cast iron boiler  sections for the boiler  industry,  including
Mestek's boiler  subsidiaries.  The Company accounts for its investment in Eafco
under the equity method.

         On  August  17,   1993,   the  Company  sold  a  70%  interest  in  its
Environmental Engineering Segment, Chester Environmental,  Inc., ("Chester"), to
Duquesne  Enterprises,  Inc.,  a  Pennsylvania  corporation,   headquartered  in
Pittsburgh,  Pennsylvania.  The Company has accounted for this  transaction as a
Disposal of a Discontinued  Segment,  as more fully  explained in Note 17 to the
consolidated  financial statements.  The Company sold its remaining 30% interest
on August 31,  1995,  as more  fully  explained  in Note 15 to the  consolidated
financial statements.

         On November 1, 1994, pursuant to a motion approved by the United States
Bankruptcy  Court  for  the  District  of  New  Mexico,   the  Company  acquired
substantially all of the inventory,  accounts receivable, and fixed tangible and
intangible  assets of Aztec Sensible  Cooling,  Inc.  (Aztec) a manufacturer  of
evaporative cooling and other custom air handling equipment in Albuquerque,  New
Mexico.  The  purchase  price  for the  assets  acquired,  was  $1,372,000.  The
operations of Aztec were  relocated to the Company's  Dallas,  Texas facility in
December of 1994.

         On October 30,  1995,  the Company  executed  an  agreement  to acquire
approximately  eighty-three  (83%) of the issued and  outstanding  voting common
stock  of  National  Northeast   Corporation  and  National  Southeast  Aluminum
Corporation  ("National").  National  operates  custom  aluminum  extrusion  and
fabrication  facilities  located in Lawrence,  Massachusetts  and Winter  Haven,
Florida.  The  transaction  was  accounted  for  under  the  purchase  method of
accounting as of October 30, 1995 and, accordingly, the company has included the
results of this acquired  business in its  consolidated  statement of operations
from this date. The Company itself is a user of aluminum  extrusions in its HVAC
segment.  The  consideration  for the  purchase  was $9.96  million  in cash and
approximately  $3.32 million payable over three years,  contingent upon a future
level of earnings.  The transaction was completed on January 2, 1996. In January
of 1997 the Company pre-paid the contingent purchase price.




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         On November 15, 1995,  the Company  acquired  substantially  all of the
accounts receivable,  inventory, fixed and intangible assets of Heat Exchangers,
Inc., a manufacturer of portable air conditioning equipment in Skokie, Illinois.
The purchase price paid,  including the assumption of certain  liabilities,  was
$6,764,000.  The acquisition  was accounted for as a purchase and,  accordingly,
the  Company  has  included  the  results  of  this  acquired  business  in  its
consolidated statement of operations since the date of the acquisition.

         On  February  2,  1996,  the  Company  acquired  all of the  issued and
outstanding  common stock of Omega Flex,  Inc. of Exton,  Pennsylvania  (Omega).
Omega is a manufacturer  of flexible  metal hose and related hose  fabrications.
The  purchase  price paid for the  acquired  stock was  $9,119,000.  Liabilities
assumed were $833,000.  The Company has accounted for this acquisition under the
purchase  method of accounting.  Omega has leased its  manufacturing  and office
facilities  through December 31, 2001, for $182,000 per year which will increase
to  $268,146  per  year  once the  18,000  square  foot  addition  is ready  for
occupancy.

         On February 5, 1996, the Company  acquired  certain assets of the press
feeding and cut-to-length line businesses of Rowe Machinery and Automation, Inc.
of Dallas,  Texas (Rowe).  Rowe is a leading  manufacturer  of press feeding and
cut-to-length   line  equipment   serving  the  appliance,   office   furniture,
automotive,  and many other  markets.  The purchase  price paid was  $5,495,000,
including the assumed  liabilities of $1,900,000.  The Company has accounted for
this acquisition under the purchase method of accounting. The Company has leased
the Rowe facility in Dallas,  including machinery and equipment, on a short term
basis (through April 1997) at a cost of $40,000 per month.

         On August 30,  1996,  the  Company  acquired  substantially  all of the
operating  assets of Dahlstrom  Industries,  Inc.  (Dahlstrom) of Schiller Park,
Illinois.  Dahlstrom is a leading manufacturer of roll-forming equipment for the
metal  fabrication  industry.  The purchase price paid was $4,288,000  including
assumed   liabilities  of  $2,606,000.   The  Company  has  accounted  for  this
acquisition under the purchase method of accounting.

         The  Company's  executive  offices are located at 260 North Elm Street,
Westfield, Massachusetts 01085. The Company's phone number is 413-568-9571.


OPERATIONS OF THE COMPANY

         The Company operates in three continuing  business  segments:  heating,
ventilating,  and air conditioning  equipment ("HVAC")  manufacturing;  computer
software  development  and systems  design;  and metal  products.  Each of these
segments is described below. The Company and its subsidiaries  together employed
2,411 persons as of December 31, 1996.


HEATING, VENTILATING AND AIR CONDITIONING EQUIPMENT

         The  Company,  through  Mestek,  Inc.  and various of its  wholly-owned
subsidiaries,  (collectively,  the "Reed Division") manufactures and distributes
products in the HVAC industry.  These products include  residential,  commercial
and  industrial  hydronic  heat  distribution  products,  gas-fired  heating and
ventilating equipment,  louver and damper equipment,  commercial and residential
gas and oil-fired boilers,  air conditioning units, and related products used in
heating, ventilating and air conditioning systems.

         The Reed Division sells finned-tube and baseboard  radiation  equipment
under the names "Sterling", "Vulcan", "Heatrim",  "Petite-7",  "Hydrotherm", and
"Suntemp",  and  other  hydronic  heat  distribution  products  under  the names
"Sterling" and "Beacon-Morris".  The division sells gas-fired unit heaters under
the name "Sterling", radiant heating and commercial furnaces under the name "Cox
and gas-fired  indoor and outdoor  heating and  ventilating  equipment under the
names "Alton", "Applied Air", "Wing", "Air Fan", and "Temprite". Cooling and air
conditioning equipment is sold under the "Alton",

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"Applied Air", "Space Pak", "Aztec", "Koldwave", "Air Fan", and "Nesbitt" names,
and gas and oil-fired  boilers are sold primarily under the names  "Hydrotherm",
"Multi-Pulse", and "Multi-Temp", and distributed under the name "Smith Cast Iron
Boilers" by  Westcast,  Inc. A number of these  trade names are also  registered
trademarks owned by the Company and its subsidiaries. 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, down to such
small  spaces  as  add-on  rooms in  residences.  The  division's  products  are
manufactured at plants in Westfield,  Massachusetts; South Windsor, Connecticut;
Farmville,  North  Carolina;  Dallas,  Texas;  Orangeville,   Ontario;  Dundalk,
Maryland;  and Wrens,  Georgia.  The  Company  closed its Skokie,  Illinois  and
Ridgeville, Indiana plants in 1996 and consolidated these operations in Dundalk,
Maryland and Farmville, North Carolina, respectively.

         The Reed Division sells its many types of fire,  smoke, and air control
louvers  and  dampers,  which are  devices  designed  to control or seal off the
movement of air through building  ductwork in the event of fire or smoke,  under
the names "Air  Balance",  "Phillips  Aire",  "Pacific Air  Balance",  "American
Warming and  Ventilating",  and "Arrow".  These products are manufactured at the
Company's plants in Wrens,  Georgia;  Los Angeles,  California;  Bradner,  Ohio;
Waldron,  Michigan;  Springfield,  Ohio, and Wyalusing,  Pennsylvania.  The Reed
Division also  manufactures  industrial  and power plant dampers in Los Angeles,
California under the name "Pacific Air Products".

         Through  its  design  and  application  engineering  groups,  the  Reed
Division  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 Reed Division's standard line of products.

         The  Reed   division   sells  its  HVAC  products   primarily   through
approximately 2254 independent  representatives throughout the United States and
Canada,  many of  whom  sell  several  of  Reed's  products.  These  independent
representatives usually handle various HVAC products made by manufacturers other
than the Company.  These representatives  usually are granted an exclusive right
to solicit  orders for  specific  Reed  Division  products  from  customers in a
specific geographic  territory.  Because of the diversity of the Reed Division's
product lines, there is often more than one representative in a given territory.
Representatives  work closely with the Reed  Division's  sales  managers and its
technical personnel to meet customers' needs and specifications. The independent
representatives are compensated on a commission basis and generally they neither
stock Reed Division products nor purchase such products for resale.

         The Reed Division, directly, or through its representatives,  sells its
HVAC  products  primarily  to  contractors,  installers,  and end  users  in the
construction   industry,   wholesale   distributors   and   original   equipment
manufacturers.

         The Company  sells  gas-fired  and  hydronic  heating  and  ventilating
products,  boilers  and coil  handling  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 consolidated total revenues, nor did foreign assets exceed
ten  percent  of total  assets,  in any of the most  recent  five  years  ending
December 31, 1996.

         The Reed Division  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. 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 it 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.

         The businesses of the HVAC segment are highly competitive.  The Company
believes that it is the largest  manufacturer of hydronic  baseboard heating for
residential   and   commercial   purposes  and  is  one  of  the  three  leading
manufacturers of gas-fired  heaters and fire and smoke dampers.  The Company has
established a substantial  market  position in the  commercial  and  residential
cast-iron   boiler  business   through  its   acquisitions  in  1991  and  1992.
Nevertheless, in all of the industries in which it competes, the

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Company  has  competitors  with  substantially  greater  manufacturing,   sales,
research  and  financial  resources  than  the  Company.  Competition  in  these
industries is based mainly on merchandising capability,  service, quality, price
and ability to meet customer specifications.  The Reed Division 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 it product line and its ability to meet customer delivery and service
requirements.  Most of its competitors  offer their products in some but not all
of the industries served by the Reed Division.

         The  quarterly  results  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"). 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 during the heating  season and are generally  lower during the balance of
the year.

         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.

         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 Reed Division has a number of trademarks important to its business,
including those relating to its Sterling, Vulcan, Beacon-Morris,  Heatrim, Wing,
Alton,  Applied Air, Arrow,  Aztec Sensible  Cooling,  Hydrotherm,  Temprite and
Dynaforce product lines.

         Expenditures for research and development for the HVAC segment in 1996,
1995,  and 1994 were $814,000,  $894,000,  and $469,000,  respectively.  Product
development efforts are necessary and ongoing in all product markets.

         The Company believes that compliance with  environmental  laws will not
have a financially material effect on its operations in 1996.


COMPUTER SOFTWARE DEVELOPMENT AND SYSTEM DESIGN

         The business of Mestek's wholly-owned subsidiary,  MCS, Inc. ("MCS") is
primarily related to business applications software and systems development. MCS
develops computer software applications to meet specific industry  requirements.
Services to customers  include  preparation of computer programs and software to
meet the customer  needs,  providing  proper  computer  hardware when  required,
installing  the system at the  customer's  business,  and  providing  continuing
support services. MCS also provides computer processing services to customers on
a time-sharing basis.

         The most significant  systems which MCS has developed and has available
for sale are MestaMed,  a third-party  billing,  general ledger,  accounting and
inventory  control system for durable medical equipment  suppliers,  home health
providers and infusion therapy  providers and ProfitWorks,  a system utilized by
lumber, electrical, plumbing, and manufacturer's representatives to manage order
entry,  inventory,  purchasing,  accounts  receivable,  and  reporting.  Support
includes software  enhancements,  diagnostic access, and training seminars.  MCS
also  has  available  a  Telephone   Usage  System  which   analyses  usage  for
institutions with multiple telephones.  The hardware for these and other systems
is supplied primarily by Digital Equipment Corp., for which MCS is an Authorized
Solution Provider.




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         New  enhancements  to  its  software  products  are  continually  being
developed by MCS.  Notable  developments in 1996 include the availability of all
MCS products in the Windows NT operating system environment.  During 1996, 1995,
and  1994  MCS  spent  approximately   $1,338,000,   $1,208,576,   and  $910,000
respectively,  for  software  development.  These  costs  related  primarily  to
customer sponsored development and improvements to existing products.

         Because of the importance of systems  development  to MCS,  programming
and  sales  personnel  are a  primary  resource.  MCS's  main  office  is in the
Pittsburgh,  Pennsylvania  area and it has sales  offices in other  parts of the
country.

         The markets for business  applications software and systems development
are diverse and very  competitive.  MCS has many  competitors  in the markets in
which it operates,  both on a regional and national basis. On December 31, 1996,
MCS's backlog was $1,838,000.

         MCS's  inventory  consists  primarily of computer  hardware and related
equipment which is used in the computer systems sold. MCS attempts to maintain a
sixty-day  supply so that delivery of completed  systems can be made on a timely
basis.


METAL PRODUCTS (formerly Coil Handling Equipment)

         The  Company's  Coil Handling  Equipment  Segment,  which  historically
included  only  its  Cooper-  Weymouth,  Peterson  (CWP)  division,  added  four
additional  units in 1996:  the assets of Rowe  Machinery and  Automation  Inc.,
(Rowe), a leading  manufacturer of press-feeding  and  cut-to-length  equipment,
acquired  on  February  5,  1996,  the  assets of  Dahlstrom  Industries,  Inc.,
(Dahlstrom),  a leading  manufacturer  of roll  forming  equipment,  acquired on
August 30, 1996, National Northeast Corporation, (National) an aluminum extruder
and heat sink  fabricator  acquired on October 30,  1995,  and Omega Flex,  Inc.
(Omega) an industrial metal hose  fabricator,  acquired on February 2, 1996. The
Company   re-named  this  segment  the  Metal   Products   Segment  in  1996  in
consideration of these acquisitions.

         The  CWP,   Rowe  and   Dahlstrom   units   manufacture  a  variety  of
metal-forming  equipment  including  coil  straighteners,  reels,  press  feeds,
cut-to-length  lines,  roll-formers,  wing  benders and related  equipment.  The
Company  believes it has improved its competitive  position within this industry
by developing  servo- driven  feeders with  microprocessor  controls,  affording
diagnostic and operational  features,  as well as by the strategic  acquisitions
made in 1996 which broaden the Company's overall product offerings.

         Certain   products  made  by  these  units  are  custom   designed  and
manufactured to meet unique customer needs or  specifications  not currently met
by existing  products.  These  products,  developed by the Company's  design and
application   engineering  groups,  often  represent  improvements  on  existing
technology  and are often then  incorporated  into the unit's  standard  product
line.

         The primary customers for such metal-forming equipment include contract
metal  stampers,  manufacturers  of large and small  appliances,  commercial and
residential  lighting  fixtures,  automobile  accessories,  office furniture and
equipment, metal construction and HVAC products.

         The businesses of CWP, Rowe and Dahlstrom are highly  competitive.  CWP
has  become  a  substantial  competitor  in the  manufacture  of  coil  handling
equipment   through  its  abilities  to  meet  customer   delivery  and  service
requirements  through its extensive  distribution  network.  The Company expects
that these  strengths  will be further  leveraged  by the  additions of Rowe and
Dahlstrom.

         National  extrudes and fabricates  high  precision  aluminum heat sinks
(heat  dissipation  devices)  for  use  in a  wide  variety  of  power  control,
communications  and related  electronic and computer systems  applications.  Its
products  are made  through an  extrusion  process  supported by a broad line of
secondary  machining   capabilities.   National's  application  engineering  and
fabrication  capabilities have helped it become a substantial  competitor in the
heat sink market place.

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         Omega manufactures  corrugated flexible stainless steel hose for use in
a wide  variety of  industrial  applications.  It's  products  include  annular,
helical  and braided  metal hose and hose  fabrications  and are sold  primarily
through  industrial  hose  distributors.  In January of 1997,  Omega  introduced
Trac-PipeTM, a corrugated stainless steel tubing developed for use in piping gas
appliances.  The Company expects that significant  synergies will be realized by
distributing Trac-PipeTM through its extensive HVAC distribution network.

         The backlog  relating to this  segment as a whole at December  31, 1996
was $14,364,000.

         Expenditures for research and development for this segment, independent
of research and  development  related to specific  customer  requests,  in 1996,
1995, and 1994 were $204,000, $0, and $68,000, respectively.


SEGMENT INFORMATION

         Selected financial  information regarding the operations of each of the
above segments is presented in Note 12 to the Consolidated Financial Statements.


Item 2 - PROPERTIES

         The Reed Division (HVAC segment) of the Company manufactures  equipment
at plants that the Company owns in Waldron, Michigan;  Bradner, Ohio; Wyalusing,
Pennsylvania;  Dundalk, Maryland, Springfield, Ohio; Wrens, Georgia, and Dallas,
Texas.  It  operates  plants  that it leases  from  entities  owned  directly or
indirectly  by certain  officers  and  directors  of the  Company in  Westfield,
Massachusetts;  Farmville,  North Carolina;  South Windsor,  Connecticut and Los
Angeles, California. The Reed Division leases manufacturing space from unrelated
parties  in  Orangeville,  Ontario,  Canada;  as  well  as  warehouse  space  in
Mississauga, Ontario, Canada.

         The metal products segment manufactures  products at plants the Company
owns in Clinton,  Maine and Schiller Park,  Illinois and at leased facilities in
Dallas,  Texas,  Lawrence,  Massachusetts,  Winter  Haven,  Florida  and  Exton,
Pennsylvania.

         During 1996 the Company constructed additions to its Dundalk, Maryland;
Farmville,  North  Carolina;  and Clinton,  Maine  facilities in anticipation of
product  relocations  from leased  facilities in Skokie,  Illinois;  Ridgeville,
Indiana;  and Dallas,  Texas.  These  transfers  are expected to be completed in
1997.

         The Company's  computer  system's  segment (MCS) leases office space in
Monroeville,  Pennsylvania,  which  houses its  principal  offices and  computer
facility used in the computer software development and system design business.
MCS owns the computer equipment used in its operations.

         The Company's principal  executive offices in Westfield,  Massachusetts
are leased from an entity owned by an officer and  director of the Company.  The
Company also owns an office building in Holland, Ohio.

         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.



         The Company's Scranton, Pennsylvania manufacturing facility, classified
as Property Held for Sale at December 31, 1995, was sold on January 19, 1996, at
a pre-tax gain of $854,000. The Company's

                                        8

<PAGE>



Hagerstown,  Maryland  facility  was sold on April 1, 1996 at a pre-tax  gain of
$590,000.


Item 3 - LEGAL PROCEEDINGS

         The  Company  is not  presently  involved  in any  litigation  which it
believes will materially and adversely affect its financial condition or results
of operations.


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 1996.


                                     PART II


Item 5 - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         The  Company's  common stock is listed on the New York Stock  Exchange,
under the symbol MCC. The number of  shareholders  of record as of March 31,1997
was 1,601. The price range of the Company's common stock between January 1, 1997
and March  31,1997 was 16-1/8 to 18-1/8 and the closing  price on March 31, 1997
was $16-1/4.


         The quarterly  price ranges of the  Company's  common stock during 1996
and 1995 as reported in the  consolidated  transaction  reporting system were as
follows:


                                   PRICE RANGE

                             1996                            1995
                             ----                            ----

First Quarter       $13-3/4          $12           $ 10-3/8          $ 9-5/8
Second Quarter      $14-7/8          $12-1/2       $ 12-7/8          $ 9-3/4
Third Quarter       $14-7/8          $14-3/8       $ 14-5/8          $12-1/4
Fourth Quarter      $16-1/2          $14-5/8       $ 13-1/4          $10-3/4


     The Company has not paid any dividends on its common stock since 1979.

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




<PAGE>


                                        9

Item 6 - SELECTED FINANCIAL DATA

Selected  financial  data for the Company for each of the last five fiscal years
is  shown  in the  following  table.  Selected  financial  data  reflecting  the
operations  of  acquired  businesses  is shown only for  periods  following  the
related acquisition. (Dollars stated in thousands except per share data.)


SUMMARY OF FINANCIAL POSITION as of December 31,
     (dollars in thousands except per share data)

                                1996       1995       1994       1993       1992
                            --------   --------   --------   --------   --------

Total assets ............   $170,010   $141,431   $120,430   $126,625   $137,158
Working capital .........     59,274     41,626     36,628     37,238     58,279
Long-term debt, including
  current portion .......     15,362      3,031      5,548     20,860     32,104
Shareholders' equity ....    103,718     91,046     80,732     73,317     70,552
Common shareholders'
   equity, per common
    share (1) ...........   $  11.61   $  10.14   $   8.93   $   7.96   $   7.59
                            ========   ========   ========   ========   ========



SUMMARY OF  OPERATIONS  - for the  year  ended  December  31,  (2)  (dollars  in
     thousands except per share data)

                                1996       1995       1994       1993       1992
                            --------   --------   --------   --------   --------

Total revenues from
  continuing operations (3) $299,527   $245,865   $224,018   $231,386   $190,038
Income from continuing
   operations .............   13,329     10,906      9,298      7,583      5,410
Net  income ...............   13,329     10,906      9,298      4,265      5,823
Earnings per common share:
Income from continuing
   operations ............. $   1.49   $   1.21   $   1.02   $    .82   $    .57
Net income ................ $   1.49   $   1.21   $   1.02   $    .46   $    .62


1)     Equity per common share amounts are computed  using the common shares and
       common stock equivalents outstanding as of December 31, 1996, 1995, 1994,
       1993, and 1992.

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

       * Dahlstrom Industries, Inc. from August 30, 1996.
       * Rowe Machinery and Automation, Inc., from February 5, 1996.
       * Omega Flex, Inc., from February 2, 1996.
       * National Northeast Corporation and National Southeast Corporation from
         October 30, 1995.
       * Heat Exchangers, Inc., from November 15, 1995.
       * Aztec Sensible Cooling, Inc., from November 1, 1994.
       * Mechanical Specialties,  Inc., from August 21, 1992 and Westcast, Inc.,
from December 15, 1992.

(3)    Revenues   have  been   adjusted   in  1993  and  1992  to  reflect   the
       reclassification  of  revenues  related  to the  Company's  Environmental
       Engineering Segment to Discontinued Operations.


Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF  OPERATIONS

                                       10

<PAGE>





                      RETURN ON AVERAGE NET ASSETS EMPLOYED


                                1996, 1995, 1994


         The  Company's  Return on  Average  Net  Assets  Employed,  defined  as
operating profits before bonuses, over Average Net Assets Employed (total assets
less current  liabilities other than current portion of long-term debt, averaged
over 12 months) for the years 1996, 1995, and 1994 was as follows:


                                          1996            1995            1994
                                  ------------    ------------    ------------

Operating Profits (as defined)    $ 25,925,000    $ 22,515,000    $ 21,538,000

Average Net Assets Employed (as
   defined) ...................   $113,594,000    $ 94,956,000    $ 90,691,000
                                  ------------    ------------    ------------
Return on Average Net Assets
    Employed ..................           22.8%           23.7%           23.8%
                                  ============    ============    ============



         The 1996 return on Average  Net Assets  Employed  was reduced  slightly
from  1995  despite  improved  performances  in the  HVAC and  Computer  Systems
Segments due  principally  to the costs of certain  product  development,  plant
relocation and other transitional costs incurred in the Company's Metal Products
segment which are described in greater detail below.


                             ANALYSIS: 1996 VS. 1995


         The Company's core HVAC Segment reported  comparative  results for 1996
and 1995 as follows:



                        1996                    1995
                   ($    000)      1996     ($    000)      1995    $Net Change
                   ---------    -------     ---------    -------    -----------

Net Sales ......   $ 228,115      100.00%   $ 218,456      100.00%    +4.42%
Gross Profit ...      62,164       27.25%      60,052       27.49%    +3.52%
Operating Income      16,142        7.08%      15,495        7.09%    +4.18%

         The growth in revenues in this Segment was principally  attributable to
the effect of added  sales from the  acquisition  of Heat  Exchangers,  Inc.  on
November  15,  1995.  Increases in volume in the  Company's  historical  boiler,
damper and cooling products were largely offset by reduced volumes in certain of
the Company's residential and commercial hydronic products. Gross profit margins
were  relatively  unchanged in 1996 despite  reductions  in certain raw material
costs due to the offsetting effect of relocation and other transitional expenses
incurred in relation to the Company's Nesbitt and Koldwave divisions.  Operating
income as a percentage of net sales was relatively unchanged from 1995.



         The Company's Computer Systems Segment (MCS, Inc.) reported improved
sales, margins and operating profits in 1996 as indicated in the following
table:

                                       11

<PAGE>




                     1996                      1995
                    ($000)         1996       ($000)       1995     $Net Change
                    ------         ----       ------       ----     -----------

Net Sales ......   $16,114      100.00%      $15,255      100.00%     +5.63%
Gross Profit ...     6,865       42.60%        6,444       42.24%     +6.53%
Operating Income     3,063       19.01%        2,749       18.02%    +11.42%


         MCS's  success in 1996  reflects its  continuing  commitment to product
enhancement and customer support in the Durable Medical Equipment, Home Infusion
Therapy, and Home Health Services marketplaces.

         The  Company's  Coil Handling  Equipment  Segment,  which  historically
included only the Cooper-  Weymouth,  Peterson  division,  added four additional
units in 1996:  the assets of Rowe  Machinery and  Automation  Inc.,  (Rowe),  a
leading manufacturer of press-feeding and cut-to-length  equipment,  acquired on
February 5, 1996,  the assets of  Dahlstrom  Industries,  Inc.,  (Dahlstrom),  a
leading  manufacturer  of roll forming  equipment,  acquired on August 30, 1996,
National Northeast,  Corporation,  (National) an aluminum extruder and heat sink
fabricator  acquired  on October  30,  1995,  and Omega  Flex,  Inc.  (Omega) an
industrial  metal hose  fabricator,  acquired on  February 2, 1996.  The Company
re-named this segment the Metal  Products  Segment in 1996 in  consideration  of
these acquisitions.  Comparative results,  which were significantly  affected by
these acquisitions, were as follows:


                     1996                     1995
                    ($000)        1996       ($000)        1995    $Net Change
                    ------        ----       ------        ----    -----------

Net Sales ......   $55,298      100.00%     $12,154      100.00%     +454.98%
Gross Profit ...    13,199       23.87%       4,549       37.43%     +290.15%
Operating Income     3,687        6.67%       1,926       15.85%     +191.43%


         The assimilation of the Rowe and Dahlstrom  businesses and planning for
the relocation of the Rowe  manufacturing  operation to Clinton,  Maine, home of
Cooper-Weymouth,  Peterson,  which is expected to be completed in 1997,  imposed
significant  direct and indirect costs on this segment in 1996 and  overshadowed
otherwise excellent results reported by Cooper-Weymouth,  Peterson.  Significant
synergies are expected to be derived from this relocation in future years. Gross
Profit and Operating  Income were also  negatively  effected by significant  new
product  development  costs  undertaken by Omega in  anticipation of its January
1997 introduction of Trac-PipeTM,  a corrugated stainless steel tubing developed
especially for use in the piping and installation of gas appliances.


         As a whole the Company reported comparative results as follows:

                     1996                      1995
                    ($000)          1996      ($000)        1995    $Net Change
                    ------          ----      ------        ----    -----------

Net Sales ......   $299,527      100.00%     $245,865      100.00%     +21.83%
Gross Profit ...     82,228       27.45%       71,045       28.90%     +15.74%
Operating Income     22,892        7.64%       20,170        8.20%     +13.49%

         Gross Profit and  Operating  Income  percentage  margins were  slightly
reduced overall  principally due to the plant relocation and product development
costs described above.


                                       12

<PAGE>




         Sales  expense for the  Company as a whole,  as a  percentage  of total
revenues,  was  reduced  from 13.08% to 11.85%.  (Sales  Expense and General and
Administrative  Expense  for 1995,  as reported  in the  accompanying  financial
statements, have been adjusted to reflect certain reclassifications for purposes
of  comparability).  General and  Administrative  Expenses,  as a percentage  of
revenues,  increased from 5.23% in 1995 to 5.40% in 1996,  principally due to an
increase in the provision for bonuses.  Engineering  expense, as a percentage of
total  revenues,  increased  slightly  from  2.32% to  2.55%.  Interest  expense
increased substantially reflecting the various acquisitions made in 1996.

         Income tax expense for 1996,  as a  percentage  of pretax  income,  was
relatively unchanged at 39.39%.

         The Company's Scranton, Pennsylvania manufacturing facility, classified
as Property Held for Sale at December 31, 1995 was sold on January 19, 1996 at a
gain of $854,000. The Company's Hagerstown,  Maryland facility was sold on April
1, 1996 at a gain of $590,000.


                             ANALYSIS: 1995 VS. 1994

         The Company's core HVAC Segment reported  comparative  results for 1995
and 1994 as follows:


                     1995                        1994
                    ($000)         1995        ($000)       1994    $Net Change
                    ------         ----        ------       ----    -----------

Net Sales ......   $218,456      100.00%     $200,444      100.00%     +8.99%
Gross Profit ...     60,052       27.49%       56,746       28.31%     +5.82%
Operating Income     15,495        7.09%       15,310        7.64%     +1.21%


         The growth in revenues was principally  attributable  to  significantly
improved  sales from the  Company's  Industrial  Products  divisions  in Dallas,
Texas, and Orangeville,  Ontario, Canada - offset somewhat by reduced sales from
the Company's residential hydronic divisions in Westfield,  Massachusetts. Gross
profit  margins  were  slightly  reduced  in 1995 owing in part to the effect of
reduced  hydronic  sales, in part to the effect (in early 1995) of material cost
increases,  and also to the effect of certain product  relocations  completed in
1995.  Operating  income as a percentage of net sales was also slightly  reduced
owing to the same effects.

         In  addition  to the  effects on HVAC Net  Sales,  Gross  Profits,  and
Operating  Income  discussed  above,  the  acquisitions  of  National  Northeast
Corporation, as of October 30, 1995, and Heat Exchangers,  Inc., on November 16,
1995,  as  more  fully  described  in  Note  2  to  the  Consolidated  Financial
Statements, affected the comparative results for 1995 and 1994 as follows:



                         Percentage    Effect of 1995 Acq.     Percentage Change
                          Change       (National Northeast)  Net of Acquisitions
                       1995 vs. 1994  (Heat Exchangers, Inc.)   1995 vs. 1994
                       -------------   ---------------------    -------------

Net Sales ..............   +8.99%              +2.1%                 +6.89%
Gross Profit ...........   +5.82%               -.86%                +6.68%
Operating Income .......   +1.21%              -1.53%                +2.74%








                                       13

<PAGE>



         The Company's Computer Systems Segment (MCS, Inc.) reported improved
sales, margins and operating profits in 1995 as indicated in the following
table:

                     1995                     1994
                    ($000)       1995        ($000)        1994    $Net Change
                    ------       ----        ------        ----    -----------

Net Sales ......   $15,255      100.00%      $14,461      100.00%      + 5.49%
Gross Profit ...     6,444       42.24%        5,583       38.61%      +15.42%
Operating Income     2,749       18.02%        2,244       15.52%      +22.50%

         MCS's  success  in 1995  reflects  its  ongoing  commitment  to product
enhancement and customer support in the Durable Medical Equipment, Home Infusion
Therapy, and Home Health Services marketplaces in which it competes.

         The  Company's  Coil  Handling   Equipment  Segment   (Cooper-Weymouth,
Peterson) also reported  excellent results for 1995, with margins declining only
slightly despite a 33% growth in revenues:

                     1995                      1994
                    ($000)        1995        ($000)       1994    $Net Change
                    ------        ----        ------       ----    -----------

Net Sales ......   $12,154      100.00%      $ 9,112      100.00%     +33.38%
Gross Profit ...     4,549       37.43%        3,581       39.30%     +27.03%
Operating Income     1,926       15.85%        1,583       17.37%     +21.67%

These results reflect both the healthy conditions  presently  affecting the coil
handling  equipment  marketplace  and  the  success  of this  segment's  product
innovation efforts.

         As a whole the Company reported comparative results as follows:

                     1995                         1994
                    ($000)        1995           ($000)       1994   $Net Change
                    ------        ----           ------       ----   -----------

Net Sales ......   $245,865      100.00%      $224,018      100.00%    +9.75%
Gross Profit ...     71,045       28.90%        65,910       29.42%    +7.79%
Operating Income     20,170        8.20%        19,137        8.54%    +5.40%

         Sales  expense for the  Company as a whole,  as a  percentage  of total
revenues, was reduced from 13.37% to 13.08%. General and Administrative expenses
as a percentage of total revenues increased from 4.95% in 1994 to 5.29% in 1995,
principally  due to an  increase  in the  provision  for bad debts.  Engineering
expense,  as a  percentage  of total  revenues,  was reduced  from 2.6% to 2.3%.
Interest expense from continuing  operations was reduced by $121,000  reflecting
the effect,  net of investment and  acquisition  activities,  of the sale of the
Company's  remaining interest in Chester  Environmental,  Inc. in August of 1995
for approximately $6,000,000.

         Income tax expense for continuing  operations for 1995, as a percentage
of pretax  income,  was 39.9% as compared with 42.1% for 1994, due to the effect
in  1994  of  certain   subsidiary  losses  on  state  and  foreign  income  tax
obligations,  as more fully  described in Note 8 to the  Consolidated  Financial
Statements.

         At December  31, 1995,  the Company  classified  an idle  manufacturing
facility, in Scranton,  Pennsylvania, as a Property Held for Sale. This property
was sold in January of 1996 at which time a gain was realized.

         Other Expense  decreased  substantially  in 1995,  due to the effect of
reduced  carrying costs on idle  properties  held for sale, and the inclusion in
1995 of a  non-recurring  $850,000 gain on the sale of the  Company's  remaining
investment in Mesta Engineering Company.



                                       14

<PAGE>



                    ANALYSIS: LIQUIDITY AND CAPITAL STRUCTURE


       Working capital  increased in 1996 in proportion to the Company's overall
growth, as indicated in the following table (all amounts in thousands):


       12/31/96       Net Change      12/31/95      Net Change      12/31/94

       $59,274         $17,648        $ 41,626        $4,998        $ 36,628
       =======      ============      ========        ======        ========


       The   Company's   funded  debt  to  equity  ratio   (including   deferred
compensation  and  Minority  Interest  in  National  Northeast  as funded  debt)
decreased  slightly,  from 16.5% at December  31,1995,  to 16.2% at December 31,
1996,  despite the effect of the Company's 1996  acquisitions of Rowe, Omega and
Dahlstrom due to the offsetting positive effect of income on total equity.

       The Company's Net Assets Employed grew from  $106,099,000 at December 31,
1995 to $120,647,000 at December 31, 1996, due principally to the effects of the
acquisitions of Rowe, Omega and Dahlstrom,  as more fully described in Note 2 to
the Consolidated Financial Statements.

       Management  regards the Company's  current capital  structure and banking
relationships  as fully adequate to meet  foreseeable  future needs. The Company
has not paid dividends on its common stock since 1979.


                            ENVIRONMENTAL DISCLOSURE

       The Company is subject to numerous laws and  regulations  that govern the
discharge  and disposal of materials  into the  environment.  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 or regulations  (Environmental  Laws).  There are,  however,  a
number of activities in which the Company is engaged under Environmental Laws.

Permitting Activities

       The  Company is engaged in various  matters  with  respect to  obtaining,
amending or renewing permits required under  Environmental  Laws to operate each
of its manufacturing facilities. Based on the information presently available to
it,  management  expects that all permit  applications will be routinely handled
and management does not believe that the denial of any currently  pending permit
application  will have a  material  adverse  effect on the  Company's  financial
position or the results of operations.

Potentially Responsible Parties (PRP) Actions

       The Company has been named or contacted by state  authorities  and/or the
Environmental Protection Agency (the EPA) regarding the Company's liability as a
potentially  responsible  party (PRP) for the remediation of several sites, none
of which actions represent a material proceeding. The potential liability of the
Company is based upon records that show the Company or other  corporations  from
whom the  Company or its  subsidiaries  acquired  assets  used the sites for the
lawful disposal of hazardous  waste pursuant to third party  agreements with the
operators of such sites.  Such PRP actions  generally arise when the operator of
the site lacks the financial  ability to address  compliance with  Environmental
Laws,  decisions and orders affecting the site in a timely and effective manner.
The governmental  authority  responsible for the site looks to the past users of
the facility and their  successors  to address the costs of  remediation  of the
site.





                                       15

<PAGE>



       In High Point,  North Carolina,  the company has been named as a PRP with
regard to the clean-up of groundwater  contamination allegedly due to dumping at
a land-fill.  The Company's activity at the site represented less than 1% of all
activity at the site.  State  authorities  continue to investigate the extent of
and remediation  methods for groundwater  contamination at or near the site, and
the  Company  joined  a  joint  defense  group  to help  define  and  limit  its
liabilities  whereby it may be required to  contribute  additional  non-material
sums as part of the remediation of groundwater contamination. The Company (along
with many other  corporations) is involved in PRP actions for the remediation of
a site  in  Southington,  Connecticut,  as a  result  of the  EPA's  preliminary
assignment of derivative  responsibility for the presence of hazardous materials
attributable to two other  corporations  from whom the Company  purchased assets
after the hazardous materials had been disposed of at the Southington sites. The
Company  is  currently  participating  as  part  of a  joint  defense  group  in
discussions  with  the EPA for a "de  minimis  settlement"  at the  Southington,
Connecticut site. The obligations of the Company in this matter are not expected
to be material to the Company's financial position or the results of operations.
The Company has recently  received  notices from Pitt County and the EPA that it
may (along with many others) be a PRP at the Pitt County  landfill and a site in
Charlotte,  North Carolina.  The Company continues to investigate these emerging
matters,  but expects that these  matters will not be material to the  Company's
financial position or results of operations.


Releases of Hazardous Materials

       There have been  releases  of  hazardous  materials  on a few  parcels of
property  which  are  presently  leased or  operated  by the  Company.  All such
releases occurred prior to the occupation of the properties by the Company.  All
releases are in the process of assessment or remediation.  In most cases,  other
parties  are  responsible  for the  costs  of  remediation  and the  Company  is
indemnified.  At a site in Massachusetts  leased by the Company,  the Lessor has
received notice from a down-stream abutter that activities on the property prior
to the Company's  occupation may be the source of groundwater  contamination  on
the abutter's  property.  Based upon an investigation  by the Lessor,  the claim
does not appear to be supportable.  Based on the information presently available
to it,  management  does not  believe  that the costs of  addressing  any of the
releases will have a material adverse effect on the Company's financial position
or the results of operations.


Changes to Environmental Laws Affecting Operations and Product Design

       The Company's operations and its HVAC products that involve combustion as
currently designed and applied entail the risk of future  noncompliance with the
evolving landscape of Environmental Laws. The cost of complying with the various
Environmental  Laws 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
atmospheric  combustion,  will not over the  long-term  and in the future have a
material adverse effect on the Company's results of operations.



















                                       16

<PAGE>



Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA





               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

                    The Board of Directors and Shareholders'
                                  Mestek, Inc.

     We have audited the  accompanying  consolidated  balance  sheets of Mestek,
Inc.  and  subsidiaries  as of  December  31,  1996 and  1995,  and the  related
consolidated statements of income, shareholders' equity, and cash flows for each
of  the  years  in  the  three  year  period  ended  December  31,  1996.  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 generally  accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

       In our  opinion,  the  financial  statements  referred  to above  present
fairly, in all material respects, the consolidated financial position of Mestek,
Inc. and  subsidiaries  as of December 31, 1996 and 1995,  and the  consolidated
results of their  operations and their  consolidated  cash flows for each of the
years in the three year  period  ended  December  31,  1996 in  conformity  with
generally accepted accounting principles.

       We have also audited  Schedule II of Mestek,  Inc. and subsidiaries as of
December  31,  1996 and for each of the years in the  three  year  period  ended
December 31, 1996. In our opinion, the schedule presents fairly, in all material
respects, the information required to be set forth therein.








/S/ GRANT THORNTON LLP
    GRANT THORNTON LLP


Boston, Massachusetts
March 28, 1997












                                       17

<PAGE>





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



                                                            1996       1995
                                                          --------   --------
                                                         (Dollars in thousands)
ASSETS

Current Assets
   Cash and Cash Equivalents ..........................   $ 11,649   $  1,405
   Accounts Receivable - less allowances of
     $1,701 and $1,377 ................................     49,577     42,911
   Unbilled Accounts Receivable .......................        174        139
   Inventories ........................................     43,265     39,241
   Deferred Tax Benefit ...............................      1,823      1,492
   Other Current Assets ...............................      2,264      4,381
                                                          --------   --------
   Total Current Assets ...............................    108,752     89,569

Property and Equipment - net ..........................     31,439     24,968
Equity Investments ....................................      8,778      8,778
Property Held for Sale ................................       --        2,955
Other Assets and Deferred Charges  - net ..............      6,786      8,097
Deferred Tax Benefit ..................................        280        448
Excess of Cost over Net Assets of Acquired Companies...     13,975      6,616
                                                          --------   --------

   Total Assets .......................................   $170,010   $141,431
                                                          ========   ========












See Accompanying Notes to Consolidated Financial Statements














                                       18

<PAGE>




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



                                                             1996       1995
                                                          --------   --------
                                                         (Dollars in thousands)
LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities:
  Current Portion of Long-Term Debt ...................   $    115   $  2,651
  Accounts Payable ....................................     19,559     16,342
  Accrued Salaries and Bonuses ........................      4,886      3,218
  Accrued Commissions .................................      3,404      2,234
  Progress Billings in Excess of Cost
   and Estimated Earnings .............................      2,899      2,904
  Purchase Price Payable - National Northeast .........       --        9,960
  Customer Deposits ...................................      4,829       --
  Other Accrued Liabilities ...........................     13,786     10,634
                                                          --------   --------
Total Current Liabilities .............................     49,478     47,943

Long-Term Debt ........................................     15,247        380
Deferred Compensation .................................         18         22
                                                          --------   --------
Total Liabilities .....................................     64,743     48,345
                                                          --------   --------
Minority  Interest - National Northeast ...............      1,549      2,040
                                                          --------   --------

Shareholders' Equity:
  Common Stock - no par, stated value $0.05 per
   share, 9,610,135 shares issued .....................        479        479
  Paid in Capital .....................................     15,434     15,434
  Retained Earnings ...................................     94,794     81,465
  Treasury Shares, at cost (680,364 and
   634,864 common shares, respectively) ...............  (   6,040) (   5,449)
  Cumulative Translation Adjustment ...................  (     949) (     883)
                                                          --------   --------
  Total Shareholders' Equity ..........................    103,718     91,046
                                                          --------   --------

     Total Liabilities and Shareholders'
         Equity .......................................   $170,010   $141,431
                                                          ========   ========



See Accompanying Notes to Consolidated Financial Statements.











                                       19

<PAGE>



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

                                                 1996       1995       1994
                                              --------   --------   --------
                       (Dollars in thousands, Except Earnings Per Common Share)

Net Sales .................................   $283,413   $230,610   $209,557
Net Service Revenues ......................     16,114     15,255     14,461
                                              --------   --------   --------
Total Revenues.............................    299,527    245,865    224,018

Cost of Goods Sold ........................    208,050    166,009    149,180
Cost of Service Revenues ..................      9,249      8,811      8,928
                                              --------   --------   --------

Gross Profit ..............................     82,228     71,045     65,910

Selling Expense ...........................     35,492     32,160     29,955
General and Administrative
     Expense ..............................     16,202     13,004     11,084
Engineering Expense .......................      7,642      5,711      5,734
                                              --------   --------   --------

Operating Profit ..........................     22,892     20,170     19,137

Interest Expense ..........................  (   1,377)  (    718)  (    839)
Gain on Sale of Property ..................      1,444       --         --
Other Income (Expense), Net ...............  (     968)  (  1,317)  (  2,250)
                                              --------   --------   --------

Income Before Income Taxes ................     21,991     18,135     16,048
Income Taxes ..............................      8,662      7,229      6,750
                                              --------   --------   --------

Net Income ................................   $ 13,329   $ 10,906   $  9,298
                                              ========   ========   ========

Earnings per Common Share: ................   $   1.49   $   1.21   $   1.02
                                              ========   ========   ========

Weighted Average Shares Outstanding .......      8,938      9,019      9,137
(In Thousands)                                ========   ========   ========




See Accompanying Notes to Consolidated Financial Statements.














                                       20

<PAGE>

<TABLE>



MESTEK, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY For the years ended December 31,
1996, 1995 and 1994
<CAPTION>

                                      $5.00
                                    Cumulative
                                    Convertible                                                                Cumulative
                                     Preferred       Common         Paid In      Retained        Treasury     Translation
(Dollars In Thousands)                Stock           Stock         Capital      Earnings         Shares       Adjustment    Total
----------------------            ---------------   -----------     --------     --------        ----------    ----------   --------


<S>                                 <C>                <C>           <C>         <C>             <C>             <C>       <C>
Balance - December 31, 1993         $ 7,209            $ 387         $ 8,323     $61,261         $ (3,203)       $( 660)   $ 73,317

Net Income                                                                         9,298                                      9,298
Common Stock Repurchased                                                                           (1,605)                  ( 1,605)
Conversion of $5.00 Convertible
     Preferred                      ( 7,203)              92           7,111
Redemption of $5.00 Convertible
     Preferred                      (     6)                                                                                (     6)
Cumulative Translation Adjustment                                                                                 ( 272)    (   272)
                                  -------------     ----------       ---------   --------         ---------    ---------   ---------
Balance - December 31, 1994         $    -             $ 479          $15,434    $70,559          $( 4,808)      $( 932)   $ 80,732

Net Income                                                                        10,906                                     10,906
Common Stock Repurchase                                                                            (   641)                  (  641)
Cumulative Translation Adjustment                                                                                 (  49)     (   49)
                                  ------------      ----------       ---------   --------         ----------    --------   ---------
Balance - December 31, 1995         $   -              $ 479          $15,434    $81,465           $( 5,449)     $( 883)   $ 91,046

Net Income                                                                        13,329                                     13,329
Common Stock Repurchased                                                                            (   591)                 (  591)
Cumulative Translation Adjustment                                                                                 (  66)     (   66)
                                  ------------      ----------       ----------  --------          ---------    ---------  ---------
Balance - December 31, 1996         $   -              $ 479          $15,434    $94,794            $(6,040)     $( 949)   $103,718
                                  ============      ==========       ==========  =========         =========     ========  =========


See Accompanying Notes to Consolidated Financial Statements






</TABLE>


                                       21

<PAGE>



                                  MESTEK, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                        For the years ended December 31,

                                          1996            1995            1994
                                       ----------       ---------       --------
                                                (Dollars in thousands)
Cash Flows from Operating Activities:
  Net Income                            $  13,329        $  10,906      $ 9,298
Adjustments to Reconcile Net Income
     to Net Cash Provided by Operating
     Activities:
 Depreciation and Amortization              5,143            3,940        4,712
 Provision for Losses on Accounts
     Receivable, net of write offs            324          (    63)     (    16)
 Gain on Sale of Property                 ( 1,444)             -            -
 Net Change in Minority Interest-         (   491)             -            -
     National Northeast
Changes in assets and liabilities net
     of effects of acquisitions and
     dispositions:
  Accounts Receivable                     ( 5,047)          ( 2,972)      9,353
  Unbilled Accounts Receivable            (    35)          (    15)    (    27)
  Inventory                                 1,002           ( 3,176)    ( 1,464)
  Accounts Payable                          1,109           ( 1,823)      3,841
  Other Current Liabilities               ( 2,212)          ( 2,101)    ( 2,745)
  Progress Billings                       (     5)              183         613
  Deferred Compensation                   (     4)          (     3)    (     7)
  Other                                     4,399           ( 4,248)        797
                                         ----------        ---------    --------
Net Cash Provided by Operating
     Activities                            16,068               628      24,355
                                         ----------         ---------   --------
Cash Flows from Investing Activities:
   Capital Expenditures                   ( 7,213)           ( 2,963)   ( 5,160)
   Disposition of Property & Equipment      4,642              2,727        -
   Acquisition of Businesses and Other
     Assets Net of Cash Acquired          (14,172)           (15,595)   ( 1,372)
   Disposition of Business Segment            -                6,000        -
                                         ----------         ---------   --------
Net Cash Provided by (Used in)
     Investing Activities                 (16,743)           ( 9,831)   ( 6,532)
                                         ----------          ---------  --------
Cash Flows from Financing Activities:
   Net Borrowings (Repayments) Under
     Revolving Credit Agreement           ( 1,725)             2,406    ( 5,866)
   Principal Payments Under Long
     Term Debt Obligations                ( 1,699)           ( 5,367)   ( 9,446)
   Proceeds from Issuance of Long
     Term Debt                             15,000                -          -
   Purchase Price Payable-                   -                 9,960        -
     National Northeast
   Redemption of $5.00 Convertible
     Preferred Stock                         -                   -      (     6)
   Repurchase of Common Stock             (   591)           (   641)   ( 1,605)
                                         ----------          ---------  --------
Net Cash Provided by (Used in)             10,985              6,358    (16,923)
     Financing Activities                ----------          ---------  --------

Net Increase (Decrease) in Cash and
      Cash Equivalents                     10,310            (  2,845)      900
Translation effect on Cash               (     66)                 49    (  272)
Cash and Cash Equivalents -
      Beginning of Year                     1,405               4,201     3,573
                                         ----------          ---------  --------

Cash and Cash Equivalents -
      End of Year                        $ 11,649            $  1,405   $ 4,201
                                         ==========          =========  ========

See Accompanying Notes to Consolidated Financial Statements.

                                       22

<PAGE>




                                  MESTEK, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


1. SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

         The consolidated  financial  statements include the accounts of Mestek,
Inc. and its subsidiaries, collectively referred to as the Company. All material
intercompany accounts and transactions have been eliminated in consolidation.


Use of Estimates

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


Revenue recognition and unbilled receivables

         Revenue  from  product  sales is  recognized  at the time of  shipment.
Revenue  from the  licensing  of  software  applications  and  software  systems
development is recognized on the basis of completed contracts.
         Unbilled receivables represent revenue earned in the current period but
not billed to the customer until future dates, usually within one month.


Cash equivalents

         The Company  considers all highly liquid  investments  with a remaining
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.


Inventories

         Inventories  are valued at the lower of cost or  market.  Approximately
84% of the cost of  inventories is determined by the last-in,  first-out  (LIFO)
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 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.





                                       23

<PAGE>




Excess of Cost Over Net Assets of Acquired Companies (Goodwill)

         The  Company  amortizes  goodwill on the  straight  line basis over the
estimated period to be benefitted.  The acquisitions of assets of Rowe Machinery
and  Automation,  Inc., and Dahlstrom  Industries,  Inc., and the acquisition of
stock of Omega  Flex,  Inc.  as more  fully  described  in Note 2,  resulted  in
goodwill of approximately  $7,700,000 which will be amortized over 25 years. The
Company  continually  evaluates the carrying value of goodwill.  Any impairments
would be recognized when the expected  future  operating cash flows derived from
the  underlying  acquired  businesses  is less  than the  carrying  value of the
goodwill.  Accumulated  amortization  of goodwill was $1,172,000 and $887,000 at
December 31, 1996 and 1995, respectively.


Advertising Expense

         Advertising  costs are charged to operations as incurred,  such charges
aggregated $3,193,000,  $2,942,000,  and $2,655,000 for the years ended December
31, 1996, 1995 and 1994 respectively.


Equity Investments

         The Company's 48.6 percent interest in H. B. Smith Company,
Incorporated (HBS) and 46.8 percent interest in EAFCO, Inc., (EAFCO), are
accounted for under the equity method.


Research and Development Expense

         Research  and  development   expenses  are  charged  to  operations  as
incurred.  Such charges aggregated  $1,018,000,  $894,000, and $537,000, for the
years ended December 31, 1996, 1995 and 1994, respectively.


Software Development Expenses

         The Company's  MCS, Inc.  subsidiary is in the business of  application
software and systems  development.  SFAS No. 86 requires that development  costs
incurred  subsequent to the  establishment of technological  feasibility for the
product be capitalized,  however, the Company does not believe that such amounts
are  material  to  the  consolidated  financial  statements.   Accordingly,  all
development  costs are charged to expense as incurred.  Such charges  aggregated
$1,338,000,  $1,209,000,  and $910,000,  for the years ended  December  31,1996,
1995, and 1994, respectively.


Treasury shares

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


Earnings per common share

         Earnings per share have been computed  based upon the average number of
common shares outstanding giving effect, where dilutive,  to common shares which
would be issued upon conversion of the $5.00 Convertible Preferred Stock. Common
stock  options,  as  more  fully  described  in Note  15,  did  not  effect  the
computation of earning per share.







                                       24

<PAGE>





Currency Translation

         Assets and liabilities denominated in foreign currencies are translated
into U.S.  dollars at exchange  rates  prevailing on the balance sheet date. Net
foreign currency  transactions are reported in the results of operations in U.S.
dollars at average  exchange  rates.  Adjustments  resulting  from balance sheet
translations  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.


Property Held for Sale

         The Company's Scranton, Pennsylvania manufacturing facility, classified
as Property Held for Sale at December 31, 1995, was sold on January 19, 1996, at
a pre-tax gain of $854,000. The Company's Hagerstown, Maryland facility was sold
on April 1, 1996 at a pre-tax gain of $590,000.


New Accounting Standard

         In  March,  1995  the  Financial   Accounting  Standards  Board  issued
Statement  of  Financial  Accounting  Standards  No.  121  "Accounting  for  the
Impairment of Long-Lived  Assets and Long-Lived Assets to be Disposed Of", which
was  effective  for the  Company's  fiscal year ending  December 31, 1996.  This
statement  requires  the  Company to review  long-lived  assets  for  impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be  recoverable.  The adoption of this standard in 1996 did not
materially impact the Company's financial condition or results of operations.


Reclassification

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

















                                       25

<PAGE>



2. BUSINESS ACQUISITIONS

            On February  2, 1996,  the  Company  acquired  all of the issued and
outstanding  common stock of Omega Flex,  Inc. of Exton,  Pennsylvania  (Omega).
Omega is a manufacturer  of flexible  metal hose and related hose  fabrications.
The  purchase  price paid for the  acquired  stock was  $9,119,000.  Liabilities
assumed were $833,000.  The Company has accounted for this acquisition under the
purchase  method of accounting.  Omega has leased its  manufacturing  and office
facilities through January 31, 2000, for $199,500 per year.

            On February  5, 1996,  the Company  acquired  certain  assets of the
press  feeding  and   cut-to-length   line  businesses  of  Rowe  Machinery  and
Automation,  Inc. of Dallas,  Texas (Rowe).  Rowe is a leading  manufacturer  of
press feeding and  cut-to-length  line equipment  serving the appliance,  office
furniture,  automotive,  and many other  markets.  The  purchase  price paid was
$5,495,000,  including the assumed  liabilities of  $1,900,000.  The Company has
accounted for this  acquisition  under the purchase  method of  accounting.  The
Company  has  leased  the Rowe  facility  in  Dallas,  including  machinery  and
equipment, on a short term basis at a cost of $40,000 per month.

         On August 30,  1996,  the  Company  acquired  substantially  all of the
operating  assets of Dahlstrom  Industries,  Inc.  (Dahlstrom) of Schiller Park,
Illinois.  Dahlstrom is a leading manufacturer of roll-forming equipment for the
metal  fabrication  industry.  The purchase price paid was $4,288,000  including
assumed   liabilities  of  $2,606,000.   The  Company  has  accounted  for  this
acquisition under the purchase method of accounting.

         Proforma  unaudited results of operations for Omega, Rowe and Dahlstrom
for 1996 and 1995 are not provided herein, they deemed immaterial.

         On October 30,  1995,  the Company  executed  an  agreement  to acquire
approximately  eighty-three  (83%) of the issued and  outstanding  voting common
stock  of  National  Northeast   Corporation  and  National  Southeast  Aluminum
Corporation   (National).   National  operates  custom  aluminum  extrusion  and
fabrication  facilities  located in Lawrence,  Massachusetts  and Winter  Haven,
Florida.  The  transaction  was  accounted  for  under  the  purchase  method of
accounting as of October 30, 1995 and, accordingly, the Company has included the
results of this acquired  business in its  consolidated  statement of operations
from this date. The Company itself is a user of aluminum  extrusions in its HVAC
segment.  The  consideration  for the  purchase  was $9.96  million  in cash and
approximately $3.32 million over three years,  contingent upon a future level of
earnings. The transaction was completed on January 2, 1996.

         Proforma unaudited results of operations for 1994 and 1995,  reflecting
a hypothetical acquisition date of January 1, 1994 are as follows:

                                 1995                               1994
--------------------------------------------------------------------------
TOTAL REVENUES                 $267,234                           $242,197
--------------------------------------------------------------------------
NET INCOME                       11,652                              9,657
--------------------------------------------------------------------------
EARNINGS PER SHARE               $1.30                              $1.06


         On November 15, 1995,  the Company  acquired  substantially  all of the
accounts receivable,  inventory, fixed and intangible assets of Heat Exchangers,
Inc., a manufacturer of portable air conditioning equipment in Skokie, Illinois.
The purchase price paid,  including the  assumption of $812,000 of  liabilities,
was   $6,764,000.   The  acquisition  was  accounted  for  as  a  purchase  and,
accordingly,  the Company has included the results of this acquired  business in
its consolidated statement of operations since the date of the acquisitions.





                                       26

<PAGE>





          On  November  1, 1994,  pursuant  to a motion  approved  by the United
States  Bankruptcy  Court for the District of New Mexico,  the Company  acquired
substantially all of the inventory,  accounts receivable, and fixed tangible and
intangible  assets of Aztec Sensible  Cooling,  Inc.  (Aztec) a manufacturer  of
evaporative cooling and other custom air handling equipment in Albuquerque,  New
Mexico. The purchase price for the assets acquired was $1,372,000.

          This  acquisition  was accounted for as a purchase.  Accordingly,  the
Company has included the results of this acquired  business in its  consolidated
statement of  operations  for the period  starting  with the  acquisition  date.
Supplemental   proforma  information  is  not  deemed  meaningful  in  that  the
transaction is not material to the financial  statements of the Company taken as
a whole.


3. INVENTORIES

Inventories consisted of the following at December 31:

                                        1996                        1995
                                   ------------                 -------------

       Finished Goods              $ 11,004,000                 $   9,657,000
       Work-in-progress              14,877,000                    17,114,000
       Raw materials                 24,924,000                    20,404,000
                                   -------------                -------------
                                     50,805,000                    47,175,000
       Less provision for LIFO
           method of valuation        7,540,000                     7,934,000
                                   ------------                 --------------
                                   $ 43,265,000                  $ 39,241,000
                                   ============                 ==============

       Progress  billings  exceeded  related  contract costs by $2,899,000,  and
$2,904,000, at December 31, 1996 and 1995, respectively.  As such, these amounts
are  reported  as  a  liability  in  the  accompanying   consolidated  financial
statements.


4. PROPERTY AND EQUIPMENT

Property and equipment consisted of the following at December 31:
                                                               Depreciation and
                                                               Amortization Est.
                                1996         1995                Useful Lives
                        -------------       ------------       ----------------
Land                     $  1,092,000   $      777,000
Buildings                  13,657,000       11,035,000             19-39 Years
Leasehold Improvements      4,186,000        3,119,000             15-39 Years
Equipment                  51,183,000       43,857,000              3-10 Years
                         -------------     -------------

                           70,118,000       58,788,000
Accumulated Depreciation  (38,679,000)     (33,820,000)
                        --------------     -------------
                         $ 31,439,000     $ 24,968,000
                        ==============    ==============

       The above amounts include  $437,000,  and $144,000,  at December 31, 1996
and 1995, 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 was $5,143,000,  $3,864,000,  and
$4,669,000, for the years ended December 31, 1996, 1995, and 1994, respectively.



                                       27

<PAGE>






5. EQUITY  INVESTMENTS

H. B. Smith Company Incorporated (HBS)

         The Company's investment in HBS is carried at a zero balance reflecting
the Company's equity in HBS' cumulative losses. The Company has no obligation to
fund future HBS operating losses.

Eafco, Inc. (EAFCO)

       On April 7, 1993,  the  Company  acquired a 46.8%  interest  in EAFCO,  a
Pennsylvania  company,  located in Boyertown,  Pennsylvania  in return for cash,
notes and certain items of foundry equipment valued in total at $8,643,000.

       EAFCO produces cast iron boiler sections for the boiler  industry.  EAFCO
used a portion of the proceeds to modernize its foundry facilities and equipment
and  began  supplying  cast iron  boiler  sections  the  Company  in 1993.  This
investment is accounted for in accordance  with the equity method of accounting.
The Company  reported  its share of EAFCO's  operating  results,  which were not
material, in Other Income (Expense) in the consolidated  financial statements in
1996, 1995, and 1994.

       The Company  purchases  approximately  $18,000,000 on an annualized basis
from EAFCO and HBS together.  The Company's  net  receivable  from EAFCO and HBS
together  was   $1,352,000  and  $3,272,000  at  December  31,  1996  and  1995,
respectively.


6. LONG TERM DEBT

       Long-Term Debt consisted of the following:


                                                Dec. 31,              Dec. 31,
                                                  1996                  1995
                                               -----------            ----------

Senior Notes                                  $15,000,000         $        -
Revolving Loan Agreement                             -              1,725,000
Note Payable Bank                                    -                711,000
Other Bonds and Notes Payable                     362,000             595,000
                                              ------------         ------------
                                               15,362,000           3,031,000
         Less Current Maturities              (   115,000)         (2,651,000)
                                              ------------        -------------
                                              $15,247,000         $   380,000
                                              ============        =============

       Senior Notes - On April 5, 1996, the Company borrowed  $15,000,000 from a
commercial  insurance  company on an unsecured basis,  executing a Note Purchase
Agreement and related Senior Notes, (the Notes).  The Notes mature March 1, 1998
and bear  interest at 5.53%.  The Note Purchase  Agreement  contains a number of
financial  covenants which limit the Company's overall debt, its dividends,  and
in  certain   circumstances,   its   ability  to  effect   acquisitions   and/or
divestitures.  The Company's  management does not believe that these limitations
will materially affect the Company's future operations or strategic plans.


       Revolving Loan Agreement - On January 1, 1992, the Company entered into a
Revolving Loan Agreement and Letter of Credit  Facility (the  Agreement)  with a
commercial bank. The Agreement, originally set to expire on January 1, 1993, has
been amended and extended  through  April 30,  1997.  It currently  provides $55
million  of  unsecured  revolving  credit and $10  million of standby  letter of
credit capacity. Borrowings under the Agreement bear interest at a floating rate
based on the bank's prime rate


                                       28

<PAGE>







less 1.00% or, at the  discretion  of the  borrower,  LIBOR plus a quoted market
factor or,  alternatively,  in lieu of the prime based rate, a rate based on the
overnight Federal Funds Rate. Management expects to renew the Agreement on a one
year basis  prior to April 30,  1997.  The  Revolving  Loan  Agreement  contains
financial  covenants  which require that the Company  maintain  certain  current
ratios,  working  capital  amounts,  capital  bases and  leverage  ratios.  This
Agreement 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% of net income.  Commitment fees on letters
of credit are 3/4% annually.  Outstanding letters of credit, principally related
to the Company's insurance programs,  aggregated $3,233,000,  and $3,242,000, at
December 31, 1996 and 1995, respectively.

       Other Bonds and Notes Payable - The Company is obligated  under the terms
of an  Industrial  Revenue Bond (the Bond) secured by its facility in Wyalusing,
Pennsylvania.  The Bond bears  interest at 5% and matures on July 25, 2001.  The
outstanding  balance  under the Bond at  December  31,  1996 was  $178,000.  The
Company's  National  Northeast  subsidiary is obligated  under two  non-interest
bearing  subordinated  Notes  Payable on which  interest  was imputed at 8%. The
notes are secured by certain pieces of equipment. The outstanding balances under
the notes at December 31, 1996 are $143,702  and $41,241  respectively,  and the
notes mature on May 1, 2001 and March 31, 1997, respectively.

       Cash paid for interest was $1,377,000, $718,000, and $839,000, during the
years ended December 31, 1996, 1995, and 1994, respectively.


       Maturities  of  long-term  debt in each of the  next  five  years  are as
follows:

                                1997 - $    115,000
                                1998 - $ 15,079,000
                                1999 - $     85,000
                                2000 - $     57,000
                                2001 - $     26,000

       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, 1996.


7. SHAREHOLDERS' EQUITY

       The Company 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, 1996, John E.
Reed, Chairman, President and CEO of the Company and Stewart B. Reed, a Director
of the Company and son of John E. Reed, together  beneficially own a majority of
the outstanding shares of the Company's common stock.

       By a vote of its  shareholders  at its annual meeting of  shareholders on
May 22, 1996,  the Company  amended its Articles of  Incorporation  to authorize
10,000,000  shares of a new class (or classes) of preferred stock (the Preferred
Stock) and to eliminate both its $5.00 convertible, non-cumulative,  non-voting,
$100 par,  preferred stock (the Convertible  Preferred) and its $6.00, $100 par,
redeemable preferred stock (the Redeemable  Preferred) . As of December 31, 1996
no shares of the Preferred Stock have been issued.






                                       29

<PAGE>



8. INCOME TAXES

       Income  before  income  taxes  included  foreign  earnings   (losses)  of
($474,000),  $217,000 and  ($606,000)  in 1996,  1995,  and 1994,  respectively.
Income tax expense (benefit) consisted of the following:

                           1996                  1995                1994
                       ------------         --------------        ----------
  Federal Income Tax:
    Current            $7,259,000            $5,894,000            $5,298,000
    Deferred          (   134,000)         (    174,000)           (   89,000)
  State Income Tax:
    Current             1,551,000             1,543,000             1,534,000
    Deferred          (    29,000)          (    46,000)          (     5,000)
  Foreign Income Tax:
    Current                15,000                12,000                12,000
    Deferred                 -                      -                     -
                      -------------         ------------          -----------

  Income Taxes         $8,662,000            $7,229,000            $6,750,000
                      =============          ===========          ============

       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 percent to earnings before income tax, as follows:

                                      1996            1995             1994
                                 ------------     ------------      -----------

Computed "expected" income tax    $ 7,736,000      $6,347,000       $5,617,000
State income tax, net of
    federal tax benefit               989,000         973,000          994,000
Benefit of foreign loss not
    allocated to income statement       -               -              212,000
Foreign tax rate differential      (   14,000)     (   15,000)      (   82,000)
Change in beginning year balance
    of the valuation allowance for
    deferred tax assets allocated
    to income tax expense               -          (   76,000)            -
Other - net                        (   49,000)           -               9,000
                                 -------------     --------------   -----------

Income Taxes                       $8,662,000      $7,229,000       $6,750,000
                                 =============     ==============   ===========






















                                       30

<PAGE>



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  (liability)  which give rise to this  deferred  income tax (expense)
benefit for the year ended December 31, 1996 are as follows:

                                                    Change
                                December 31,       (Expense)       December 31,
                                   1995             Benefit            1996
                               -------------     -------------     ------------
Deferred Tax Assets:
Warranty Reserve              $    662,000        $  113,000       $   775,000
Compensated Absences               721,000           100,000           821,000
Inventory Valuation                350,000            14,000           364,000
Accounts Receivable Valuation      557,000           125,000           682,000
State Tax Operating Loss
   Carryforward                    192,000          ( 51,000)          141,000
Foreign Tax Operating Loss
   Carryforward                    629,000            83,000           712,000
Deferred Income on Sale of Assets
   to Nonconsolidated Investees    213,000              -              213,000
                                -------------      ------------     -----------

Total Gross Deferred Tax Assets  3,324,000           384,000         3,708,000
Less Valuation Allowance       (   119,000)             -           (  119,000)
                                ------------       ------------     -----------
    Deferred Tax Assets          3,205,000           384,000         3,589,000
                                ------------       ------------     -----------
Deferred Tax Liabilities:
Prepaid Expenses               (   578,000)             -           (  578,000)
Depreciation                   (   326,000)         (261,000)       (  587,000)
Other                          (   361,000)           40,000        (  321,000)
                               ------------        ------------     -----------

    Deferred Tax Liabilities   ( 1,265,000)         (221,000)       (1,486,000)
                               ------------        ------------     -----------
    Net Deferred Tax Assets    $ 1,940,000         $ 163,000        $2,103,000
                               ===========         ============     ===========


       A valuation  allowance of $195,000 was  established at December 31, 1993.
This allowance reflects  uncertainties as to the realization of a portion of the
foreign  tax  operating  loss  carryforward  identified  above.  This  valuation
allowance  was  adjusted  downward to $119,000 on December  31, 1995 because the
foreign  operations  resulted in earnings for the year. At December 31, 1996, no
additional  valuation  allowance has been established  relative to the remaining
foreign  tax  operating   loss   carryforward   or  state  tax  operating   loss
carryforward.  It is  management's  belief  that it is more likely than not that
these carry forwards will be utilized prior to their expiration. The Company has
available  to it a number  of tax  planning  opportunities  which  support  this
conclusion.

       At  December  31,  1996,  the Company  has state tax  operating  loss and
foreign  tax  operating  loss  carryforwards  of  approximately  $2,932,000  and
$1,430,000,  respectively,  which are  available to reduce  future  income taxes
payable,  subject to  applicable  "carryforward"  rules and  limitations.  These
losses expire as follows:
                             State                                Foreign

       1998              $   436,000                            $    -
       2000                     -                                1,430,000
       2007                2,496,000                                 -
                         ------------                            ------------
                          $2,932,000                             $1,430,000
                         ============                            ============

       Cash paid for income taxes was  $7,354,000,  $8,222,000  and $ 5,990,000,
for the years ended December 31, 1996, 1995, and 1994 respectively.





                                       31

<PAGE>



9. 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, 1996  including  the effect of renewals  and  amendments  executed
subsequent to December 31, 1996 are as follows:

                                    Date                   Basic       Minimum
                                     of                    Annual      Future
                                    Lease       Term       Rental      Rentals
Sterling Realty Trust
Land and Building - Main          12/17/84    15 years  $ 192,000   $   576,000
Land and Building - Engineering   07/01/83    15 years     42,000        63,000
Land and Building - South Complex 01/01/94    15 years    256,800     3,081,600
Machinery & Equipment             01/01/93     5 years     41,460        41,460
(Westfield, Farmville and Wrens
 Locations)

Machinery Rental
Machinery & Equipment             01/01/93     5 years    223,980       223,980
(Westfield, Farmville, Wrens,
 South Windsor and Clinton Locations)

Elizabeth C. Reed Trust
Machinery & Equipment             01/01/93     5 years     14,100        14,100

Production Realty
Land and Building                    N/A       monthly     26,400         2,200
Machinery & Equipment                N/A       monthly     41,400         3,450

Rudbeek Realty Corp.
(Farmville Location)              11/02/92     6 years    324,000       648,000

MacKeeber
(South Windsor Location)          01/01/97     8 years    324,600     2,596,800

     Rent expense for operating  leases,  including those with related  parties,
was $3,454,000, $2,581,000 and $2,433,000 for the years ended December 31, 1996,
1995 and 1994, respectively.

     Future minimum lease payments under all noncancelable leases as of December
31, 1996 are as follows:
                                                        Operating
       Year Ending December 31,                           Leases

               1997                                   $  2,427,000
               1998                                      2,144,000
               1999                                      1,794,000
               2000                                      1,195,000
               2001                                        850,000
            After 2001                                   2,770,000
                                                      -------------
Total minimum lease payments                           $11,180,000
                                                      =============





                                       32

<PAGE>



10. EMPLOYEE BENEFIT PLANS

       The Company maintains a qualified  non-contributory  profit-sharing  plan
covering  all  eligible  employees.  Contributions  to the plan  were  $872,000,
$828,000,  and $789,000,  for the years ended December 31, 1996, 1995, and 1994,
respectively. Contributions to the Plan are defined as 3.0% of gross wages up to
the current Old Age, Survivors,  and Disability,  (OASDI), limit and 6.0% of the
excess over the Old Age, Survivors,  and Disability,  (OASDI), limit, subject to
the maximum allowed under the Employee  Retirement Income Security Act, (ERISA).
The plan's  vesting terms are 20% vesting after 3 years of service,  40% after 4
years, 60% after 5 years, 80% after 6 years, and 100% vesting after 7 years.

       In  addition to the  profit-sharing  plan,  the  Company  also offers the
following defined contribution benefit plans:

       The Company maintains a Retirement  Savings Plan qualified under Internal
Revenue Code Section  401(k) for  employees  covered under  regional  collective
bargaining agreements.  Service eligibility  requirements differ by division and
collective  bargaining  agreement.  Participants  may elect to have up to 15% of
their compensation  withheld,  up to the maximum allowed by the Internal Revenue
Code.  Participants may also elect to make nondeductible voluntary contributions
up to an  additional  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.
Contributions to the Plan were $247,000,  $252,000,  and $176,000, for the years
ended December 31, 1996, 1995, and 1994, respectively.

       The Company  maintains  a separate  qualified  401(k)  Plan for  salaried
employees  not  covered  by a  collective  bargaining  agreement,  who  chose to
participate, and who have at least one year of 1,000 hours or more of service at
the time of  participation.  Participants  may  elect to have up to 15% of their
compensation  withheld,  up to the maximum allowed by the Internal Revenue Code.
Participants may also elect to make nondeductible  voluntary contributions up to
an additional 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
to the Plan not to exceed 1.50% of an employee's compensation.  The Company does
not match any amounts for withholdings  from  participants in excess of 6.00% of
their   compensation   or  for  any   nondeductible   voluntary   contributions.
Contributions  are  funded on a current  basis.  Contributions  to the Plan were
$349,000,  $243,000,  and $212,000 for the years ended December 1996,  1995, and
1994, respectively.

       One  of  the  Company's   subsidiaries   maintains  a  qualified  defined
contribution target benefit pension plan which covers  substantially all of it's
employees.  Pension costs are accrued annually based on contributions  earned by
participants under plan provisions as determined by an independent  actuary. The
total expense  related to this pension plan for the twelve months ended December
31, 1996, 1995, and 1994 was $70,000, $64,000, and $59,000, respectively.

       The  Company  maintains  bonus  plans  for its  officers  and  other  key
employees. The plans generally allow for annual bonuses for individual employees
based  upon the  operating  results  of  related  profit  centers in excess of a
percentage of the Company's  investment in the respective  profit  centers.  The
Company also has employment agreements with certain executive officers.

       40% of the Company's  employees are covered under  collective  bargaining
agreements,  of which 15% are covered under agreements expected to be renewed in
1997.


11. COMMITMENTS AND CONTINGENCIES

       The Company is subject to several legal actions and  proceedings in which
various monetary claims are asserted.  Management,  after  consultation with its
corporate counsel and outside counsel, does not





                                       33

<PAGE>



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.

       The  Company  is  obligated  as  guarantor  with  respect  to the debt of
MacKeeber  Associates Limited  Partnership,  a Connecticut Limited  Partnership,
under  an  Industrial  Development  Bond  issued  in  1984  by  the  Connecticut
Development Authority. The balance outstanding under the bond as of December 31,
1996 was $1,204,000.

       The Company is subject to numerous laws and  regulations  that govern the
discharge  and  disposal of  materials  into the  environment.  Liabilities  for
environmental  remediation  and/or  restoration are recorded when it is probable
that obligations have been incurred and the amounts can be reasonably estimated.
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 or regulations  (Environmental  Laws). There are,
however,  a  number  of  activities  in  which  the  Company  is  engaged  under
Environmental  Laws.  The Company is engaged in various  matters with respect to
obtaining,  amending or renewing  permits required under  Environmental  Laws to
operate  each of its  manufacturing  facilities.  The  Company or various of its
subsidiaries  have been  named or  contacted  by state  authorities  and/or  the
Environmental Protection Agency (the EPA) regarding the Company's liability as a
potentially  responsible  party (PRP) for the remediation of several sites, none
of which, in the judgement of management,  would have a material  adverse impact
on the financial  condition or results of operations of the Company.  There have
been  releases of  hazardous  materials  on a few parcels of property  which are
presently leased or operated by the Company.  Based on the information presently
available to it, management does not believe that the costs of addressing any of
the releases  will have a material  adverse  effect on the  Company's  financial
position or the results of operations.


12. SEGMENT INFORMATION

       The Company operates in the following segments: heating,  ventilating and
air conditioning  equipment  (HVAC);  computer  software  development and system
design (Computer  Systems);  and the manufacture of metal handling machinery and
metal  fabricating,  (Metal  Products),  formerly  known  as the  Coil  Handling
Equipment Segment.

       The HVAC  segment  includes  the  design  and  manufacture  primarily  of
residential,  commercial and  industrial  hydronic heat  distribution  products,
including  finned-tube and baseboard radiation equipment,  gas-fired heating and
ventilating  equipment,  air damper  equipment and related  products used in air
distribution.

       The   Computer   Systems   segment   includes  the   development,   sale,
installation, and maintenance of business applications software.

       The Metal  Products  Segment  includes  the  design  and  manufacture  of
metal-forming equipment, the extrusion and fabrication of aluminum products, and
the fabrication of flexible metal hose.

       Intersegment  sales are not  significant.  Operating income is defined as
net sales directly related to a segment's  operations,  less operating expenses.
Identifiable  assets by segments are those assets used in the operations of that
segment. The Company has not identified any of its assets as corporate assets.












                                       34

<PAGE>



       The following  table  presents  segment  information  for the years ended
December 31, 1996, 1995, and 1994. Segment information reflecting the operations
of acquired businesses is shown only for the periods following acquisition.


                              1996             1995             1994
                           ----------        ----------       ---------

                                          (Dollars in thousands)
Total Revenues
     HVAC                  $ 228,115         $ 218,456        $ 200,445
     Computer Systems         16,114            15,255           14,461
     Metal Products           55,298            12,154            9,112
                           ----------        -----------      ----------

     Total Revenues        $ 299,527         $ 245,865        $ 224,018
                           ==========        ===========      ==========

 Operating Profit
     HVAC                   $ 16,142         $  15,495         $ 15,310
     Computer Systems          3,063             2,749            2,244
     Metal Products            3,687             1,926            1,583
                            ---------         -----------      -----------

     Total Operating Profit $ 22,892        $   20,170        $  19,137
                            =========         ===========      ===========




     Other information regarding the segments for the years 1996, 1995, and 1994
is as follows:

                                                  1996

                        Identifiable assets     Capital         Depreciation
                           (at year-end)      expenditures  *      expense
                                         (Dollars in thousands)

     HVAC                   $ 120,020           $ 3,950            $ 3,020
     Computer Systems           6,899               204                 20
     Metal Products            43,091             3,059              1,818
                            -----------         ---------          ---------

          Total             $ 170,010           $ 7,213            $ 4,858
                            ===========         =========          =========



                                                   1995

                         Identifiable assets     Capital         Depreciation
                            (at year-end)      expenditures  *      expense
                                           (Dollars in thousands)

     HVAC                    $ 112,259         $   2,416          $   3,535
     Computer Systems            6,772                25                 69
     Metal Products             22,400               522                260
                            ------------       -----------        -----------

         Total               $ 141,431         $   2,963          $   3,864
                            ============       ===========        ===========

     1995 segment data has been reclassified for purposes of comparability.





                                       35

<PAGE>



                                                    1994

                         Identifiable assets      Capital          Depreciation
                           (at year-end)       expenditures  *        expense
                                            (Dollars in thousands)

     HVAC                    $   106,011        $    4,635          $   4,516
     Engineering                   6,000              -                  -
     Computer Systems              4,866               135                 62
     Metal Products                3,553               390                 91
                             -------------       -------------      ----------

         Total               $   120,430         $   5,160          $   4,669
                             =============       =============      ==========


     * Excludes capital assets acquired by acquisition.

     The Company sells its HVAC products  primarily to contractors,  installers,
and end users in the construction industry, wholesale distributors, and original
equipment manufacturers. At December 31, 1996 and 1995, accounts receivable, net
of  allowances,  for the  HVAC  segment  totaled  $35,862,000  and  $38,664,000,
respectively. These receivables are generally of high quality, and the Company's
history is that losses  from bad debts are not  excessive.  Management  believes
that  established  reserves at December 31, 1996 are adequate to absorb any such
losses.


13. SELECTED QUARTERLY  INFORMATION (UNAUDITED)

     The table below sets forth  selected  quarterly  information  for each full
quarter  of 1996 and  1995.  (Dollars  in  thousands  except  per  common  share
amounts).

1996                1st            2nd              3rd                 4th
                   Quarter        Quarter         Quarter            Quarter

Total Revenues    $66,317         $68,191         $79,067            $85,952
Gross Profit      $19,222         $18,678         $21,273            $23,055

Net Income        $ 3,142         $ 2,741         $ 3,228            $ 4,218
Per Common Share:
     Net Income   $   .35         $   .31         $   .36            $   .47


1995                1st            2nd              3rd                 4th
                  Quarter        Quarter          Quarter            Quarter

Total Revenues    $53,759         $52,479         $64,686            $74,941
Gross Profit      $15,535         $15,475         $18,956            $21,079

Net Income        $ 2,675        $  1,904        $  2,963           $  3,364
Per Common Share:
     Net Income   $   .30         $   .21         $   .33            $   .37










                                       36

<PAGE>



14. COMMON STOCK BUYBACK PROGRAM

     In  1996  and  1995  the  Company   continued   its  program  of  selective
"open-market"  purchases of common shares,  originally announced in 1990. 45,500
and 60,440 of such shares were acquired in 1996 and 1995, respectively. All such
shares are  accounted  for as treasury  shares as of December 31, 1996 and 1995,
respectively.


15. STOCK OPTION PLANS

     On March 20, 1996 the Company adopted a stock option plan, the Mestek, Inc.
1996 Stock  Option  Plan,  which  provides  for the  granting of  incentive  and
nonqualified stock options on up to 500,000 shares of stock to certain employees
of the Company and other persons,  including directors,  for the purchase of the
Company's  common stock at fair market value at the date of grant.  The Plan was
approved by the Company's  shareholders  on May 22, 1996.  Options granted under
the plan vest over a five-year period and expire at the end of ten years. During
1996,  90,000  options were  granted,  at an exercise  price of $13.75,  to four
employees and these options are outstanding at December 31, 1996.

     Effective  with 1996,  the Company  adopted the  provisions of Statement of
Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation,
SFAS No. 123. As permitted by the statement,  the Company has chosen to continue
to account  for  stock-based  compensation  using the  intrinsic  value  method.
Accordingly,  no  compensation  expense has been  recognized for its stock-based
compensation  plan. Had the fair value method of accounting  been applied to the
Company's  stock  option  plan,  the  impact  on  operating   results  would  be
insignificant. Accordingly, the Company has omitted certain disclosures relating
to SFAS No. 123.


16.  SUBSEQUENT EVENTS

     On January 31, 1997, the Company acquired 91% of the issued and outstanding
common stock of Hill  Engineering,  Inc of Villa Park,  Illinois  and  Danville,
Kentucky   (Hill).   The  purchase   price  paid  for  the  acquired  stock  was
approximately  $5.1 million.  Hill is a leading  producer of precision tools and
dies for the gasket  manufacturing  and  roll-forming  industries  and specialty
equipment.





                                       37

<PAGE>



                                    PART III

     With  respect  to items 10  through  13,  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 14-A.


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 22,  1997,  and to the  extent  required,  is  incorporated  herein  by
reference.  Information  regarding  executive  officers  of the Company is forth
under the caption "Executive Officers".


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 22,  1997,  and,  to the extent  required,  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 will be set forth in the Company's  proxy  statement  relating to the
annual  meeting of  shareholders  to be held May 22,  1997,  and,  to the extent
required, 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  22,  1997,  and,  to  the  extent  required,  is
incorporated herein by reference.



















                                       38

<PAGE>




                                     PART IV


  Item 14 - EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES, AND REPORTS ON FORM 8-K


                                      INDEX
                                                                      Pages of
                                                                    this report


Independent Auditors' Reports                                  Page 17

Financial Statements:

(a)(1)Consolidated Balance Sheets as of December 31, 1996
      and 1995                                                 Pages 18 and 19

     Consolidated Statements of Income for the Years Ended
     December 31, 1996, 1995, and 1994                         Page 20

     Consolidated Statements of Shareholders' Equity for
     the Years Ended December 31, 1996, 1995, and 1994         Page 21

     Consolidated Statements of Cash Flows for the Years
     Ended December 31, 1996, 1995, and 1994                   Page 22

     Notes to the Consolidated Financial Statements            Pages 23 thru 37

(a)(2)  Financial Statement Schedules


      II. Valuation and Qualifying Accounts                     Page 40

     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 41 through 43

(b)    No reports on Form 8-K were filed during the three months ended  December
       31, 1996.


     No annual report to security  holders as of December 31, 1996 had 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 1997.  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.





                                       39

<PAGE>





                                                                    Schedule II




                                  MESTEK, INC.
                        Valuation and Qualifying Accounts
                  Years ended December 31, 1996, 1995 and 1994



                              Charged     Charged
                    Bal. at   to cost     to other                        Bal.
                    at Beg.     and        Accts.    Other    Deduct.    at end
Year  Description   of Year   expense     (Desc.)   (Desc.)   (Desc.)    of Year

1996  Allowance
      for doubtful
      accounts      $1,377    $ 740        $  -    $  26 (1)  $ (442)(2)  $1,701

1995  Allowance
      for doubtful
      accounts      $1,440    $ 867        $  -    $  76 (1)  $(1,006)(2) $1,377

1994  Allowance
      for doubtful
      accounts      $1,456    $ 248        $  -    $  -       $  (264)(2) $1,440



(1)    Includes recoveries of amounts previously  written-off and allowances for
       doubtful accounts of acquired companies.

(2)    Bad debts written off.




















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<PAGE>



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.
Description
****************

3.1     Restated Articles of Incorporation of Mestek, Inc., as amended

3.2     By-laws of Mestek, Inc. as amended through April 1, 1993            (D)
10.1    Mestek, Inc. (formerly Reed National Corp.) Deferred Profit
        Sharing Plan                                                        (A)

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

10.3    Lease dated July 1, 1983 between Sterling Realty Trust (lessor)
        and Mestek, Inc. (lessee)                                           (D)

10.4    Lease dated  December  17, 1984  between  Mestek  (lessee)  and Sterling
        Realty Trust (lessor), as amended on November 1, 1991 (D)

10.5    Lease dated January 1, 1994 between Mestek (lessee) and Sterling
        Realty Trust (lessor)                                               (D)

10.6    Amended lease dated as of November 2, 1992 between Mestek
        (lessee) and Rudbeek Realty Corp. (lessor)                          (D)

10.7    Amended and restated lease agreement dated as of January 1, 1997
        between Vulcan Radiator Division, Mestek, Inc. (lessee) and
        MacKeeber Associates Limited Partnership (lessor)

10.8    Equipment Lease Agreement dated January 1, 1993, between
        Mestek (lessee) and Sterling Realty Trust (lessor)                  (D)

10.9    Loan Agreement dated as of December 1, 1984 among
        Reed National Corp., Rudbeek Realty Corp. and The Pitt
        County Industrial Facilities and Pollution Control
        Financing Authority and the Promissory Notes thereunder,
        two Guaranty Agreements dated as of December 1, 1984
        between Reed National Corp., NCNB National Bank of
        North Carolina, and Rudbeek Realty Corp.                            (A)

10.10   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 thereunder; Guaranty of Vulcan Radiator
        Corporation and Reed National Corp. to the Connecticut
        Bank and Trust Company, N.A.                                        (A)

10.11   Note Agreement dated as of July 1, 1987 between Mestek,
        Inc. and Massachusetts Mutual Life Insurance Company.               (B)



                                       41

<PAGE>

10.12   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)

10.13   Acquisition Agreement dated July 29, 1993 for the Purchase
        of Stock of Chester Environmental, Inc. between Duquesne
        Enterprises, Inc. and Mestek, Inc.                                  (D)

10.14   Variable Interest Rate Cognovit Note dated December 15,
        1993 between Mestek, Inc. and The Mary Staebell Trust               (D)

10.15   Loan Agreement and Promissory Note between Mestek, Inc.
        and ABN Amro Bank, N.V., dated July 9, 1993                         (D)

10.16   Loan Agreement and Promissory Note dated June 7, 1993
        between The First National Bank of Boston and Mestek, Inc.          (D)

10.17   Mortgage Note dated February 1, 1986 between Arrow United
        Industries, Inc. and Chemical Bank; said Note assumed by
        Mestek, Inc. in the purchase of certain assets of Arrow United
        Industries, Inc.                                                    (D)

10.18   Closing Agreement dated February 10, 1995 between Shougang
        Mechanical Equipment of Pennsylvania, Inc. and West Homestead
        Joint Venture Corporation.                                          (E)

10.19   Equipment Lease Agreement dated January 1, 1993 between
        Machinery Rental Company (Lessor) and Vulcan Radiator
        Corporation (Lessee).                                               (E)

10.20   Equipment Lease Agreement dated January 1, 1993 between Machinery
        Rental Company (Lessor) and Mestek, Inc. (Lessee).                  (E)

10.21   Equipment Lease Agreement dated January 1, 1993 between Elizabeth
        C. Reed Trust (Lessor) and Mestek, Inc. (Lessee).                   (E)

10.22   Asset Purchase Agreement dated September 9, 1994 between Mestek,
        Inc. and Aztech International, Ltd., debtor-in-possession; and
        Aztec Sensible Cooling, Inc., debtor-in-possession, and the
        Amendment thereto dated October 31, 1994.                           (E)

10.23   Stock Purchase Agreement relating to the acquisition of stock of
        National Northeast Corporation dated October 30, 1995 by and
        between Mestek, Inc. as Buyer and David Weener, Wayne Frerichs,
        Mark McCrill, and Jon Morrison as Sellers; Stock Purchase Agreement
        dated October 30, 1995 relating to the acquisition of stock of
        National Southeast Aluminum Corporation by and between Mestek, Inc.
        as Buyer and David Weener, Wayne Frerichs, Mark McCrill, and
        Jon Morrison as Sellers.                                            (F)

10.24   Asset Purchase Agreement dated November 15, 1995 by and between
        Mestek, Inc. and Heat Exchangers, Inc. and Lease.                   (G)

10.25   Stock Purchase Agreement dated February 2, 1996 for the purchase
        of stock of Omega Flex, Inc. between Mestek, Inc. and Koji Shimada
        and Lease.                                                          (G)

10.26   Agreement for the Purchase and Sale of Assets dated
        January 12, 1996 by and between Mestex,  Ltd., Rowe Machinery &
        Automation,  Inc., and Met-Coil Systems Corporation, and the Amendment
        thereto dated February 5, 1996 and Lease.                           (H)
                                       42

<PAGE>





 10.27  Asset Purchase Agreement dated October 2, 1995 by and between
        Mestek, Inc.and Honeywell, Inc.                                     (H)

 10.28  Agreement of Sale dated July 5, 1995 between The Hydrotherm
        Corporation and SET Realty, L.L.C. for the purchase and sale
        of real property in Northvale, New Jersey.                          (H)

10.29   Purchase Contract dated November 15, 1995 for the purchase and
        sale of real property in Dunmore, Pennsylvania between
        Peritek, Inc. and R.R. Donnelly & Sons Company.                     (H)

10.30   Amended and Restated Revolving Loan Agreement, Letter of Credit
        Facility and Foreign Exchange Facilities between Mestek, Inc.
        and Bay Bank, dated September 27, 1996.

10.31   Agreement for The Purchase and Sale of Assets between Formtek, Inc.
        (Purchaser)and Dalhstrom Industries, Inc. (Seller) dated
        August 8, 1996.

10.32   Stock Purchase  Agreement between Formtek,  Inc.(Purchaser)  and Maurice
        Hill Trust dated August 16, 1991,  Thomas  Nedbal,  Donald Hill,  Robert
        Martinelli,  Elmer Utley,  and Allen Reczek  (Sellers) dated January 30,
        1997.

10.33   Letter Agreement between Mestek, Inc. and the Travelers Insurance
        Company, dated March 1, 1996, regarding 5.53% Senior Notes due
        March 1, 1998.

11.1    Schedule of Computation of Earnings per Common Share.

22.1    Subsidiaries of Mestek, Inc.

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

           (B)    Filed as an Exhibit to the Current Report on Form 8-K dated
                  July 2, 1987

           (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 Annual  Report on Form 10-K for the
                  year ended December 31, 1994

           (F     ) Filed as an Exhibit to the Current  Report on Form 8-K dated
                  November 13, 1995.

           (G)    Filed as an  Exhibit to the  Current  Report on Form 8-K dated
                  February 13, 1996.

           (H)    Filed as an Exhibit to the Annual  Report on Form 10-K for the
                  year ended December 31, 1995.


<PAGE>

                                  MESTEK, INC.
              Schedule of Computation of Earnings Per Common Share




                                                 Years Ended December 31,
                                          1996            1995            1994
                                          ----            ----            ----


Net income                             $ 13,329          $ 10,906       $ 9,298
Less:  dividends on Preferred Stock        -                -              -
                                       ---------         --------       -------

Net income for common shareholders     $ 13,329          $ 10,906        $9,298
Add back dividends which would not have
   been paid if $5.00 Convertible Preferred
   Stock had been converted                -                -               -
                                       ---------          --------      --------
Net income for earnings per share      $ 13,329          $ 10,906       $ 9,298
                                       --------           --------      --------


Weighted average number of common shares
   outstanding                            8,938             9,019          8,241

Common share equivalents resulting from
   conversion of the $5.00 Convertible
   Preferred Stock                         -                -                896
                                        --------          --------       -------
Total common shares and common share
   equivalents                            8,938            9,019          9,137
                                       --------           --------      --------

Earnings per common share                $1.49             $1.21          $1.02
                                       ========           ========      ========





















                                       43

<PAGE>









                          SUBSIDIARIES OF MESTEK, INC.




                                                            Jurisdiction
              Corporate Name                               of Organization

     Advanced Thermal Hydronics                              Delaware

     Alapco Holding, Inc.                                    Delaware

     Deltex Partners, Inc.                                   Delaware

     Formtek, Inc.                                           Delaware

          Cooper-Weymouth, Peterson, Inc.                    Delaware

          Hill Engineering, Inc.                             Illinois

     Gentex Partners, Inc.                                   Texas

          Mestex, Ltd.                                       Texas

          Yorktown Properties, Ltd.                          Texas

     HBS Acquisition Corp.                                   Delaware

     Homestead Holding, Inc.                                 Delaware

     Lexington Business Trust                                Massachusetts

     MCS, Inc.                                               Pennsylvania

     Mestek Canada, Inc.                                     Ontario

     Mestek Foreign Sales Corporation                        U.S.Virgin Islands

     National Northeast Corporation                          Delaware

     Omega Flex, Inc.                                        Pennsylvania

     Pacific/Air Balance, Inc.                               California

     TEK Capital Corp.                                       Delaware

     Westcast, Inc.                                          Massachusetts


                                       44

<PAGE>




                                                                  Exhibit 10.12

                         SCHEDULE OF DIRECTORS/OFFICERS
                           Indemnification Agreements

     The Indemnification Agreement entered into by the Directors and/or Officers
of Mestek, Inc. and certain Directors of Mestek's wholly-owned  subsidiaries are
identical in all respects,  except for the name of the  indemnified  director or
officer and the date of execution.

     Set forth  below is the  identity of each  director  and officer of Mestek,
Inc. and the date upon which the above Indemnification Agreement was executed by
the Director or Officer.

     Director and/or Officer                          Year of Execution

     A. Warne Boyce                                         1987

     E. Herbert Burk                                        1987

     William J. Coad                                        1987

     David R. Macdonald                                     1987

     David M. Kelly                                         1996

     Winston R. Hindle, Jr.                                 1995

     David W. Hunter                                        1987

     John E. Reed                                           1987

     Stewart B. Reed                                        1987

     James A. Burk                                          1987

     R. Bruce Dewey                                         1990

     Robert G. Dewey                                        1988

     Nicholas Kakavis                                       1987

     Robert K. McCauley                                     1995

     Richard J. McKnight                                    1987

     Walter J. Markowski                                    1990

     John F. Melesko, Jr.                                   1987

     Jack E. Nelson                                         1996

     William S. Rafferty                                    1990

     Stephen M. Shea                                        1987

     Charles J. Weymouth                                    1995

                                       45

<PAGE>



     Kevin R. Hoben                                         1996

     Stephen M. Schwaber                                    1997

     Phil K. LaRosa                                         1997

     Robert P. Kandel                                       1997

     Robert F. Neveu                                        1997

     Richard E. Kessler                                     1997

     Timothy P. Scanlan                                     1997














































                                       46

<PAGE>



                                   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:  April 2, 1997                      By: /S/ JOHN E. REED
                                          John E. Reed, Chairman of the Board
                                          and Chief Executive Officer

Date:  April 2, 1997                      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:  April 2, 1997                       By: /S/ A. WARNE BOYCE
                                           A. Warne Boyce, Director




Date:  April 2, 1997                       By: /S/ E. HERBERT BURK
                                           E. Herbert Burk, Director




Date:  APRIL 2, 1997                       By: /S/ WILLIAM J. COAD
                                           William J. Coad, Director












                                       47

<PAGE>







Date:  APRIL 2, 1997                        By: /S/ DAVID M. KELLY
                                            David M. Kelly, Director




Date:  APRIL 2, 1997                         By: /S/ WINSTON R. HINDLE, JR.
                                             Winston R. Hindle, Jr., Director




Date:  APRIL 2, 1997                          By: /S/ DAVID W. HUNTER
                                              David W. Hunter, Director




Date: APRIL 2, 1997                            By: /S/ DAVID R. MACDONALD
                                               David R. Macdonald, Director




Date: APRIL 2, 1997                            By: /S/ JOHN E. REED
                                               John E. Reed, Director




Date: APRIL 2, 1997                            By: /S/ STEWART B. REED
                                               Stewart B. Reed, Director




                                       48

<PAGE>