<PAGE>
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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                            ------------------------
                                   FORM 10-K
 
/X/
        ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
                              EXCHANGE ACT OF 1934
 
                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
 
                                       OR
 
/ /
      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
                              EXCHANGE ACT OF 1934
 
       FOR THE TRANSITION PERIOD FROM _______________ TO _______________
 
                         COMMISSION FILE NUMBER 1-7568
 
                            ------------------------
 
                             COLTEC INDUSTRIES INC
             (Exact name of registrant as specified in its charter)
 
<TABLE>
<S>                                         <C>
               PENNSYLVANIA                              13-1846375
         (State of Incorporation)                     (I.R.S. Employer
                                                    Identification No.)
 
            3 COLISEUM CENTRE
          2550 WEST TYVOLA ROAD
              CHARLOTTE, NC                                28217
          (Address of principal                          (Zip Code)
            executive offices)
</TABLE>
 
       Registrant's telephone number, including area code: (704) 423-7000
                            ------------------------
 
          Securities registered pursuant to Section 12(b) of the Act:
 
<TABLE>
<S>                                      <C>
                                                NAME OF EACH EXCHANGE
          TITLE OF EACH CLASS                    ON WHICH REGISTERED

---------------------------------------  ------------------------------------
Common Stock, par value $.01 per share   New York Stock Exchange
                                         Pacific Stock Exchange

</TABLE>
 
        Securities registered pursuant to Section 12(g) of the Act: None
                            ------------------------
 
     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes _X_ No _____
                            ------------------------
 
     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not
contained herein, and will not be contained, to the best of registrant's
knowledge, in definitive proxy or information statements incorporated by
referenced in Part III of this Form 10-K or any amendment to this Form 10-K. _X_
 
     On March 3, 1997, there were outstanding 66,466,466 shares of the
registrant's Common Stock, par value $.01 per share. On March 3, 1997, the
aggregate market value of the registrant's voting stock (based on a closing
price of $17 7/8 per share) held by non-affiliates was $1,179,171,744. For
purposes of the foregoing calculation, all directors and officers of the
registrant have been deemed to be affiliates, but the registrant disclaims that
any of such directors or officers is an affiliate.
 
                      DOCUMENTS INCORPORATED BY REFERENCE
 
     Portions of the registrant's 1996 Annual Report to its shareholders are
incorporated by reference into Part I (Item 1), Part II (Items 6, 7 and 8) and
Part IV (Item 14) hereof. Portions of the registrant's Proxy Statement for its
1997 Annual Meeting of Shareholders are incorporated by reference into Part III
(Items 10, 11, 12 and 13) hereof.
 
--------------------------------------------------------------------------------
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<PAGE>
     Statements in this Annual Report on Form 10-K that reflect projections or
expectations of future financial or economic performance of the Registrant, and
statements of the Registrant's plans and objectives for future operations,
including those in the 'Business' and 'Legal Proceedings' sections or relating
to future capital expenditures or estimated costs to resolve and the
corresponding effect on the Registrant of certain litigation and environmental
matters, are 'forward looking' statements within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. No assurance can be given that actual results
or events will not differ materially from those projected, estimated, assumed or
anticipated in any such forward looking statements. Important factors that could
result in such differences in addition to other factors noted with such forward
looking statements, include: general economic conditions in the Registrant's

markets, including inflation, recession, interest rates and other economic
factors; casualty to or other disruption of the Registrant's facilities and
operations; and other factors that generally affect the business of aerospace
and industrial companies.
<PAGE>
                                     PART 1
 
ITEM 1.  BUSINESS.
 
     Coltec Industries Inc and its consolidated subsidiaries (together referred
to as 'Coltec') manufacture and sell a diversified range of highly-engineered
aerospace and industrial products in the United States and, to a lesser extent,
abroad. Coltec's operations are conducted through two principal segments: its
Aerospace and Industrial Segments. Set forth below is a description of the
business conducted by the respective divisions within Coltec's two industry
segments. The tabular five-year presentation of financial information in respect
of each industry segment under the caption 'Industry Segment Information' of
Coltec's 1996 Annual Report to its shareholders and the information in note 15
of the Notes to Consolidated Financial Statements of Coltec's 1996 Annual Report
to its shareholders are incorporated herein by reference.
 
AEROSPACE
 
     Through its Aerospace Segment, Coltec is a leading manufacturer of landing
gear systems, engine fuel controls, turbine blades, fuel injectors, nozzles and
related components for commercial and military aircraft. The operating units and
principal products, markets and competitors of the Aerospace Segment are as
follows:
 
<TABLE>
<CAPTION>
      OPERATING UNITS            PRINCIPAL PRODUCTS            PRINCIPAL MARKETS          PRINCIPAL COMPETITORS
---------------------------  ---------------------------  ---------------------------  ---------------------------
<S>                          <C>                          <C>                          <C>
Menasco                      Aircraft landing gear and    Commercial and military      B.F. Goodrich,
                               flight control actuators,    aircraft manufacturers,      Messier-Dowty
                               landing gear parts and       airlines, U.S. Government
                               repairs
Walbar                       Aircraft and industrial gas  Aircraft and stationary gas  Chromalloy, Howmet
                               turbine engine components    turbine engine
                               and services                 manufacturers
Chandler Evans Control       Aircraft fuel pump and       Aircraft engine              Argotech, Hamilton
                               control systems              manufacturers, U.S.          Standard, Sunstrand,
                                                            Government and               AlliedSignal Bendix
                                                            aftermarket
Delavan Gas Turbine          Aircraft engine fuel         Aircraft engine              Parker-Hannifin, Fuel
  Products                     nozzles, valves and          manufactures, U.S.           Systems Textron
                               afterburner spray bars       Government and
                                                            aftermarket
Lewis Engineering            Aircraft instrumentation,    Commercial and military      Ametek, Rogerson, Rosemont
                               temperature sensors, and     aircraft, engine
                               level control products       manufacturers and process
                                                            industries
</TABLE>

 
     Menasco is one of the leading suppliers of landing gear systems for
medium-to-heavy commercial and military aircraft. The design, manufacture and
test of aircraft landing gear and components, and related overhaul and repair,
comprise 90% of Menasco's sales volume. Landing gear and precision components
are highly engineered and manufactured to customer specifications and sold to
aircraft manufacturers, aircraft operators and to the United States Government
('Government'), both as original equipment and as spare parts for existing
aircraft.
 
     Menasco's historical concentration of landing gear sales among a limited
number of companies reflects the relatively small number of medium and heavy
aircraft manufacturers.
 
                                       1
<PAGE>
     Landing gear systems account for up to 2% of the total cost of an aircraft.
Coltec believes that, in terms of dollar volume, Menasco is the leading supplier
of the medium and heavy landing gear manufactured in the United States for both
commercial and military aircraft.
 
     The remaining 10% of Menasco's sales are primarily flight control
actuators. Menasco produces large hydraulic and mechanical actuators and has the
capability to produce shock mitigation equipment for both military and
commercial applications.
 
     Menasco provides both spare parts for landing gear and landing gear
overhaul services. Aftermarket business represented 18% of Menasco's total sales
in 1996.
 
     Walbar is a leading original equipment manufacturer and coating and repair
service center for aircraft and industrial gas turbine engine components. The
product base ranges from complex precision machined turbine parts to
high-technology protective coatings. The primary machined products are turbine
blades and other related turbine airfoil components. Walbar also manufactures
disks, integrally bladed rotors and complex impellers.
 
     Following the reduction in military aircraft engine funds, Walbar has
successfully focused on non-aerospace applications, and now enjoys significant
market share in the locomotive turbocharger market and the gas turbine power
generation market.
 
     Chandler Evans Control Systems Division ('CECO') produces gas turbine
engine fuel controls and pumps, and pneumatic and hydraulic components for use
on aircraft and helicopter engines and aircraft systems. CECO has carved a niche
market in the area of small engine fuel pumps and controls for both commercial
and military applications. CECO believes it is the market leader in sales of
fuel pumps for the small turbine engine market. CECO is also the market leader
in supplying the world's small turbine engine market with Full Authority Digital
Electronic Control ('FADEC') systems. Computerized electronics in a FADEC system
make aircraft safer and less expensive to operate.
 
     In 1996, CECO began deliveries of the technologically advanced combination
main/afterburner fuel pump for the McDonnell Douglas F/A-18 E/F Navy fighter.

Additionally in 1996, several versions of CECO's state-of-the-art metering fuel
pump, the Variable Displacement Vane Pump, successfully completed engine tests.
 
     Delavan Gas Turbine Products Division ('Delavan') is a custom designer and
manufacturer of fuel injectors, flow control valves, fuel manifolds, afterburner
spray bars and other accessories for commercial and military gas turbine
engines. Product applications in the aerospace industry include engines powering
large commercial and regional airliners, business aircraft, military and
commercial helicopters, military fighters and transports and auxiliary power
units. In the industrial sector, Delavan fuel injectors and valves are utilized
in large land-based gas turbines found in electrical power generation plants and
natural gas pipeline installations.
 
     Lewis Engineering designs, develops and produces electromechanical and
electronic instrumentation for aircraft cockpits and temperature sensors for
aircraft and engine systems. These products are used in commercial transport,
general aviation and military markets.
 
     One customer (Boeing) in the Aerospace Segment represented approximately
12% of Coltec's 1996 total sales.
 
INDUSTRIAL
 
     In the Industrial Segment, Coltec is a leading manufacturer of industrial
seals, gaskets, packing products, self-lubricating bearings and oil seals and
hubodometers for trucks and trailers and is a producer of technologically
advanced spray nozzles for agricultural, home heating and industrial
applications. Coltec also produces high-horsepower diesel engines for naval
ships and diesel, gas and dual-fuel engines for electric power plants and
produces air compressors for manufacturers as well as
 
                                       2
<PAGE>
automotive products. The operating units and principal products, markets and
competitors of the Industrial Segment are as follows:
 
<TABLE>
<CAPTION>
      OPERATING UNITS            PRINCIPAL PRODUCTS            PRINCIPAL MARKETS          PRINCIPAL COMPETITORS
---------------------------  ---------------------------  ---------------------------  ---------------------------
<S>                          <C>                          <C>                          <C>
Garlock Sealing              Seals, gaskets, packings     Chemical, pulp and paper,    CR Industries, A.W.
  Technologies                 and expansion joints,        utilities, industrial and    Chesterton, Richard
                               butterfly valves, PTFE       electronics                  Klinger, AMRI, Durco,
                               sheet and film, OEM parts                                 Neotecha, Furon, Dewal
                               and gaskets
Quincy Compressor            Air compressors and vacuum   Manufacturing, climate       Gardner-Denver, Sullair,
                               pumps                        control, oil and gas         Ingersoll-Rand, Champion
                                                            industries
Garlock Bearings             Self-lubricated bearings     Automotive and equipment     Kolbenschmidt, Rexnord
                                                            manufacturers
Fairbanks Morse Engine       Diesel, gas and dual-fuel    U.S. Navy, marine,           Caterpillar, Cooper
                               engines                      locomotive and stationary    Industries, General
                                                            power markets                Motors

Holley Performance Products  New, replacement,            Automotive manufacturers,    Edelbrock, Echlin, Standard
                               remanufactured and           wholesale distributors,      Motor Products
                               performance carburetors,     retailers in replacement
                               E.F.I. components,           markets and stationary
                               ignition systems and         gas engine users
                               coils
Stemco                       Oil seals, hubcaps and       Fleet truck operators,       CR Industries, Federal
                               hubodometers                 truck parts distributors     Mogul, Nelson, Donaldson
                                                            and vehicle assemblers
Delavan Commercial Products  Spray nozzles, accessories,  Home heating, industrial     Spraying Systems, Danfoss
                               pumps and systems            and agriculture
France Compressor Products   Compressor valves and seals  Compressor manufacturers     Hoerbiger, C. Lee Cook
                                                            and end users
Haber Tool                   Cold-forming dies            Fastener and automotive      Form Flow
                                                            manufacturers
Sterling Die                 Thread-rolling dies          Fastener manufacturers       Reed Rico
Ortman Fluid Power           Hydraulic and pneumatic      Fluid power market           Parker-Hannifin, Miller
                               cylinders                                                 Fluid Power
Plastomer Products           PTFE tape                    Industrial manufacturers     Fluoroglas
</TABLE>
 
     The more significant operating units in the Industrial Segment are
discussed below.
 
                                       3
<PAGE>
     The Garlock Sealing Technologies Division ('Garlock') produces and markets
fluid sealing devices that prevent leakage and exclude contaminants from
rotating and reciprocating machinery. Garlock products seal joints for high
temperatures and corrosive environment applications.
 
     The newest Garlock products are positioned to meet current emission
standards for valves, pumps and flanges. To accommodate more stringent global
regulations for fugitive V.O.C. (volatile organic compound) emissions, Garlock
has developed a variety of products using traditional and newly developed
materials. Garlock products include compression packings, gaskets and gasketing
materials, hydraulic seals, oil seals, mechanical seals, elastomeric expansion
joints, industrial textiles, metallic gaskets and other specialized industrial
products.
 
     Sophisticated Garlock products protect equipment in industry applications
where performance is vital to safety and environmental concerns. These
applications include natural resource recovery, petroleum refining, chemicals,
primary metals, food and pharmaceuticals, power generation, mining, pulp and
paper, water and waste treatment, construction and transportation.
 
     The single common characteristic of the Division's products is that they
are consumable. Most wear out during the life of the equipment in which they are
installed. Although they also are purchased for use in original equipment, the
maintenance and replacement aftermarket consequently accounts for 80% of the
Division's total sales.
 
     The Quincy Compressor Division ('Quincy') is a leading manufacturer of a
wide range of helical screw and reciprocating air compressors and vacuum pumps.

They are marketed through Quincy's domestic and international distribution
system, encompassing factory sales offices and distributors in most major
population centers. Quincy products vary in size from one-third to 350
horsepower and are offered in various package configurations.
 
     Much of Quincy's business is in the highly competitive industrial and
climate control compressor markets. Quincy is a leading producer of
reciprocating compressors of 30 horsepower and below. Quincy compressors are
used in a variety of industrial applications, including industrial base load,
pneumatic temperature and instrument control, diesel and gas engine starting,
paint spraying and emergency standby service.
 
     Garlock Bearings is a leading specialist in the field of self-lubricating
bearings, which consist of either steel or reinforced epoxy composite backings
with non-metallic bearing surfaces of polytetrafluoroethylene ('PTFE') fibers or
a mixture that includes PTFE. PTFE provides maintenance-free performance and
reduced friction. The Division's products typically perform as sleeve bearings
or thrust washers under conditions of no lubrication, minimal lubrication or
pre-lubrication. The demand for these types of bearings is significant due to
the fact that the market requires bearings that can operate at high temperatures
in confined spaces with minimal lubrication.
 
     Garlock Bearings has a major share of the self-lubricating bearing market
in North America. Approximately 80% of sales are to original equipment
manufacturers, with major competition coming from companies in Japan and
Germany.
 
     The Fairbanks Morse Engine Division ('Fairbanks Morse') offers a broader
horsepower range of heavy-duty diesel engines than any engine manufacturer in
the United States. The Division has the capacity to provide diesels from 640 to
29,320 horsepower. In addition, the Division manufactures dual-fuel, gas and
diesel engines ranging in size from four to 18 cylinders. Engines are offered in
both conventional 'V' and in-line, four-cycle versions as well as in-line,
two-cycle opposed-piston configurations. They are used for marine propulsion and
marine power generation and in pump, compressor and electrical power generation
applications.
 
     Under a license agreement with S.E.M.T, a French company, Fairbanks Morse
manufactures the Colt-Pielstick PC series of large diesel engines. The Pielstick
PC series of engines are proven heavy fuel burning engines used for ship
propulsion and by utilities utilizing diesel fuel and/or natural gas for primary
and standby power generation. Typical customers include government agencies,
public and privately owned utilities, institutions such as hospitals and
universities, large industrial plants and
 
                                       4
<PAGE>
municipalities, firms engaged in ship and tug operations, waste-to-energy
operations and oil and gas exploration, processing and transmission companies.
 
     The Holley Performance Products Division ('Holley') markets a diversified
line of new and remanufactured replacement and performance carburetors, ignition
systems, fuel pumps, fuel injection systems, emission-control components, intake
manifolds and performance engine systems and accessories to the independent

automotive aftermarket. In addition to these products, the Division manufactures
and sells replacement carburetors to Chrysler, Ford and General Motors.
 
     The Division's aftermarket products are offered in a number of lines, each
designed for a specific segment of the market. The largest business segment is
performance products, which comprises 55% of Holley's total sales. The
performance line of carburetors is designed exclusively for improved performance
and is used by car enthusiasts and racers. Other products consist of
remanufactured carburetors and fuel injection components, new replacement
carburetors for U.S. passenger cars and trucks, and fuel injection systems and
service components, throttle body units and a complete line of components for
service.
 
     The Stemco Division is a leading producer of hub oil seals, hubcaps, axle
nuts and distance-measuring devices for medium and heavy-duty trucks.
 
INTERNATIONAL OPERATIONS
 
     Coltec's international operations, mainly in Canada, are conducted through
foreign-based manufacturing or sales subsidiaries, or both, and by export sales
of domestic divisions to unrelated foreign customers. Export sales of diesel
engines are made either directly or through foreign representatives. Compressors
are sold through foreign distributors. Certain products of the Industrial
Segment are sold in foreign countries through salesmen and sales representatives
or sales agents.
 
     Coltec's Canadian operations include the manufacture of landing gear
systems and aircraft flight controls, the provision of overhaul services for
these systems and controls for Canadian and other customers and the manufacture
of turbine components and turbine and compressor rotating parts primarily for
aircraft gas turbine engines. The Canadian operations also manufacture and
market seals, gasketing material, packings and truck products, market parts for
Fairbanks Morse diesel engines and accessories and other products for use in
Canada and other countries.
 
     Coltec operates 16 plants in Canada, Mexico, France, the United Kingdom,
Australia, Germany and Poland. In addition, Coltec occupies leased office and
warehouse space in various foreign countries.
 
     Devaluations or fluctuations relative to the United States dollar in the
exchange rates of the currency of any country where Coltec has foreign
operations could adversely affect the profitability of such operations in the
future.
 
     For financial information on operations by geographic segments, see note 15
of the Notes to Consolidated Financial Statements of Coltec's 1996 Annual Report
to its shareholders incorporated herein by reference.
 
     Coltec's contracts with foreign nations for delivery of military equipment,
including components, are subject to deferral or cancellation by Government
regulation or orders regulating sales of military equipment abroad. Any such
action on the part of the Government could have an adverse effect on Coltec.
 
                                       5

<PAGE>
SALES BY CLASS OF PRODUCTS
 
     During the last three fiscal years, landing gear systems was the only class
of similar products that accounted for at least 10% of total Coltec sales. In
1996, 1995 and 1994, sales of landing gear systems constituted 15%, 14% and 14%,
respectively, of total Coltec sales.
 
BACKLOG
 
     At December 31, 1996, Coltec's backlog of firm unfilled orders was $678.3
million compared with $657.1 million at December 31, 1995. Approximately $218.1
million of the 1996 year-end backlog is scheduled to be shipped after 1997.
 
CONTRACT RISKS
 
     Coltec, through its various operating units, primarily Menasco, Chandler
Evans, Walbar and Delavan Gas Turbine Products, produces products for
manufacturers of commercial aircraft pursuant to contracts that generally call
for deliveries at predetermined prices over varying periods of time and that
provide for termination payments intended to compensate for certain costs
incurred in the event of cancellation. In addition, certain commercial aviation
contracts contain provisions for termination for convenience similar to those
contained in Government contracts described below. Longer-term agreements
normally provide for price adjustments intended to compensate for deferral of
delivery depending upon market conditions.
 
     A significant portion of the business of Coltec's Menasco, Chandler Evans,
Walbar and Delavan Gas Turbine Products divisions has been as a subcontractor
and as a prime contractor in supplying products in connection with military
programs. Substantially all of Coltec's government contracts are firm fixed-
price contracts. Under firm fixed-price contracts, Coltec agrees to perform
certain work for a fixed price and, accordingly, realizes all the benefit or
detriment occasioned by decreased or increased costs of performing the
contracts. From time to time, Coltec accepts fixed-price contracts for products
that have not been previously developed. In such cases, Coltec is subject to the
risk of delays and cost overruns. Under Government regulations, certain costs,
including certain financing costs, portions of research and development costs,
and certain marketing expenses related to the preparation of competitive bids
and proposals, are not allowable. The Government also regulates the methods
under which costs are allocated to Government contracts. With respect to
Government contracts that are obtained pursuant to an open bid process and
therefore result in a firm fixed price, the Government has no right to
renegotiate any profits earned thereunder. In Government contracts where the
price is negotiated at a fixed price rather than on a cost-plus basis, as long
as the financial and pricing information supplied to the Government is current,
accurate and complete, the Government similarly has no right to renegotiate any
profits earned thereunder. If the Government later conducts an audit of the
contractor and determines that such data were inaccurate or incomplete and that
the contractor thereby made an excessive profit, the Government may take action
to recoup the amount of such excessive profit, plus treble damages, and take
other enforcement actions.
 
     Government contracts are, by their terms, subject to termination by the

Government either for its convenience or for default of the contractor.
Fixed-price type contracts provide for payment upon termination for items
delivered to and accepted by the Government, and, if the termination is for
convenience, for payment of the contractor's costs incurred plus the costs of
settling and paying claims by terminated subcontractors, other settlement
expenses, and a reasonable profit on its costs incurred. However, if a contract
termination is for default by the contractor (a) the contractor is paid such
amount as may be agreed upon for completed and partially-completed products and
services accepted by the Government, (b) the Government is not liable for the
contractor's costs with respect to unaccepted items, and is entitled to
repayment of advance payments and progress payments, if any, related to the
terminated portions of the contracts, and (c) the contractor may be liable for
excess costs incurred by the Government in procuring undelivered items from
another source.
 
     In addition to the right of the Government to terminate, Government
contracts are conditioned upon the continuing availability of Congressional
appropriations. Congress usually appropriates funds
 
                                       6
<PAGE>
on a fiscal-year basis even though contract performance may take many years.
Consequently, at the outset of a major program, the contract is usually
partially funded, and additional monies are normally committed to the contract
by the procuring agency only as appropriations are made by Congress for future
fiscal years.
 
CAPITAL EXPENDITURES
 
     Capital expenditures were $44.6 million in 1996 compared to $42.5 million
in 1995 and $38.2 million in 1994, as Coltec continues to invest in capital
improvements to increase efficiency, reduce costs, pursue new opportunities,
expand product capacity and improve facilities. The level of capital
expenditures has and will vary from year to year, affected by the timing of
capital spending for production equipment for new products, periodic plant and
facility expansion as well as cost reduction and labor efficiency programs.
Capital expenditures during 1996 included the initial construction and equipment
purchases for significant production expansions at Menasco's original equipment
facilities with completion scheduled for 1997. Coltec estimates capital
expenditures for 1997 to approximate $75.0 million, including amounts for
equipment purchases related to capacity expansions and upgrades.
 
RESEARCH AND PATENTS
 
     Most divisions of Coltec maintain staffs of manufacturing and product
engineers whose activities are directed at improving the products and processes
of Coltec's operations. Manufactured and development products are subject to
extensive tests at various divisional plants. Total research and development
cost, including product development, was $44.1 million for 1996, $45.1 million
for 1995 and $41.7 million for 1994.
 
     Coltec owns a number of United States and other patents and trademarks and
has granted licenses under some of such trademarks. Management does not consider
the business of Coltec as a whole to be materially dependent upon any patent,

patent right or trademark.
 
EMPLOYEE RELATIONS
 
     As of December 31, 1996, Coltec had approximately 8,200 employees, of whom
approximately 3,400 were salaried. Approximately 50% of the hourly employees are
represented by unions for collective bargaining purposes. Union agreements
relate, among other things, to wages, hours and conditions of employment, and
the wages and benefits furnished are generally comparable to industry and area
practices.
 
     In 1996, seven collective bargaining agreements covering approximately
1,433 hourly employees were renegotiated. Coltec considers the labor relations
of Coltec to be satisfactory, although Coltec does experience work stoppages
from time to time, as happened at Fairbank Morse in 1996. In 1997, two
collective bargaining agreements covering 313 employees are due to expire and
will be renegotiated.
 
     Coltec is subject to extensive Government regulations with respect to many
aspects of its employee relations, including increasingly important occupational
health and safety and equal employment opportunity matters. Failure to comply
with certain of these requirements could result in ineligibility to receive
Government contracts. These conditions are common to the various industries in
which Coltec participates and entail risks of financial and other exposure.
 
     For litigation relating to labor and other matters, see Item 3. 'Legal
Proceedings.--Other Litigation.'
 
ENVIRONMENTAL MATTERS
 
     Coltec's operations are subject to extensive laws and regulations governing
air emissions, wastewater discharges and solid and hazardous waste management
activities. Coltec takes a proactive approach in addressing the applicability of
these laws and regulations as they relate to its manufacturing operations and in
proposing and implementing any remedial plans that may be necessary. Coltec has
identified certain situations that will require future capital and non-capital
expenditures to maintain or
 
                                       7
<PAGE>
improve compliance with current environmental laws and regulations. The majority
of the identified situations relate to remediation projects at former operating
sites which have been sold or closed and primarily deal with soil and
groundwater remediation.
 
     Coltec has been notified that it is among Potentially Responsible Parties
under federal environmental laws, or similar state laws, relative to the costs
of investigating and in some cases remediating contamination by hazardous
materials at approximately 26 sites. Such laws impose joint and several
liability for the costs of investigating and remediating properties contaminated
by hazardous materials. Liability for these costs can be imposed on present and
former owners or operators of the properties or on parties who generated the
wastes that contributed to the contamination.
 

     Coltec's policy is to accrue environmental remediation costs when it is
both probable that a liability has been incurred and the amount can be
reasonably estimated. While it is often difficult to reasonably quantify future
environmental-related expenditures, Coltec currently estimates its future
non-capital expenditures related to environmental matters to range between
$23,000,000 and $48,000,000. In connection with these expenditures, Coltec had
accrued $35,000,000 at December 31, 1996 representing management's best estimate
of probable non-capital expenditures. These non-capital expenditures are
estimated to be incurred over the next 10 to 20 years. In addition, capital
expenditures aggregating $5,000,000 may be required during the next two years
related to environmental matters. Although Coltec is pursuing insurance recovery
in connection with certain of these matters, no receivable has been recorded
with respect to any potential recovery of costs in connection with any
environmental matter. During 1996, costs associated with environmental
remediation and ongoing assessment were not significant.
 
     The measurement of liability is based on an evaluation of currently
available facts with respect to each individual situation and takes into
consideration factors such as existing technology, presently enacted laws and
regulations and prior experience in remediation of contaminated sites. As
assessments and remediation progress at individual sites, these liabilities are
reviewed periodically and adjusted to reflect additional technical and legal
information which becomes available.
 
     Coltec believes it is either in material compliance with all currently
applicable regulations or is operating in accordance with the appropriate
variances and compliance schedules or similar arrangements.
 
     Actual costs to be incurred for identified situations in future periods may
vary from the estimates, given inherent uncertainties in evaluating
environmental exposures due to unknown conditions, changing government
regulations and legal standards regarding liability and evolving related
technologies. Subject to the imprecision in estimating future environmental
costs, Coltec believes that compliance with current laws and regulations will
not require significant capital expenditures or have a material adverse effect
on its consolidated results of operations or financial position.
 
ITEM 2.  PROPERTIES.
 
     Coltec operates 61 manufacturing plants in 21 states and in Canada, Mexico,
France, the United Kingdom, Australia, Germany and Poland. In addition, Coltec
has other facilities throughout the United States and in various foreign
countries, which include sales offices, repair and service shops, light
manufacturing and assembly facilities, administrative offices and warehouses.
 
                                       8
<PAGE>
     Certain information with respect to Coltec's significant manufacturing
plants that are owned in fee, all of which (other than the Palmyra, New York
facility) are encumbered pursuant to a certain credit agreement between Coltec
and certain banks and related security documents, is set forth below:
 
<TABLE>
<CAPTION>

                                                                                   APPROXIMATE
                                                                                    NUMBER OF     APPROXIMATE
                   SEGMENT                                  LOCATION               SQUARE FEET      ACREAGE
----------------------------------------------   ------------------------------    -----------    -----------
<S>                                              <C>                               <C>            <C>
Aerospace.....................................   West Hartford, Connecticut (a)      981,000          111
                                                 Ft. Worth, Texas                    394,000           42
                                                 Oakville, Ontario                   280,000           14
                                                 Mississauga, Ontario                141,000            7
 
Industrial....................................   Palmyra, New York                   677,000          137
                                                 Beloit, Wisconsin                   856,000           73
                                                 Bowling Green, Kentucky             376,000           46
                                                 Longview, Texas                     265,000           52
</TABLE>
 
------------------
(a) Approximately 238,000 square feet are utilized by the Aerospace Segment with
    the balance leased to third parties.
 
     In addition to the owned facilities, certain manufacturing activities of
some industry segments are conducted within leased premises, the largest of
which is in the Industrial segment, located in Quincy, Illinois, and covers
approximately 173,000 square feet. Some of these leases provide for options to
purchase or to renew the lease with respect to the leased premises.
 
     Coltec's total manufacturing facilities presently being utilized aggregate
approximately 5,645,000 square feet of floor area of which approximately
4,901,000 square feet of area are owned in fee and the balance is leased from
third parties.
 
     Coltec leases approximately 35,000 square feet at 3 Coliseum Centre, 2550
West Tyvola Road, Charlotte, North Carolina, for its executive offices, and has
renewal options under such lease through 2011.
 
     In the opinion of management, Coltec's principal properties, whether owned
or leased, are suitable and adequate for the purposes for which they are used
and are suitably maintained for such purposes. See Item 1.
'Business.--Environmental Matters' for a description of proceedings under
applicable environmental laws regarding certain of Coltec's properties.
 
ITEM 3.  LEGAL PROCEEDINGS.
 
ASBESTOS LITIGATION
 
     As of December 31, 1996 and 1995, two subsidiaries of Coltec were among a
number of defendants (typically 15 to 40) in approximately 94,700 and 105,300
actions, respectively (including approximately 5,100 and 4,900 actions,
respectively, in advanced stages of processing), filed in various states by
plaintiffs alleging injury or death as a result of exposure to asbestos fibers.
During 1996, 1995 and 1994, these two subsidiaries of Coltec received
approximately 39,900, 44,000 and 29,800 new actions, respectively. Through
December 31, 1996, approximately 177,500 of the approximately 272,200 total
actions brought have been settled or otherwise disposed of.

 
     The damages claimed for personal injury or death vary from case to case and
in many cases plaintiffs seek $1 million or more in compensatory damages and $2
million or more in punitive damages. Although the law in each state differs to
some extent, it appears, based on advice of counsel, that liability for
compensatory damages would be shared among all responsible defendants, thus
limiting the potential monetary impact of such judgments on any individual
defendant.
 
                                       9
<PAGE>
     Following a decision of the Pennsylvania Supreme Court, in a case in which
neither Coltec nor any of its subsidiaries were parties, that held insurance
carriers are obligated to cover asbestos-related bodily injury actions if any
injury or disease process, from first exposure through manifestation, occurred
during a covered policy period (the 'continuous trigger theory of coverage'),
Coltec settled litigation with its primary and most of its first-level excess
insurance carriers, substantially on the basis of the Court's ruling. Coltec has
negotiated a final agreement with most of its excess carriers that are in the
layers of coverage immediately above its first layer. Coltec is currently
receiving payments pursuant to this agreement. Coltec believes that, with
respect to the remaining carriers, a final agreement can be achieved without
litigation and on substantially the same basis that it has resolved the issues
with its other carriers. Settlements are generally made on a group basis with
payments made to individual claimants over periods of one to four years.
Payments were made with respect to asbestos liability and related costs
aggregating $71,354,000 in 1996, $56,739,000 in 1995 and $46,374,000 in 1994,
substantially all of which were covered by insurance. Related to payments not
covered by insurance, Coltec recorded charges to operations amounting to
$8,000,000 and $5,000,000 in 1996 and 1995, respectively. No charges were
recorded in 1994.
 
     In accordance with Coltec's internal procedures for the processing of
asbestos product liability actions and due to the proximity to trial or
settlement, certain outstanding actions have progressed to a stage where Coltec
can reasonably estimate the cost to dispose of these actions. As of December 31,
1996, Coltec estimates that the aggregate remaining cost of the disposition of
the settled actions for which payments remain to be made and actions in advanced
stages of processing, including associated legal costs, is approximately
$71,538,000, and Coltec expects that this cost will be substantially covered by
insurance.
 
     With respect to the 89,600 outstanding actions as of December 31, 1996
which are in preliminary procedural stages, Coltec lacks sufficient information
upon which judgments can be made as to the validity or ultimate disposition of
such actions, thereby making it difficult to estimate with reasonable certainty
the potential liability or costs to Coltec. When asbestos actions are received
they are typically forwarded to local counsel to ensure that the appropriate
preliminary procedural response is taken. The complaints typically do not
contain sufficient information to permit a reasonable evaluation as to their
merits at the time of receipt, and in jurisdictions encompassing a majority of
the outstanding actions, the practice has been that little or no discovery or
other action is taken until several months prior to the date set for trial.
Accordingly, Coltec generally does not have the information necessary to analyze

the actions in sufficient detail to estimate the ultimate liability or costs to
Coltec, if any, until the actions appear on a trial calendar. A determination to
seek dismissal, to attempt to settle or to proceed to trial is typically not
made prior to the receipt of such information.
 
     It is also difficult to predict the number of asbestos lawsuits that
Coltec's subsidiaries will receive in the future. Coltec has noted that, with
respect to recently settled actions or actions in advanced stages of processing,
the mix of the injuries alleged and the mix of the occupations of the plaintiffs
have been changing from those traditionally associated with Coltec's
asbestos-related actions. Coltec is not able to determine with reasonable
certainty whether this trend will continue. Based upon the foregoing, and due to
the unique factors inherent in each of the actions, including the nature of the
disease, the occupation of the plaintiff, the presence or absence of other
possible causes of a plaintiff's illness, the availability of legal defenses,
such as the statute of limitations or state of the art, and whether the lawsuit
is an individual one or part of a group, management is unable to estimate with
reasonable certainty the cost of disposing of outstanding actions in preliminary
procedural stages or of actions that may be filed in the future. However, Coltec
believes that its subsidiaries are in a favorable position compared to many
other defendants because, among other things, the asbestos fibers in its
asbestos-containing products were encapsulated. Considering the foregoing, as
well as the experience of Coltec's subsidiaries and other defendants in asbestos
litigation, the likely sharing of judgments among multiple responsible
defendants, and the substantial amount of insurance coverage that Coltec expects
to be available from its solvent carriers, Coltec believes that pending and
reasonably anticipated future actions are not likely to have a material effect
on Coltec's results of operations and financial condition.
 
                                       10
<PAGE>
     Although the insurance coverage which Coltec has is substantial, it should
be noted that insurance coverage for asbestos claims is not available to cover
exposures initially occurring on and after July 1, 1984. Coltec's subsidiaries
continue to be named as defendants in new cases, some of which allege initial
exposure after July 1, 1984.
 
     In addition to claims for personal injury, Coltec's subsidiaries have been
involved in an insignificant number of property damage claims based upon
asbestos-containing materials found in schools, public facilities and private
commercial buildings. Based upon the proceedings to date, the overwhelming
majority of these claims have been resolved without a material adverse impact on
Coltec, Likewise, the insignificant number of claims remaining to be resolved
are not expected to have a material effect on Coltec's results of operations and
financial condition.
 
     Coltec has recorded an accrual for its liabilities for asbestos-related
matters that are deemed probable and can be reasonably estimated (settled
actions and actions in advanced states of processing), and has separately
recorded an asset equal to the amount of such liabilities that is expected to be
recovered by insurance. In addition, Coltec has recorded a receivable for that
portion of payments previously made for asbestos product liability actions and
related litigation costs that is recoverable from its insurance carriers.
Liabilities for asbestos-related matters and the receivable from insurance

carriers included in the Consolidated Balance Sheets were as follows at December
31, 1996 and 1995 (in thousands):
 
<TABLE>
<CAPTION>
                                                                            1996       1995
                                                                           -------    -------
<S>                                                                        <C>        <C>
Accounts and notes receivable...........................................   $67,012    $53,677
Other assets............................................................    18,728     16,243
Accrued expenses........................................................    60,659     47,791
Other liabilities.......................................................    10,879     11,450
</TABLE>
 
ENVIRONMENTAL MATTERS
 
     For information concerning environmental matters, see Item 1.
'Business.--Environmental Matters.'
 
OTHER LITIGATION
 
     In September 1983, the local employees' union at Menasco Canada Ltee. (now
Coltec Aerospace Canada Ltd.) ('Menasco Canada'), a federation of trade unions
and several member-employees filed a complaint in the Province of Quebec
Superior Court against Menasco Canada, alleging, among other things, an illegal
lock-out, failure to negotiate in good faith, interference with the affairs of
the union and various violations of local law. The plaintiffs are collectively
seeking approximately Cdn. $14.0 million in damages, and Menasco Canada has
filed a cross-claim for Cdn. $21.0 million and has closed its operations in
Quebec Province. Coltec does not believe that this action will have a material
effect on Coltec's consolidated results of operations and financial condition.
 
     On September 24, 1986, approximately 150 former salaried employees of
Crucible Inc (a former subsidiary of Coltec) commenced an action claiming
benefits under a corporate employment policy that had been established in 1962
and was terminated in 1972 by the corporation's Board of Directors. (George W.
Henglein et al. v. Colt Industries Operating Corporation Informal Plan for Plant
Shutdown Benefits for Salaried Employees et al., U.S. District Court for the
Western District of Pennsylvania, 86-cv-2021). Plaintiffs alleged that the
policy continued after the Board of Directors' action by reason of the Company's
failure to notify them of elimination of the employment policy. As a result of
that failure to notify, the policy was converted into a welfare or pension
benefit plan upon the passage of the Employee Retirement Income Security Act in
1974. Based upon the occurrence of this conversion, the plaintiffs were entitled
to benefits in 1982 when the Midland operations closed. Following a non-jury
trial in the U.S. District Court for the Western District of Pennsylvania,
defendant's motion to dismiss was granted and the plaintiffs appealed. The Court
of Appeals for the Third Circuit remanded the case to the District Court
directing it to make specific findings of fact and conclusions of law and also
found for the defendant on the jurisdiction of the District Court. The defendant
again moved for dismissal and again defendant's motion to dismiss was granted by
the District Court. This second decision of the District Court was appealed to
the Third Circuit Court of Appeals and the case was again remanded to
 

                                       11
<PAGE>
the District Court for additional findings as to the application of the law. On
February 10, 1994, the District Court for the third time dismissed the
plaintiffs' complaint and the plaintiffs appealed to the Third Circuit Court of
Appeals. On September 26, 1994, the Third Circuit Court of Appeals for the third
time remanded the case to the District Court. The Appellate Court held the
record established by plaintiffs in the District Court was insufficient so as to
allow the Court the ability to apply the appropriate legal standard. On November
4, 1994 the Third Circuit Court of Appeals denied the defendant's request for a
rehearing. The defendant petitioned the U.S. Supreme Court for a writ of
Certiorari; its petition was denied in 1995. The defendant again moved for
dismissal before the U.S. District Court based upon the holding of the Third
Circuit that plaintiffs had failed to establish their case at trial. The
District Court denied the motion and sua sponte ordered a new trial de novo. The
trial was held during July, 1996 with both parties introducing evidence. All
post-trial documents have been filed, and a decision is expected in mid-to-late
1997. Coltec does not believe that this action will have a material effect on
Coltec's consolidated results of operations and financial condition.
 
     In addition to the litigation described above, there are various pending
legal proceedings involving Coltec which are routine in nature and incidental to
the business of Coltec. Coltec does not believe that these proceedings will have
a material effect on Coltec's consolidated results of operations and financial
condition.
 
     The Government conducts investigations into procurement of defense
contracts as a part of a continuing process. Under current federal law, if such
investigations establish such improper activities, among other matters,
debarment or suspension of a company from participating in the procurement of
defense contracts could result. These conditions are common to the aerospace and
government industries in which Coltec participates and entail the risk of
financial and other exposure. See Item 1. 'Business--Contract Risks.' Coltec is
not aware of any such investigation, nor is Coltec aware of any facts which, if
known to investigators, might prompt any investigation.
 
PRODUCT LIABILITY INSURANCE
 
     Coltec has product liability insurance coverage for liabilities arising
from aircraft products which Coltec believes to be in adequate amounts. In
addition, with respect to other products (exclusive of liability for exposure to
asbestos products), Coltec has product liability insurance in amounts exceeding
$2.5 million per occurrence, which Coltec believes to be adequate.
 
     Coltec is self-insured (for claims arising after July 1984) with respect to
liability for exposure to asbestos products since third party insurance became
unavailable in July 1984.
 
ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
 
     Not applicable.
 
                                    PART II
 

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
 
     Coltec's common stock (symbol COT) is listed on the New York Stock Exchange
and the Pacific Stock Exchange. The high and low prices of the stock for each
quarter during 1996 and 1995 were as follows:
 
<TABLE>
<CAPTION>
                                                                             1996                      1995
                                                                    ----------------------    ----------------------
                                                                      HIGH          LOW         HIGH          LOW
                                                                    ---------    ---------    ---------    ---------
<S>                                                                 <C>          <C>          <C>          <C>
First quarter....................................................     14 1/4        10 7/8      17 3/8        15 3/8
Second quarter...................................................     14 3/8        12 1/8      18 3/4        16 3/4
Third quarter....................................................     16 1/8        12 7/8      18 1/8        11 5/8
Fourth quarter...................................................     19 1/4        15 1/2      12 1/4        10 1/8
</TABLE>
 
     At December 31, 1996, there were 456 shareholders of record. No dividends
were paid in 1996 or 1995, and no dividends are expected to be paid in 1997.
 
                                       12
<PAGE>
ITEM 6.  SELECTED FINANCIAL DATA.
 
     The five year tabular presentation, and notes thereto, under the caption
'Selected Consolidated Financial Data' in Coltec's 1996 Annual Report to its
shareholders is incorporated herein by reference.
 
ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS.
 
     The information under the caption 'Management's Discussion and Analysis' in
Coltec's 1996 Annual Report to its shareholders is incorporated herein by
reference.
 
ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
 
     The information under the caption 'Quarterly Financial Data' in Coltec's
1996 Annual Report to its shareholders and the Consolidated Statements of
Earnings, the Consolidated Balance Sheets, the Consolidated Statements of Cash
Flows, the Consolidated Statements of Shareholders' Equity, the Notes to
Consolidated Financial Statements, the Report of Management and the Report of
Independent Public Accountants in Coltec's 1996 Annual Report to its
shareholders are incorporated herein by reference.
 
ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE.
 
     None.
 
                                    PART III
 

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
 
     The information under the captions 'Election of Directors' and 'Executive
and Senior Officers of Coltec' in Coltec's Proxy Statement for its 1997 Annual
Meeting of Shareholders is herein incorporated by reference.
 
ITEM 11.  EXECUTIVE COMPENSATION.
 
     The text and tabular information under the caption 'Executive Compensation
and Other Information' in Coltec's Proxy Statement for its 1997 Annual Meeting
of Shareholders is herein incorporated by reference.
 
ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
 
     The information under the captions 'Security Ownership of Certain
Beneficial Owners' and 'Security Ownership of Management' in Coltec's Proxy
Statement for its 1997 Annual Meeting of Shareholders is herein incorporated by
reference.
 
ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
 
     The information under the caption 'Compensation Committee Interlocks and
Insider Participation' in Coltec's Proxy Statement for its 1997 Annual Meeting
of Shareholders is herein incorporated by reference.
 
                                       13
<PAGE>
                                    PART IV
 
ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
 
     (a) The following documents are filed as part of this report:
 
          (1) Consolidated Financial Statements (incorporated by reference from
     the 1996 Annual Report to Shareholders): Consolidated Statements of
     Earnings for the Three Years ended December 31, 1996; Consolidated Balance
     Sheets at December 31, 1996 and 1995; Consolidated Statements of Cash Flows
     for the Three Years ended December 31, 1996; Consolidated Statements of
     Shareholders' Equity for the Three Years Ended December 31, 1996; Notes to
     Consolidated Financial Statements; Report of Management; and Report of
     Independent Public Accountants.
 
          (2) Consolidated Financial Statement Schedules listed in the Index to
     Consolidated Financial Statement Schedules on page S-1 hereof.
 
          (3) The exhibits required by Item 601 of Regulation S-K as listed in
     the accompanying exhibit index commencing on page I-1 hereof.
 
     (b) During the quarter ending December 31, 1996, Coltec filed three reports
on Form 8-K as follows:
 
          (1) Form 8-K, dated November 20, 1996, reporting under Item 5, Other
     Events, the issuance of a press release announcing a tender offer and
     consent solicitation relating to certain debt securities.

 
          (2) Form 8-K, dated December 4, 1996, reporting under Item 5, Other
     Events, that consents from the holders of more than a majority in principal
     amount of certain debt securities to certain amendments to indentures
     relating to such debt securities were received on or before December 4,
     1996 and not revoked.
 
          (3) Form 8-K, dated December 19, 1996, reporting under Item 5, Other
     Events, the successful conclusion of the tender offer and consent
     solicitation relating to certain debt securities and acceptance of all
     validly tendered debt securities for payment pursuant to the offer.
 
     (c) Exhibits 4.20, 12.1, 13.1, 21.1, 23.1 and 27.1 are filed herewith. All
other exhibits listed on the attached Index to Exhibits have been filed
previously.
 
                                       14
<PAGE>
                                   SIGNATURES
 
     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
 
                                          Coltec Industries Inc
 
Date: March 24, 1997                      By: /s/ DAVID D. HARRISON
                                              ______________________________
                                                  David D. Harrison
                                                  Executive Vice President and
                                                  Chief Financial Officer
 
     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant in the capacities noted on March 24, 1997.
 
<TABLE>
<CAPTION>
                    NAME AND TITLE                                          NAME AND TITLE
------------------------------------------------------  ------------------------------------------------------
 
<S>                                                     <C>
                /s/ JOSEPH R. COPPOLA                                   /s/ DAVID I. MARGOLIS
------------------------------------------------------  ------------------------------------------------------
                  Joseph R. Coppola                                       David I. Margolis
                       Director                                                Director
 
                 /s/ WILLIAM H. GRIGG                                /s/ J. BRADFORD MOONEY, JR.
------------------------------------------------------  ------------------------------------------------------
                   William H. Grigg                                    J. Bradford Mooney, Jr.
                       Director                                                Director
 
               /s/ JOHN W. GUFFEY, JR.                                      /s/ JOEL MOSES
------------------------------------------------------  ------------------------------------------------------

                 John W. Guffey, Jr.                                          Joel Moses
           Director, Chairman of the Board,                                    Director
        Chief Executive Officer and President
 
                /s/ DAVID D. HARRISON                                   /s/ RICHARD A. STUCKEY
------------------------------------------------------  ------------------------------------------------------
                  David D. Harrison                                       Richard A. Stuckey
          Director, Executive Vice President                                   Director
        and Chief Financial Officer (Principal
                    Financial and
                 Accounting Officer)
</TABLE>
 
                                       15

<PAGE>
              INDEX TO CONSOLIDATED FINANCIAL STATEMENT SCHEDULES
 
<TABLE>
<CAPTION>
                                                                                                            PAGE
CONSOLIDATED FINANCIAL STATEMENT SCHEDULES NUMBER                                                          NUMBER
--------------------------------------------------------------------------------------------------------   ------
 
<S>                                                                                                        <C>
II--Valuation and Qualifying Accounts for the three years ended December 31, 1996                            S-3
</TABLE>
 
                                      S-1

<PAGE>
                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
 
To the Board of Directors and Shareholders of Coltec Industries Inc:
 
     We have audited in accordance with generally accepted auditing standards,
the consolidated financial statements included in Coltec Industries Inc and
subsidiaries' annual report to shareholders incorporated by reference in this
Form 10-K, and have issued our report thereon dated January 31, 1997. Our audits
were made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The schedule listed in the index to financial
statement schedules is the responsibility of the Company's management and is
presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial statements. This
schedule has been subjected to the auditing procedures applied in the audits of
the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
 
ARTHUR ANDERSEN LLP
Charlotte, North Carolina
January 31, 1997

                                      S-2
 

<PAGE>
                     COLTEC INDUSTRIES INC AND SUBSIDIARIES
                 SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS
                  FOR THE THREE YEARS ENDED DECEMBER 31, 1996
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                                       COLUMN C
                                                               ------------------------
                                                 COLUMN B             ADDITIONS                           COLUMN E
                                               ------------    ------------------------                  ----------
                  COLUMN A                      BALANCE AT     CHARGED TO    CHARGED TO     COLUMN D     BALANCE OF
--------------------------------------------   BEGINNING OF     COST AND       OTHER       ----------      END OF
DESCRIPTION                                       PERIOD        EXPENSES      ACCOUNTS     DEDUCTIONS      PERIOD
--------------------------------------------   ------------    ----------    ----------    ----------    ----------
<S>                                            <C>             <C>           <C>           <C>           <C>
1996
  Valuation account deducted from assets--
     Allowance for doubtful accounts........      $4,174        $1,517          $ --         $3,684        $2,007
                                               ------------    ----------        ---       ----------    ----------
                                               ------------    ----------        ---       ----------    ----------
 
1995
  Valuation account deducted from assets--
     Allowance for doubtful accounts........      $4,124        $  327          $ --         $  277        $4,174
                                               ------------    ----------        ---       ----------    ----------
                                               ------------    ----------        ---       ----------    ----------
1994
  Valuation account deducted from assets--
     Allowance for doubtful accounts........      $4,170        $  229          $ --         $  275        $4,124
                                               ------------    ----------        ---       ----------    ----------
                                               ------------    ----------        ---       ----------    ----------
</TABLE>
 
------------------
Note:
 
(1) Deductions primarily represent reduction of necessary allowance for
    doubtful accounts.
 
                                      S-3

<PAGE>
                               INDEX TO EXHIBITS
 
<TABLE>
<S>     <C>
3.1     Amended and Restated Articles of Incorporation of Coltec, filed as Exhibit 3.1 to Coltec's Registration
        Statement on Form S-2 (No. 33-44846) and incorporated herein by reference.
 
3.2     By-laws of Coltec, filed as Exhibit 3.2 to Coltec's Annual Report on Form 10-K for the year ended December
        31, 1994 and incorporated herein by reference.
 
4.1     Credit Agreement, dated as of March 24, 1992 (the 'Credit Agreement') among Coltec and the financial
        institutions party thereto, Bankers Trust Company, Manufacturers Hanover Trust Company, Barclays Bank PLC,
        New York Branch and Credit Lyonnais New York Branch, as Agents, and Bankers Trust Company, as
        Administrative Agent, filed as Exhibit 4.13 to Coltec Holdings Inc.'s Annual Report on Form 10-K for the
        year ended December 31, 1991 and incorporated herein by reference.
 
4.2     First Amendment, dated as of April 1, 1992, to the Credit Agreement, dated as of March 24, 1992, filed as
        Exhibit 3 to Coltec's Current Report on Form 8-K, dated April 1, 1992 and incorporated herein by
        reference.
 
4.3     Second Amendment, dated as of April 8, 1992, to the Credit Agreement, filed as Exhibit 4.7 to Coltec's
        Annual Report on Form 10-K for the year ended December 31, 1993 and incorporated herein by reference.
 
4.4     Third Amendment and Waiver, dated as of September 3, 1992, to the Credit Agreement, filed as Exhibit 4.8
        to Coltec's Annual Report on Form 10-K for the year ended December 31, 1993 and incorporated herein by
        reference.
 
4.5     Fourth Amendment and Consent, dated as of September 25, 1992, to the Credit Agreement, filed as Exhibit
        4.9 to Coltec's Annual Report on Form 10-K for the year ended December 31, 1993 and incorporated herein by
        reference.
 
4.6     Fifth Amendment, dated as of May 26, 1993, to the Credit Agreement, filed as Exhibit 4.10 to Coltec's
        Annual Report on Form 10-K for the year ended December 31, 1993 and incorporated herein by reference.
 
4.7     Sixth Waiver, dated as of August 3, 1993, to the Credit Agreement, filed as Exhibit 4.11 to Coltec's
        Annual Report on Form 10-K for the year ended December 31, 1993 and incorporated herein by reference.
 
4.8     Seventh Consent, dated as of October 27, 1993, to the Credit Agreement, filed as Exhibit 4.12 to Coltec's
        Annual Report on Form 10-K for the year ended December 31, 1993 and incorporated herein by reference.

 
4.9     Eighth Waiver, dated as of December 23, 1993, to the Credit Agreement, filed as Exhibit 4.13 to Coltec's
        Annual Report on Form 10-K for the year ended December 31, 1993 and incorporated herein by reference.
 
4.10    Credit Agreement among Coltec, Various Banks, The Co-Agents and Bankers Trust Company, as Administrative
        Agent dated as of March 24, 1992 and Amended and Restated as of January 11, 1994 (the 'Amended Credit
        Agreement'), filed as Exhibit 4.14 to Coltec's Annual Report on Form 10-K for the year ended December 31,
        1993 and incorporated herein by reference.
 
4.11    First Waiver, dated as of December 15, 1994, to the Amended Credit Agreement, filed as Exhibit 4.15 to
        Coltec's Annual Report on Form 10-K for the year ended December 31, 1994 and incorporated herein by
        reference.
 
4.12    First Amendment, dated as of October 11, 1995, to the Amended Credit Agreement, filed as Exhibit 4.1 to
        Coltec's Current Report on Form 8-K, dated July 1, 1996 and incorporated herein by reference.
</TABLE>
 
                                      I-1
<PAGE>
<TABLE>
<S>     <C>
4.13    Second Waiver, dated as of June 5, 1995, to the Amended Credit Agreement, filed as Exhibit 4.16 to
        Coltec's Annual Report on Form 10-K for the year ended December 31, 1995 and incorporated herein by
        reference.
 
4.14    Second Amendment, dated as of November 17, 1995, to the Amended Credit Agreement, filed as Exhibit 4.17 to
        Coltec's Annual Report on Form 10-K for the year ended December 31, 1995 and incorporated herein by
        reference.
 
4.15    Third Amendment, dated as of May 14, 1996, to the Amended Credit Agreement, filed as Exhibit 4.2 to
        Coltec's Current Report on Form 8-K, dated July 1, 1996 and incorporated herein by reference.
 
4.16    Fourth Amendment, dated as of June 6, 1996, to the Amended Credit Agreement, filed as Exhibit 4.3 to
        Coltec's Current Report on Form 8-K, dated July 1, 1996 and incorporated herein by reference.
 
4.17    Form of Indenture, dated as of October 26, 1992, between Coltec and United States Trust Company of New
        York, as Trustee, relating to Coltec's 9-3/4% Senior Notes Due 1999 (including the form of 9-3/4% Senior
        Note Due 1999), filed as Exhibit 4.1 to Coltec's Registration Statement on Form S-3 (No. 33-52414) and
        incorporated herein by reference.
 
4.18    Indenture, dated as of April 1, 1992, between Coltec and United States Trust Company of New York, as
        Trustee, relating to Coltec's 9-3/4% Senior Notes Due 2000 (including the form of 9-3/4% Senior Note Due
        2000), filed as Exhibit 4 to Coltec's Current Report on Form 8-K, dated April 1, 1992 and incorporated
        herein by reference.
 
4.19    Indenture, dated as of April 1, 1992, between Coltec and Norwest Bank Minnesota, National Association, as
        Trustee, relating to Coltec's 10-1/4% Senior Subordinated Notes Due 2002 (including the form of 10-1/4%
        Senior Subordinated Note Due 2002), filed as Exhibit 5 to Coltec's Current Report on the Form 8-K, dated
        April 1, 1992 and incorporated herein by reference.
 
4.20    Credit Agreement among Coltec, Various Banks, Bankers Trust Company, as Administrative Agent, and Bank of
        America Illinois, as Documentation Agent, and The Chase Manhattan Bank, as Syndication Agent, dated as of
        March 24, 1992 and Amended and Restated as of January 11, 1994 and further Amended and Restated as of
        December 18, 1996.

 
        Pursuant to paragraph (4)(iii) of Item 601(b) of Regulation S-K, there are omitted certain agreements,
        which the registrant hereby agrees to furnish to the Commission upon request.
 
10.1    Form of Family Protection Agreement used in connection with Coltec's Family Protection Program, filed as
        Exhibit 3.5.1 to Coltec's Registration Statement on Form 8-B, filed with the Securities and Exchange
        Commission on June 25, 1976 and incorporated herein by reference.
 
10.2    Benefits Equalization Plan of Coltec, filed as Exhibit 10.2 to Coltec's Annual Report on Form 10-K for the
        year ended December 31, 1988 and incorporated herein by reference.
 
10.3    Amendment No. 1 to the Benefits Equalization Plan, filed as Exhibit 10.3 to Coltec's Annual Report on Form
        10-K for the year ended December 31, 1993 and incorporated herein by reference.
 
10.4    Amendment No. 2 to the Benefits Equalization Plan, filed as Exhibit 10.1 to Coltec's Quarterly Report on
        Form 10-Q for the quarterly period ended September 29, 1996 and incorporated herein by reference.
 
10.5    Supplemental Retirement Savings Plan of Coltec, filed as Exhibit 10.3 to Coltec's Annual Report on Form
        10-K for the year ended December 31, 1988 and incorporated herein by reference.
 
10.6    Amendment No. 1 to the Supplemental Retirement Savings Plan, filed as Exhibit 10.2 to Coltec's Quarterly
        Report on Form 10-Q for the quarterly period ended September 29, 1996 and incorporated herein by
        reference.
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10.7    Employment Agreement between Coltec and John W. Guffey, Jr., dated June 1, 1995, filed as Exhibit 10.8 to
        Coltec's Annual Report on Form 10-K for the year ended December 31, 1995 and incorporated herein by
        reference.
 
10.8    Form of Employment Agreement between Coltec and Laurence H. Polsky, dated June 1, 1995, filed as Exhibit
        10.9 to Coltec's Annual Report on Form 10-K for the year ended December 31, 1995 and incorporated herein
        by reference.
 
10.9    Form of Employment Agreement between Coltec and John M. Cybulski, Richard L. Dashnaw and Robert J. Tubbs,
        dated June 1, 1995, filed as Exhibit 10.10 to Coltec's Annual Report on Form 10-K for the year ended
        December 31, 1995 and incorporated herein by reference.
 
10.10   Form of Employment Agreement between Coltec and David Harrison, dated July 11, 1996, filed as Exhibit 10.3
        to Coltec's Quarterly Report on Form 10-Q for the quarterly period ended September 29, 1996 and
        incorporated herein by reference.
 
10.11   The Incentive Plan for Certain Employees of Coltec and Subsidiaries (the 'Incentive Plan'), filed as
        Exhibit 10.22 to Coltec's Registration Statement on Form S-2 (No. 33-44846) and incorporated herein by
        reference.
 
10.12   Amendments to the Incentive Plan, filed as Exhibit 10.13 to Coltec's Annual Report on Form 10-K for the
        year ended December 31, 1993 and incorporated herein by reference.
 
10.13   Coltec's 1992 Stock Option and Incentive Plan, filed as Exhibit 10.24 to Coltec's Annual Report on Form
        10-K for the year ended December 31, 1991 and incorporated herein by reference.

 
10.14   Amendment No. 1 to the Coltec 1992 Stock Option and Incentive Plan, filed as Exhibit 10.15 to Coltec's
        Annual Report on Form 10-K for the year ended December 31, 1993 and incorporated herein by reference.
 
10.15   1994 Long-Term Incentive Plan of Coltec, filed as Exhibit 10.16 to Coltec's Annual Report on Form 10-K for
        the year ended December 31, 1993 and incorporated herein by reference.
 
10.16   Resolutions of the Board of Directors of Coltec on July 13, 1995 amending Section 6(a) of the 1994
        Long-Term Incentive Plan, filed as Exhibit 10.17 to Coltec's Annual Report on Form 10-K for the year ended
        December 31, 1995 and incorporated herein by reference.
 
10.17   Annual Incentive Plan For Certain Employees of Coltec Industries Inc and Its Subsidiaries, filed as
        Exhibit 10.17 to Coltec's Annual Report on Form 10-K for the year ended December 31, 1993 and incorporated
        herein by reference.
 
10.18   1994 Stock Option Plan for Outside Directors, filed as Exhibit 10.18 to Coltec's Annual Report on Form
        10-K for the year ended December 31, 1993 and incorporated herein by reference.
 
10.19   Deferred Compensation Plan For Non-Employee Directors, filed as Exhibit 10.20 to Coltec's Annual Report on
        Form 10-K for the year ended December 31, 1995 and incorporated herein by reference.
 
10.20   Resolution of the Board of Directors of Coltec on May 30, 1995 establishing a Change In Control
        arrangement for non-employee directors, filed as Exhibit 10.21 to Coltec's Annual Report on Form 10-K for
        the year ended December 31, 1995 and incorporated herein by reference.
 
12.1    Computation of Ratio of Earnings to Fixed Charges.
 
13.1    Portions of Coltec's 1996 Annual Report to Shareholders.
 
21.1    List of Subsidiaries of Coltec.
 
23.1    Consent of Arthur Andersen LLP.
 
27.1    Consolidated Financial Data Schedule.

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