FORM 10-K
          SECURITIES AND EXCHANGE COMMISSION
                Washington, D.C. 20549
                                
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
      SECURITIES EXCHANGE ACT OF 1934         [FEE REQUIRED]

For the fiscal year ended           December 31, 1995
                                OR
[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
       SECURITIES EXCHANGE ACT OF 1934      [NO FEE REQUIRED]

For the transition period from                              to

Commission file number - 1-9294

                  Imo Industries Inc.
(Exact name of registrant as specified in its charter)
                                
      Delaware                              21-0733751
 (State or other jurisdiction    (I.R.S. Employer Identification No.)
of incorporation or organization)

  1009 Lenox Drive, Building Four West
        Lawrenceville, New Jersey               08648
  (Address of principal executive offices)     (Zip Code)

Registrant's telephone number, including area code 609-896-7600.

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

                                            Name of each exchange on
Title of each class                                which registered

Common Stock, $1.00 par value                New York Stock Exchange
                                
Securities registered pursuant to Section 12(g) of the Act:  None

     Indicate by check  mark whether the Registrant (1) has  filed all
reports required to be filed by Section 13  or 15(d) of the Securities
Exchange Act of 1934  during the  preceding 12  months (or  for such
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 statement incorporated by reference in Part III of this Form
10-K or any amendment to the Form 10-K.  (X)

     Aggregate market value of the voting  stock held by non-affiliates of
the Registrant computed by reference to the closing price of such stock on
the New York Stock Exchange, Inc. on
March 15, 1996...........................................$119,595,763

Shares of Registrant's common stock, $1.00 par value, outstanding as of
March 15, 1996 ............................................17,085,109

DOCUMENTS INCORPORATED BY REFERENCE

 Identification of Documents               Part into which Incorporated

  Portions of the Company's Proxy          Items 10, 11, 12 of Part III
Statement for its Annual Meeting of
Stockholders to be held May 21, 1996


                                TABLE OF CONTENTS                      
                                      PART I                           
Item                                              
                                                  
1.  Business.
      General
      History
      Industry Segments
      Discontinued Operations
      Restructuring Plan
      Competition
      Product Distribution and Customers                                       
      Backlog
      Raw Materials
      Patents, Licenses and Trademarks
      Research and Development
      Environmental Matters
      Employees
2.  Properties
3.  Legal Proceedings
4.  Submission of Matters to a Vote of Security Holders
Executive Officers of the Registrant
                                    
                                                  
                                      PART II                           
                                                  
5.  Market for the Registrant's Common Equity
      and Related Stockholder Matters
6.  Selected Financial Data
7.  Management's Discussion and Analysis of  
      Financial Condition and Results Operations
8.  Financial Statements and Supplementary Data
9.  Changes in and Disagreements with Accountants
      on Accounting and Financial Disclosure
                                                  
                                                  
                                      PART III                          
                                                  
10.  Directors and Executive Officers of the Registrant
11.  Executive Compensation
12.  Security Ownership of Certain Beneficial Owners
       and Management
13.  Certain Relationships and Related Transactions
                                                  
                                                  
                                      PART IV                           
                                                  
14.  Exhibits, Financial Statement Schedules and
       Reports on Form 8-K
Exhibit Index
Signatures


                              PART I

Item 1.            Business.


General

Imo Industries   Inc.   (hereinafter  with  its  subsidiaries
referred to as the "Company") is an integrated  multinational
industrial  manufacturer  of  a  broad  range  of  industrial
products  through  its four core business  segments  -  Power
Transmission, Pumps, Instrumentation and Morse Controls.  The
Company's  products  are  designed to  regulate  and  control
motion,  transfer  liquids and monitor  fluids.  The  Company
markets  its  products  on a worldwide  basis  to  a  diverse
customer base. In February 1996, the Company announced it  is
intending   to  sell its Italian-based Roltra-Morse  business
segment,  a supplier of latches, door panels, flexible  cable
and  window  controls for automobiles. As a  result  of  this
announcement, the Company has focused its operations  on  the
remaining four core business segments, as follows:

The  Power Transmission business segment designs and produces
electronic  adjustable-speed motor drives,  gears  and  speed
reducers.

The Pumps business segment designs and produces a broad range
of  rotary  pumps, including a proprietary line  of  two  and
three-screw pumps.

The  Instrumentation  business segment designs  and  produces
transducers   and   switches  for  sensing,   measuring   and
controlling pressure, temperature and liquid level and flow.

The Morse Controls business segment designs and produces push-
pull cable and remote control systems.

In  addition  to the four segments comprising  the  Company's
continuing core operations, the Company has a fifth  business
segment  entitled Other included in its continuing operations
for  financial  reporting purposes.   This  segment  includes
operations  previously sold and non-operating  assets  to  be
sold as part of the Company's asset divestiture program.

The  Company's  Electro-Optical Systems,  Turbomachinery  and
Roltra-Morse    businesses  are  being   accounted   for   as
discontinued operations and, accordingly,  have been excluded
from   the   Company's  segments.   The  previously  reported
financial  information has been reclassified to  reflect  the
Roltra-Morse business segment as a discontinued operation.


History

The  Company,  founded in 1901 in the  United States  by  Dr.
Carl  Gustaf  Patrick  de  Laval, a  Swedish  scientist,  was
acquired  by  Transamerica  Corporation  ("Transamerica")  in
1963.  In 1964, Transamerica merged its existing wholly owned
manufacturing  subsidiary, General Metals  Corporation,  into
the  Company.  At the close of business on December 18, 1986,
Transamerica  distributed all of the issued  and  outstanding
shares of the  Company Common Stock  to holders of  record of
Transamerica   Common  Stock on the basis  of  one  share  of
Company   Common  Stock  for each ten shares of  Transamerica
Common  Stock held ("Distribution") and since that  time  the
Company  has  operated on a stand-alone basis as  a  publicly
traded company.

Industry Segments

A  description  of   the  principal  products  and   services
offered  by   each core business segment of the  Company,  as
well  as  the  principal  markets  for  such  products    and
services,   are   set forth  below.   Certain information  in
response   to   this   item  with   respect  to   net  sales,
operating profit,  and identifiable assets  of each of  these
segments  and by geographic area is contained in Note  10  of
the  Notes  to Consolidated Financial Statements included  in
Part IV of this Form 10-K Report as indexed at Item 14(a)(1).
Information regarding the businesses sold and held  for  sale
and  the  discontinued operations is provided later  in  this
section  and  is  contained  in  Note  2  to the Consolidated
Financial Statements.


Power Transmission
The  Power  Transmission business segment operations  produce
speed  reducers  and loose gearing that   are  recognized  as
leading  products  in their market niches.   The  segment  is
comprised  of two units: Boston Gear, a leading  producer  of
gears  and speed reducers, and Fincor Electronics, a producer
of  adjustable-speed motor controllers.   Speed reducers  are
used  to  reduce the output speed and increase the torque  of
power  trains  in numerous products, ranging from  industrial
machinery  to  exercise  treadmills.  Adjustable-speed  motor
controllers  are  used for the accurate control  of  electric
motor speed, torque, shaft position and direction of rotation
in   applications  such  as  ski  lifts,  textile  machinery,
overhead  cranes and large printing presses.  The  operations
also  produce  worm  gear  sets used  as  speed  reducers  by
original  equipment manufacturers, and by  oil  and  gas  and
industrial machinery customers.

Pumps
The   Pumps   business  segment  is  the  largest   worldwide
manufacturer of rotary screw pumps. The three businesses that
comprise  the Pumps segment -- Imo Pump, Imo AB,  and  Warren
Pumps,  Inc. -- design and manufacture screw-type fuel,  lube
oil  and  hydraulic pumps  for use primarily by  the  marine,
process,  oil and gas and elevator industries.  The segment's
three-screw pumps are the leading low-noise-level pumps  used
in United States Navy vessels and in many commercial vessels.
These  pumps  are  also  used to power  hydraulic  elevators,
lubricate   diesel  engines  and  fuel  gas  turbines.    The
segment's  two-screw pumps are used by  the  pulp  and  paper
industry and in other high-viscosity process applications.


Instrumentation
The  Instrumentation business segment operations  design  and
manufacture products that perform a wide variety of  critical
sensing,  measuring,  monitoring and control functions.   The
business  segment is comprised of two units: Gems Sensors,  a
leading   producer   of   level  and   flow   switches,   and
TransInstruments,  a leading producer of pressure transducers
in Europe.

Tank level indicators, level switches, solid state relays and
flow  meters  are  manufactured principally  for  marine  and
general  industrial applications.  These indicators are  used
in   ocean-going  tankers,  military  vessels,  petrochemical
facilities and industrial  and commercial products around the
world.    Hundreds of  varieties of  liquid-level   monitors,
indicators and switches are manufactured for use by more than
30,000  customers.   Pressure transducers are used to measure
pressure  as  a continuous function and are sold  to  a  wide
segment of the general industrial market.




Morse Controls
The  Morse  Controls business segment is a leading  worldwide
manufacturer  of precision mechanical and electronic  control
products  and  systems that are primarily used  for  pleasure
marine and  industrial vehicle applications.

This  segment produces, among other products, push-pull cable
and  control  systems used to control and actuate  functions,
such  as steering and valve adjustment, and as an alternative
to    electrical  systems.   Applications  include   throttle
control  and steering systems for both off-the-road  vehicles
and pleasure boats.

Discontinued Operations

Electro-Optical Systems
In  January 1994, pursuant to a plan approved by the Board of
Directors, the Company announced its intention to dispose  of
its Electro-Optical Systems operations which consisted of the
Company's  subsidiaries Varo Inc. and Baird  Corporation.  On
January 3, 1995, the Company completed the sale of its  Baird
Analytical Instruments Division to Thermo Instruments Systems
Inc. for approximately $12.3 million, which was used to repay
a  portion of the Company's domestic senior debt. On June  2,
1995,   the Company completed the sale of the Optical Systems
and  Ni-Tec  divisions of Varo Inc. and the  Optical  Systems
division  of Baird, which represented the major part  of  its
Electro-Optical  Systems business, to Litton  Industries  for
approximately book value. The proceeds were used to  pay  off
$8  million outstanding under the Company's revolving  credit
facility  on  June 2, 1995 and to redeem $40 million  of  its
12.25% Senior Subordinated Debentures on July 6, 1995.

These divisions represented the major portion of the Electro-
Optical  Systems  business.   Remaining  assets  to  be  sold
include  the Electro-Optical Systems' Varo Electronic Systems
division and non-operating real estate, which continue to  be
marketed to interested parties.

Turbomachinery
In August 1994 the Board of Directors approved a plan to sell
the Company's Turbomachinery operations. On January 17, 1995,
the  Company  completed the sale of its Delaval  Turbine  and
TurboCare divisions and its 50% interest in Delaval-Stork, to
Mannesmann  Demag.  The  final adjusted  purchase  price  was
$119.0  million,  of  which  $109  million  was  received  at
closing,  with the remainder earning interest to the  Company
and to be received at specified future contract dates subject
to   adjustment  as  provided  in  the  agreement.    It   is
management's  expectation  that  there  will  be  no  further
adjustment  to the purchase price. A portion of the  proceeds
were  used by the Company to pay off its domestic senior debt
in  January  1995 and in March 1995 the Company redeemed  $40
million   of  its 12.25% Senior Subordinated Debentures  with
the remainder of the proceeds.


Roltra-Morse
On  February 7, 1996 the Company announced a plan  to  sell
its  Roltra-Morse  operations. The  Company  has  engaged  an
investment  banking  firm to assist  in  the  sale  which  is
expected to be completed in 1996.

In accordance with APB Opinion No. 30, the disposals of these
business  segments  have been accounted for  as  discontinued
operations  and,  accordingly, their operating  results  have
been  segregated and reported as Discontinued  Operations  in
the  accompanying  Consolidated Statements of  Income.  Prior
year  financial statements have been reclassified to  conform
to the current year presentation.

See  Note 2 to the Consolidated Financial Statements  located
in  Part  IV of this Form 10-K Report as indexed at  Item  14
(a)(1)  for  additional  details regarding  the  discontinued
operations.


Restructuring Plan

Asset Sales
In  October  1992, the Company announced a plan to strengthen
its  balance sheet through the sale of certain businesses and
the application of the proceeds to reduce debt.  Pursuant  to
this plan, the Company divested its Heim Bearings, Aerospace,
Barksdale Controls and CEC Instruments businesses.  In  1993,
the  Company sold its Heim Bearings, Aerospace and  Barksdale
Controls   operations  for  proceeds  of  approximately   $91
million,  and in 1994, sold its CEC Instruments and Turboflex
Ltd.  operations,  its  Corporate headquarters  building  and
other previously identified assets for aggregate proceeds  of
$13.2 million. These proceeds, net of related expenses,  were
used  to repay senior debt in the amount of $81.9 million  in
1993  and $13.2 million in 1994, in accordance with the terms
of the 1993 restructured credit facilities.

Other  non-operating real estate, representing less than  10%
of  the  original value of assets announced  to  be  sold  in
October  1992,  remains for sale.   Results  for  the  fourth
quarter  of  1995 include an unusual charge of  $5.0  million
related  to the write-down of this non-operating real  estate
to  its  net realizable value. The Company targets completion
of the divestitures over the next 9 to 12 months.

In  the  fourth  quarter  of  1993,  management  initiated  a
strategy  to  reposition  the Company  on  its  less  capital
intensive   businesses  that  exhibited  strong  brand   name
recognition, a broad customer base and market leadership with
less dependence on U.S. Government sales.  In connection with
this  strategy,  the Company divested its Turbomachinery  and
most  of its Electro-Optical Systems businesses in 1995. This
repositioning will be completed upon the sale of the Roltra-
Morse  business,  and the remaining portion of  the  Electro-
Optical  Systems business, which are expected to be completed
in   1996.   See   above  discussion  regarding  Discontinued
Operations.


Cost Reduction Programs
In  the fourth quarter of 1995, the Company recorded a charge
to continuing operations of $4.0 million, including severance
and  other  expenses  related to a  Company-wide  program  to
reduce   general  and  administrative  costs.   This  program
includes  a  reduction of 65 employees, or 2%  of  the  total
number  of  Company employees, including a reduction  of  the
corporate  headquarters  staff  by  20%.   This  program   is
expected  to  reduce general and administrative  expenses  by
approximately $2.9 million in 1996, $4.0 million in 1997  and
$5.0  million annually thereafter.  The required cash  outlay
related  to  this program was $.4 million in  1995,  and  the
expected cash requirements during 1996 are $3.2 million.  The
remainder represents non-cash charges.

In   1993,  the  Company  recorded  a  charge  to  continuing
operations of $5.2 million for a cost reduction program which
benefited  1994  and  1995  operating  results.  The  Company
implemented  cost-cutting measures at its core operations  to
reduce  its  expense  structure and to eliminate  duplicative
functions.  In  addition, in connection with this  1993  cost
reduction   program,   the   Company   consolidated   certain
operations  in  its European Instruments and  Morse  Controls
businesses  and  revised  operating  processes  and   reduced
employment  levels at its Pumps segment and other operations.
The  number of Company employees in core operations  declined
by   205,  or  7%,  between  mid-1993  and  mid-1994.   These
organizational restructuring measures have been providing net
cash  benefits,  compared to 1993 levels, which  approximated
$4.5  million and $1.5 million for continuing operations,  in
1995  and 1994, respectively, and are expected to approximate
$5.5  million annually thereafter, based largely  on  reduced
employment costs.

See  Note 3 to the Consolidated Financial Statements  located
in  Part  IV  of  this Form 10-K Report as  indexed  at  Item
14(a)(1)   for   additional  details  regarding   the   asset
divestiture and restructuring program.


Competition

The  Company's  products  and  services  are  marketed  on  a
worldwide basis.  Approximately 90% of the Company's products
are  marketed  outside  of the United States  through  wholly
owned subsidiaries, sales offices and several joint ventures.
Most  markets  in  which  the  Company  operates  are  highly
competitive.  The principal elements of competition  for  the
products  manufactured  in  each of  the  Company's  business
segments  are  design  features,  product  quality,  customer
service and price.

Product Distribution and Customers

The   Company's  products  are sold  primarily  through   the
Company's  direct sales  forces.  During 1995, sales  by  the
Company's  direct sales forces were approximately  30%,  81%,
87%    and   83%   of   the    Power   Transmission,   Pumps,
Instrumentation  and  Morse Controls segments,  respectively.
The    Company's   remaining    sales   are    made   through
distributors, dealers and agents.

None  of  the  business segments is dependent on  any  single
customer or a few customers, the loss of which would  have  a
material adverse effect on the respective segments, or on the
Company  as a whole. Total sales to the Department of Defense
in  the form of prime and subcontracts were approximately  7%
of net sales in 1995, 9% of sales in 1994 and 14% of sales in
1993. No customer other than the United States Department  of
Defense,  accounted for 10% or more of consolidated sales  in
1995, 1994 or 1993.


Backlog

The   Company's  continuing operations' backlog  of  unfilled
orders  at month end February, 1996 and 1995 and at  December
31,   1995,   1994  and  1993 by  business   segment  was  as
follows:

                February 29,  February 28,      December 31
                    1996          1995      1995    1994    1993
                               (Dollars in millions)   
                                                  
Power Transmission  $ 9.0         $10.0     $8.5    $9.6   $10.5
Pumps                34.3          30.9     33.7    28.9    33.6
Instrumentation      20.9          21.2     18.3    19.2    18.4
Morse Controls       21.6          23.9     21.9    22.8    20.2
Other                 ---           ---      ---     ---     3.4
                    $85.8         $86.0    $82.4   $80.5   $86.1

Backlog  is  considered significant only to the Warren  Pumps
business  of  the Pumps segment, given that the  products  of
that  operation require long lead times for manufacture.   Of
the  total backlog from continuing operations at December 31,
1995,  the  Company believes that all but approximately  $2.5
million of its orders will be filled in 1996.

Raw Materials

The  Company's  operations  obtain raw  materials,  component
parts and supplies from a variety of sources, generally  from
more than one supplier. The Company's principal raw materials
are metals and plastics.  The Company's suppliers and sources
of  raw  materials  are based in both the United  States  and
foreign  countries and the Company believes that its  sources
of   raw  materials  are  adequate  for  its  needs  for  the
foreseeable  future. The loss of any one supplier  would  not
have  a  material  adverse effect on the Company's  financial
condition or results of operations.


Patents, Licenses and Trademarks

The    Company   owns  numerous   unexpired   U.S.    patents
(currently  having  a  term of  17 years  from  the  date  of
issuance  and  expiring at various times in the  future)  and
foreign   patents  (having an initial term that  is  governed
by  the law  of the  country and expiring at various times in
the  future),   including  counterparts  of  certain  of  its
U.S.  patents,   in  major  industrial   countries   of   the
world.     The   Company's  products   are   marketed   under
various  trade   names  and  registered   U.S.  and   foreign
trademarks  (having  an initial  term that is governed by the
law  of  the  country  and  expiring  at various times in the
future).   The  Company, however, does not consider  any  one
patent  or trademark or any group  thereof essential  to  its
business   as  a whole,  or to any of its business  segments.
The  Company  relies,  to an extent,  on proprietary  product
knowledge  and manufacturing processes in its operations.

Following   the   removal   of   the   distinctive   modifier
"Transamerica"  from  the  corporate   name   prior  to   the
Distribution, the  Company changed its name to  "Imo  Delaval
Inc."   in 1986  and to "Imo Industries Inc."  in 1989.   The
Company's   use  of the name  "Delaval"  is restricted  as  a
result  of  a  contract  by which the Company's  assets  were
acquired  from  their  former  Swedish  owner  preceding  the
acquisition of the Company by Transamerica.  In January 1995,
the Company transferred its rights to use the  "Delaval" name
in  connection  with  certain products of the  Turbomachinery
segment   to  Mannesmann Demag as part of the divestiture  of
its Turbomachinery business.


Research and Development

The  Company's   ongoing  research and  development  programs
involve the development of new  technologies  to  enhance the
performance    or  lower  the  cost  of   manufacturing   its
products,  and the redesign of existing product lines  either
to  increase their efficiency or to lower their manufacturing
cost.  Expenditures   for  research  and development  charged
against  continuing operations  for 1995, 1994  and  1993  by
business segment were as follows:

                       Year Ended December 31

                     1995           1994           1993
                           (Dollars in millions)
                                        
Power Transmission  $  .7          $  .7          $  .9
Pumps                 1.5            1.8            1.8
Instrumentation        .9             .7             .9
Morse Controls        1.7            1.3            1.6
Other                 ---             .1            2.3
                     $4.8           $4.6           $7.5

Environmental Matters

In connection with the Company's separation from Transamerica
in   1986,   three  of  the  Company's  properties   required
compliance   with   the  New  Jersey  Environmental   Cleanup
Responsibility Act, which was amended by the Industrial  Site
Recovery  Act  ("ISRA").  ISRA required  that  the  Company's
three   New  Jersey  industrial  establishments  undergo   an
approved   remediation  by  the  New  Jersey  Department   of
Environmental   Protection  and  Energy   (the   "NJ   DEP").
Remediation  has  been completed at the two sites  and  final
closure approvals have been sought.  As a result of the  sale
of  a  portion of the third establishment, this site has been
divided  into  two separate sites for ISRA compliance.   Both
sites have undergone cleanup but the NJ DEP has requested and
received  from  the Company additional sampling  information.
If  further cleanup is required, the Company does not  expect
it  to  have  a  material  adverse effect  on  its  financial
condition.

The Company has been identified in a number of instances as a
"Potentially  Responsible Party" by  the  U.S.  Environmental
Protection  Agency,  and  in  one  instance  the   State   of
Washington, with respect to the disposal of hazardous  wastes
at  a number of facilities that have been targeted for clean-
up  pursuant  to  the  Comprehensive  Environmental  Response
Compensation  and Liability Act ("CERCLA") or  similar  State
law.   Although  CERCLA and similar  State law  liability  is
joint  and  several, the Company believes that its  liability
will  not  have  a material adverse effect on  the  financial
condition  of  the Company since it believes that  it  either
qualifies as a de minimis or minor contributor at each  site.
Accordingly,  the  Company  believes  that  the  portion   of
remediation  costs  that  it will  be  responsible  for  will
therefore not be material.

The  Company  has operations in numerous locations,  some  of
which   require  environmental  remediation.   The   Company,
however, does not know of or believe that any such matters or
the   cost   of  any  required  corrective  measure,   either
individually  or  in  the aggregate,  will  have  a  material
adverse  effect  on the financial condition of  the  Company.
There  can  be no assurance, however, that these matters,  or
other  environmental  matters  not  currently  known  to  the
Company  will not have such a material adverse effect.

Employees

At  December  31,  1995,  the Company employed  approximately
3,900  persons worldwide of which 2,900 relate to  continuing
operations.  Approximately 2,000 persons were employed in the
United  States, and approximately 1,900 persons were employed
outside  of  the United States.  Approximately 1,900  of  the
employees  associated with continuing operations are  located
in  the  United States.  There are approximately 900  persons
worldwide  covered by collective bargaining  agreements  with
various  unions  expiring at various dates  in  1996  through
1998.  The Company considers its relations with its employees
to be satisfactory.


Item 2.            Properties.

The  Company's  continuing operations have  22  manufacturing
facilities  in  9  states in the United  States,  the  United
Kingdom, Germany, Singapore, Sweden, Switzerland, France, and
Australia  of  which  17 are owned and   5  are  leased.   In
addition, the Company owns 12 closed manufacturing facilities
(approximately 1.5 million square feet of building  space  on
152.7  acres of land) that are being offered for sale.    The
properties owned by the Company consist of approximately  3.0
million  square feet of building space, inclusive of the  1.5
million   square   feet   of  the   closed   facilities,   on
approximately 400 acres (including 169.6 acres of undeveloped
land).  The leases expire over a period of years from 1996 to
2054 with renewal options for varying terms contained in 4 of
the  leases.  The Company's executive office, which is leased
by  the Company, is located in Lawrenceville, New Jersey  and
occupies approximately 37,140 square feet.

The  Company believes that its machinery, plants and  offices
are  in satisfactory operating condition and are adequate for
the  uses  to which they are put.  The Company believes  that
its  properties  have  sufficient capacity  to  substantially
increase   their   current  utilization   without   incurring
significant additional capital expenditures.

The  manufacturing  facilities of  the  Company  by  business
segment are summarized below:

                                                     Square Feet of
                                                     Building Space
                           Number of Plants          (In thousands)
                           Owned     Leased        Owned       Leased
                                                             
Power Transmission             4          0          366            0
Pumps                          4          0          554            0
Instrumentation                4          0          154            0
Morse Controls                 5          5          335          253
  Continuing Operations       17          5        1,409          253
Other (Including Discontinued 
  Operations)                  3          3           56          434
                              20          8        1,465          687


Item 3.  Legal Proceedings.


In  August  1985,  the Company was named as  defendant  in  a
lawsuit  filed  by  Long  Island Lighting  Company  ("LILCO")
following the severing of a crankshaft in  a diesel generator
sold to LILCO by the Company.  LILCO's complaint contained 11
counts,  including counts for breach of warranty,  negligence
and  fraud,  and sought $250 million in damages.  In  various
decisions  from  1986 through 1990, 10  of  the  original  11
counts  and various additional amended counts were  dismissed
with  only  the original breach of warranty count  remaining.
In  September  1993,  the  Second Circuit  Court  of  Appeals
affirmed  a previous trial court decision entering a judgment
against  the Company in the amount of $18.3 million,  and  in
October 1993, the judgment was satisfied by payment to  LILCO
of  approximately  $19.3  million by  two  of  the  Company's
insurers.

In January 1993, the Company was served with a complaint in a
case  brought  in  the U.S. District Court for  the  Northern
District  of California by one of its insurers, International
Insurance Company ("International"), alleging that,  because,
among other things, its policies did not cover the matters in
question  in  the LILCO case, it was entitled to recover  $10
million  in defense costs previously paid in connection  with
such case and $1.2 million of the judgment which was paid  on
behalf  of  the  Company. In June 1995, the Court  entered  a
judgment in favor of International awarding it $11.2 million,
plus interest from March 1995 (the "International Judgment").
The International Judgment, however, was not supported by  an
order,   and   in  July  of  1995,  the  Court  vacated   the
International  Judgment  as being premature  because  certain
outstanding  issues of recoverability of the $10  million  in
defense  costs had not been finally determined.  The  Company
is  awaiting a final decision.  If the International Judgment
is  reinstated,  the  Company  intends  to  appeal.   If  the
ultimate  outcome of this matter is unfavorable, the  Company
will  record  a charge for the judgment amount  plus  accrued
interest.

In  June  1992,  the  Company filed an  action,  subsequently
transferred to the U.S. District Court, Southern District  of
New  York,  that is currently pending against  Granite  State
Insurance Co. ("Granite State"), one of its insurers,  in  an
attempt  to collect amounts for defense costs paid to counsel
retained  by  the Company in defense of the LILCO litigation.
After  reimbursing  the Company for $1.7 million  in  defense
costs,  Granite  State refused to reimburse the  Company  for
approximately  an  additional $8.5 million in  defense  costs
paid  by  the  Company,  alleging that  defense  costs  above
reasonable  levels  were  expended  in  defending  the  LILCO
litigation.  The insurer subsequently paid $18.1  million  of
the judgment rendered against the Company, thereby exhausting
its   $20  million  policy.   The  Company  claims  that  the
insurer's  refusal to pay defense costs was in bad faith  and
the  Company  is  entitled to its cost  of  money  and  other
damages.   In  a  counterclaim,  Granite  State  is   seeking
reimbursement of all or part of the $1.7 million  in  defense
costs  previously paid by it, and has indicated that  it  may
seek  additional damages beyond the reimbursement of  defense
costs, including recoupment of approximately $4.0 million  of
the amount awarded by the jury in the LILCO litigation (which
represents  amounts previously paid by LILCO to  the  Company
for  generator repairs, and which Granite State had  paid  on
behalf of the Company).

The  Company and one of its subsidiaries are two of  a  large
number  of  defendants  in a number of  lawsuits  brought  by
approximately  17,500 claimants who allege injury  caused  by
exposure to asbestos.  Although neither the Company  nor  any
of  its  subsidiaries  has ever been  a  producer  or  direct
supplier  of asbestos, it is alleged that the industrial  and
marine products sold by the Company and the subsidiary  named
in  such  complaints  contained  components  which  contained
asbestos.  Suits against the Company and its subsidiary  have
been tendered to their insurers who are defending under their
stated  reservation of rights.  Should settlements for  these
claims  be  reached at levels comparable to those reached  by
the Company in the past, they would not be expected to have a
material effect on the Company.

The activities of certain employees of the Ni-Tec Division of
the  Company's Varo Inc. subsidiary ("Ni-Tec"), headquartered
in  Garland, Texas, are the focus of an ongoing investigation
by the Office of the Inspector General of the U.S. Department
of Defense and the Department of Justice (Criminal Division).
Ni-Tec  received subpoenas for certain records as a  part  of
the  investigation in 1992, 1993 and 1994, each of which  was
responded to.  The investigation appears directed at  quality
control, testing and documentation activities which began  at
Ni-Tec  while  it  was  a division of Optic-Electronic  Corp.
Optic-Electronic  Corp.  was  acquired  by  the  Company   in
November 1990 and subsequently merged with Varo Inc. in 1991.
The   Company   continues  to  cooperate   fully   with   the
investigation and is pursuing settlement discussions with the
U.S.  government.   Should settlement be  reached  consistent
with current discussions, it would not be expected to have  a
material effect on the Company.

The  operations of the Company, like those of other companies
engaged in similar businesses, involve the use, disposal  and
clean-up   of   substances  regulated   under   environmental
protection  laws.  In a number of instances the  Company  has
been  identified as a Potentially Responsible  Party  by  the
U.S. Environmental Protection Agency, and in one instance  by
the  State  of  Washington, with respect to the  disposal  of
hazardous  wastes at a number of facilities  that  have  been
targeted  for  clean-up pursuant to CERCLA or  similar  State
law.   Although CERCLA and corresponding State law  liability
is joint and several, the Company believes that its liability
will  not  have  a material adverse effect on  the  financial
condition  of  the Company since it believes that  it  either
qualifies as a de minimis or minor contributor at each  site.
Accordingly,  the  Company  believes  that  the  portion   of
remediation costs that it will be responsible for will not be
material.   For  additional information see section  entitled
Environmental  Matters in Part I, Item I of  this  Form  10-K
Report.

The Company also has a lawsuit pending against it in the U.S.
District  Court  for  the  Western District  of  Pennsylvania
alleging  component failures in equipment sold by its  former
diesel  engine division and claiming damages of approximately
$3.0  million  and  a lawsuit in the Circuit  Court  of  Cook
County, Illinois, alleging performance shortfalls in products
delivered  by  the Company's former Delaval Turbine  Division
and  claiming  damages of approximately $8.0  million.   Each
lawsuit is in the document discovery stage.

With  respect to the litigation and claims described  in  the
preceding paragraphs, management of the Company believes that
it either expects to prevail, has adequate insurance coverage
or  has  established appropriate reserves to cover  potential
liabilities.   There  can be no assurance,  however,  on  the
ultimate outcome of any of these matters.

The  Company is also involved in various other pending  legal
proceedings  arising  out  of  the  ordinary  course  of  the
Company's  business.  The adverse outcome  of  any  of  these
legal  proceedings is not expected to have a material adverse
effect  on the financial condition of the Company.   However,
if  all or substantially all of these legal proceedings  were
to  be determined adversely to the Company, there could be  a
material  adverse  effect on the financial condition  of  the
Company.

See  Note 14 to the Consolidated Financial Statements located
in  Part  IV  of  this Form 10-K Report as  indexed  at  Item
14(a)(1) for additional details relating to Contingencies.


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

No  matter was submitted to a vote of the Company's  security
holders during the fourth quarter of 1995.

Executive Officers of the Registrant

The  following  table sets forth information  concerning  the
names,  ages  and  principal  occupations  of  the  executive
officers of the Company:

Name                  Age     Principal Occupation

Donald K. Farrar*      57     Chairman, Chief Executive
                                Officer and President
Thomas J. Bird, Jr.    52     Executive Vice President, 
                                General Counsel and Secretary
William M. Brown       53     Executive Vice President, Chief  
                                Financial Officer and Corporate
                                Controller 
John J. Carr           53     Executive Vice President
Brian Lewis            62     Executive Vice President
David C. Christensen   62     Senior Vice President,
                                Human Resources    
Robert A. Derr II      50     Vice President and Treasurer
Frederick W. Wojtowicz 44     Vice President and Director of Tax

*  This executive officer is a director of the Company  whose
current term as a director will expire in 1998.

Donald  K.  Farrar  joined  the Company  as  Chief  Executive
Officer  and  President in September  1993  and  was  elected
Chairman  in  June 1994.  Prior to joining the  Company,  Mr.
Farrar  held  various positions with Textron, Inc.  and  Avco
Corporation  for  24  years.  He served as  President,  Chief
Operating  Officer  and  director  of  Avco  until  its  1985
acquisition  by  Textron.  Thereafter, he  served  as  Senior
Executive  Vice  President,  Operations  and  a  director  of
Textron,  Inc. until December 1989.  From January 1990  until
joining the Company, Mr. Farrar was a private investor.

Thomas  J. Bird, Jr. was promoted to his current position  in
October  1994.  Mr.  Bird  served as Senior  Vice  President,
General Counsel and Secretary from June 1992 to October 1994,
and as Vice President and Associate General Counsel from July
1990  to  June  1992.  Prior to joining the Company  in  July
1990,  Mr. Bird held various positions with General  Electric
Company  for  18  years, most recently as Group  Counsel  RCA
Aerospace  and Defense division from August 1987 to  February
1988  and  as  General  Counsel to GE  Aerospace  of  General
Electric  Company  from  February  1988  until  joining   the
Company.

William  M.  Brown  joined  the  Company  as  Executive  Vice
President  and  Chief Financial Officer  in  June  1992,  and
assumed the additional responsibility of Corporate Controller
in January 1996. Prior to joining the Company, Mr. Brown held
various  positions with ITT Corporation for  25  years,  most
recently  as  Corporate  Assistant  Controller  and   General
Auditor  from  December 1986 to April 1991 and  as  Corporate
Vice President and Assistant Controller from April 1991 until
joining the Company.

John  J. Carr  was promoted to his current position in   July
1989.    From July 1985 to July 1989,  Mr. Carr was a   Group
Vice  President of the Company.  Mr. Carr is responsible  for
the   Morse   Controls,   Pumps,   Power   Transmission   and
Instrumentation business segments of the Company.

Brian  Lewis  was  promoted to his current position  in  July
1989.  Mr. Lewis was President and Chief Operating Officer of
the  Controls Group of Incom International Inc. (acquired  by
the  Company  in December 1987) from 1985 until January  1988
and  was  a Group Vice President of the Company from  January
1988   to  July 1989.  Mr. Lewis has responsibility  for  the
world-wide operations of  Roltra-Morse.

David  C.  Christensen  joined the  company  in  his  current
position  in  August 1990.  Previously, he  was  Senior  Vice
President,  Human Resources for Pneumo Abex Corporation  (and
its  predecessor  Abex Corporation) from  1980  to  September
1988.   From  September 1988 until joining the  Company,  Mr.
Christensen was an independent human resources consultant.

Robert  A.  Derr II joined the Company as Vice President  and
Corporate Controller in 1988. Mr. Derr was promoted  to  Vice
President  and Treasurer in January 1996.  Prior  to  joining
the Company, Mr. Derr held various positions with The Stanley
Works  for nine years, most recently as Director of Corporate
Accounting  from  1982 to 1986 and as the Controller  of  the
Vidmar  Division of The Stanley Works from 1986 until joining
the Company.

Frederick  W. Wojtowicz was promoted to his current  position
in  October 1994.  Mr. Wojtowicz served as Executive Director
of  Tax from July 1988 to October 1994.  Prior to joining the
Company  in July 1988, Mr. Wojtowicz  held various  positions
with Ernst & Young LLP, most recently as Senior Tax Manager.

Each  of these executive officers will hold office until  his
successor  is  chosen  and qualifies  or  until  his  earlier
resignation  or removal.  Any officer may be removed  at  any
time  by  the  Board of Directors without  prejudice  to  any
contract rights which he may have.



                              PART II

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

The Company's common stock (the "Common Stock") is listed  on
the   New  York  Stock  Exchange  (stock  symbol  IMD).   The
following  table sets forth, for the quarters indicated,  the
high and low closing price per share for the Common Stock  as
reported  on the New York Stock Exchange Composite  Tape  and
the  amount  of  per  share cash dividends  declared  by  the
Company during each quarter on its Common Stock.

                                               Declared
                                               Dividend
                      High        Low          Per Share
                                           
1994:                                      
1st Quarter          10-1/8       7            ---
2nd Quarter          10-7/8       9-1/2        ---
3rd Quarter          12           9-3/8        ---
4th Quarter          12-1/4       8-3/4        ---

1995:                                      
1st Quarter          11-1/2       6-1/4        ---
2nd Quarter           9-1/8       6-1/2        ---
3rd Quarter           9-7/8       8-1/4        ---
4th Quarter           9           5-3/4        ---
                                                                        
1996:                                      
1st Quarter           7-5/8       5-3/4        ---
 (through March 15, 1996)


The  last  sale  price  for  the Company's  Common  Stock  as
reported  by the New York Stock Exchange on March  15,  1996,
was  $7  per  share.   As  of  March  15,  1996,  there  were
approximately  22,795  holders of  record  of  the  Company's
Common Stock.

Three  of  the  Company's long-term debt agreements  contain,
among  other  provisions, a restriction on retained  earnings
available  for  payment  of  dividends.    Under   the   most
restrictive   provisions  the  Company  is  prohibited   from
declaring or paying cash dividends through at least July  31,
1997.

<TABLE>
Item 6.      Selected Financial Data.
(Dollars in millions except per share amounts)
<CAPTION>
Year Ended December 31, (a)        1995    1994*   1993*   1992*   1991*
<S>                                <C>     <C>     <C>     <C>     <C>

Net sales                          $373.2  $360.8  $416.5  $462.9  $478.0
Gross profit                        114.9   111.9   132.3   125.7   138.5
Selling, general and   
  administrative expenses            81.0    78.0   102.9   102.4   105.5
Research and development       
  expenses                            4.8     4.6     7.5     8.1     7.0
Unusual items                         9.0     ---    14.3    16.7     ---
Income from continuing operations
  before interest expense, income                                        
  taxes, extraordinary item and
  change in accounting principle     23.1    31.1     8.9   (1.0)    27.4
Interest expense                     25.9    29.2    33.3    38.2    38.4
Income (loss) from continuing
  operations before extraordinary
  item and cumulative effect of
  change in accounting principle     12.0      .2  (37.9)  (24.8)   (6.9)
Discontinued operations,         
  net of taxes                       22.1     9.0 (214.5)  (30.2)    18.3
Extraordinary item                   (4.4)   (5.3) (18.1)    ---      ---
Cumulative effect of change in
 accounting principle, net of 
 taxes  (b)                           ---     ---    ---   (27.6)     ---
Net income (loss)                    29.7     3.9 (270.6)  (82.6)    11.4
Earnings (loss) per share:                                        
  Continuing operations before
    cumulative effect of change in
    accounting principle and 
    extraordinary item                .71     .01  (2.25)  (1.47)    (.41)
  Discontinued operations            1.29     .53 (12.70)  (1.79)    1.09
  Extraordinary item                 (.26)   (.31) (1.07)   ---      ---
  Cumulative effect of change in 
    accounting principle              ---     ---   ---    (1.64)    ---
  Net income (loss)                  1.74     .23 (16.02)  (4.90)     .68
Cash dividends per share              ---     ---   ---      .375     .50
Capital expenditures                 14.6     6.0     6.3    10.0    11.3
Depreciation and amortization
  expense                            15.2    18.6    19.8    20.0    20.0
Working capital                      81.0   132.2   107.1   111.0   226.8
Total assets:                                                     
   Continuing operations            349.5   348.1   395.0   520.8   506.3
   Discontinued operations           34.4   164.5   156.5   338.8   376.9
      Total assets                  383.9   512.6   551.5   859.6   883.2
Total long-term debt including  
  current portion                   246.6   386.0   351.1   386.7   389.5
Shareholders' equity                  6.9   (25.8)  (33.5)  239.9   332.6

(a)  The notes to the consolidated financial statements located in
     Part IV of this Form 10-K Report as indexed at Item 14(a)(1) 
     should be read in conjunction with this summary.

(b)  In 1992, the Company adopted FASB Statement No. 106 "Employer's 
     Accounting for Postretirement Benefits Other Than Pensions".

*Reclassified to conform to 1995 presentation.
</TABLE>



Item 7.  Management's Discussion and Analysis of Financial
             Condition and Results of Operations.


The  following  discussion  and  analysis  of  the  Company's
consolidated  results of operations and  financial  condition
should  be  read in conjunction with the audited Consolidated
Financial  Statements included elsewhere in  this  Form  10-K
Report.

Overview

In  October  1992, the Company determined that it  needed  to
delever  its  balance  sheet  through  the  sale  of  certain
businesses  and  the  application of the  proceeds  from  the
divestitures to reduce debt.  Pursuant to this decision,  the
Company  divested  its  Heim Bearings,  Aerospace,  Barksdale
Controls and CEC Instruments businesses.  See "Liquidity  and
Capital  Resources" below. In 1993, management, under  Donald
K.  Farrar,  who became Chief Executive Officer in  September
1993, initiated a strategy to reposition the Company to focus
on  its  less  capital  intensive businesses  that  exhibited
strong  brand  name  recognition, a broad customer  base  and
market  leadership  with less dependence on  U.S.  Government
sales.    In  connection  with  this  strategy,  the  Company
divested  its  Turbomachinery and most of its Electro-Optical
Systems businesses. This repositioning will be completed upon
the  sale of the Roltra-Morse business, the remaining portion
of  the  Electro-Optical Systems business  and  certain  non-
operating  real estate.  See "Remaining Asset  Sales"  below.
The Company's continuing businesses are now grouped into four
core  business segments for management and segment  reporting
purposes:   Power  Transmission, Pumps,  Instrumentation  and
Morse Controls. Previously, the Power Transmission, Pumps and
the Instrumentation business segments were all included in  a
single  business  segment  and the  Morse  Controls  business
segment included the Roltra-Morse business.

1995 Asset Sales

Electro-Optical Systems

In  January  1994, the Company announced a plan to  sell  its
Electro-Optical Systems business.  On January  3,  1995,  the
Company  completed  the  sale of the  Analytical  Instruments
division  of  its wholly owned subsidiary, Baird Corporation,
for $12.3 million in cash, the proceeds of which were used to
reduce  outstanding amounts under its Credit Agreement  dated
August 5, 1994 (the "Existing Credit Agreement").

On  June  2,  1995, the Company completed  the  sale  of  the
Optical  Systems  and Ni-Tec divisions of  its  wholly  owned
subsidiary,  Varo,  Inc. ("Varo"), and  the  Optical  Systems
division  of  Baird for $50 million in cash, the proceeds  of
which  were used to redeem $40 million in aggregate principal
amount  of  the  12.25% senior subordinated  debentures  (the
"Debentures")  and  to reduce outstanding amounts  under  the
Existing  Credit Agreement. In the second half of  1995,  the
Company recorded provisions totaling $13.3 million related to
the  Electro-Optical Systems business, $6.8 million of  which
was  recorded in the third quarter related to the  resolution
of  contingencies associated with such divisions  sales,  and
$6.5  million  of  which was recorded in the  fourth  quarter
related  primarily to write-downs of remaining  non-operating
real estate to estimated fair market value.

TurboMachinery

On  January 17, 1995, the Company completed the sale  of  its
Delaval  Turbine  and  TurboCare divisions,  which  comprised
substantially  all  of  the Company's  former  Turbomachinery
business  segment, and its 50% interest in  Delaval-Stork,  a
Dutch  joint venture.  The final adjusted purchase price  was
$119  million, of which the Company received $109 million  in
cash  at closing, with the balance earning interest until  it
is  received at specified future contract dates,  subject  to
adjustment  as provided in the agreement. It is  management's
expectation that there will be no further adjustment  to  the
purchase  price.  The proceeds from this sale  were  used  to
repay  in  full term and bridge loans outstanding  under  the
Existing  Credit  Agreement and  to  redeem  $40  million  in
aggregate principal amount of the 12.25% Debentures.  In  the
fourth  quarter of 1995, the Company recorded a provision  of
$4.6   million   related  primarily  to  the  resolution   of
contingencies  associated with this sale. The fourth  quarter
provision  partially  offset  the  after-tax  gain  of  $39.6
million  recorded in the first quarter of 1995, bringing  the
net gain on these sales to $35.0 million.

Remaining Asset Sales

The  remaining  operation  of  the Company's  Electro-Optical
Systems   business,   which  is  Varo's  Electronic   Systems
division,  continues  to be marketed to  interested  parties.
The Company expects to complete the sale of this business  in
1996 and plans to use the proceeds to reduce debt.

In February 1996, the Company announced its intention to sell
its  Roltra-Morse business. The Company expects  to  complete
the  sale of this business in 1996 for proceeds in excess  of
net book value and plans to use the proceeds to reduce debt.

Other  non-operating real estate, representing less than  10%
of  the  original value of assets announced  to  be  sold  in
October  1992,  remains for sale.   Results  for  the  fourth
quarter  of  1995 include an unusual charge of  $5.0  million
related  to the write-down of this non-operating real  estate
to its net realizable value.

Cost Reduction Programs

In  the fourth quarter of 1995, the Company recorded a charge
to continuing operations of $4.0 million, including severance
and  other  expenses  related to a  Company-wide  program  to
reduce   general  and  administrative  costs.   This  program
includes  a  reduction of 65 employees, or 2%  of  the  total
number  of  Company employees, including a reduction  of  the
corporate  headquarters  staff  by  20%.   This  program   is
expected  to  reduce general and administrative  expenses  by
approximately $2.9 million in 1996, $4.0 million in 1997  and
$5.0  million annually thereafter.  The required cash  outlay
related  to  this program was $.4 million in  1995,  and  the
expected cash requirements during 1996 are $3.2 million.  The
remainder of the charges represent non-cash charges.

In   1993,  the  Company  recorded  a  charge  to  continuing
operations of $5.2 million for a cost reduction program which
benefited  1994  and  1995 operating results.  Following  Mr.
Farrar  joining  as  Chief  Executive  Officer,  the  Company
implemented  cost-cutting measures at its core operations  to
reduce  its  expense  structure and to eliminate  duplicative
functions.  In  addition, in connection with this  1993  cost
reduction   program,   the   Company   consolidated   certain
operations  in  its European Instruments and  Morse  Controls
businesses  and  revised  operating  processes  and   reduced
employment  levels at its Pumps segment and other operations.
The  number of Company employees in core operations  declined
by   205,  or  7%,  between  mid-1993  and  mid-1994.   These
organizational restructuring measures have been providing net
cash  benefits,  compared to 1993 levels, which  approximated
$4.5  million and $1.5 million for continuing operations,  in
1995  and 1994, respectively, and are expected to approximate
$5.5  million annually thereafter, based largely  on  reduced
employment costs.

Results of Operations

The    Electro-Optical,   Turbomachinery   and   Roltra-Morse
businesses  are  accounted  for as  discontinued  operations.
Accordingly, their operating results have been segregated and
reported   as   Discontinued  Operations   in   the   audited
Consolidated Financial Statements included elsewhere in  this
Form 10-K.   Financial  results prior to  1995  have  been
reclassified to conform to current year presentation.


1995 Compared to 1994

Sales.   Net  sales from continuing operations in  1995  were
$373.2 million, compared with $360.8 million in 1994.   Sales
from  core operations (excluding operations sold in 1994 that
were  not accounted for as discontinued operations) increased
4.8%  in 1995 compared with the 1994 level of $356.0 million.
All  sales  in 1995 were from core operations.  Each  of  the
Company's  four  core business segments contributed  to  this
increase.  See "Segment Operating Results" below.

Gross  Profit.  The gross profit in 1995 remained  relatively
constant  at 30.8% of sales compared with 31.0% in 1994.  See
"Segment Operating Results" below.

Selling,   General  and  Administrative  Expenses.   Selling,
general  and administrative expenses increased $3.0  million,
or 3.8%, in 1995 over the 1994 level.  As a percent of sales,
selling,   general   and  administrative  expenses   remained
relatively constant at 21.7% in 1995 compared with  21.6%  in
1994.  While 1995 benefited from a full year of savings  from
the  1993 cost reduction program implemented during  1994,  a
portion  of  these savings were offset by the Instrumentation
segment's efforts to expand marketing of transducer  products
in  the United States and Gems products in Europe, as well as
to  increase  sales  in the Far East markets.   Research  and
development expenditures were 1.3% of sales in both 1995  and
1994.

Interest   Expense.    Average  borrowings   in   1995   were
approximately $120 million lower than in 1994.  As a  result,
total  interest  expense (before allocation  to  discontinued
operations)  of $36.4 million in 1995 was $15.3  million,  or
30%,  less  than  in 1994.  Interest expense  for  continuing
operations   excludes  interest  expense  incurred   by   the
discontinued operations of $3.0 million and $3.1  million  in
1995   and   1994,  respectively,  as  well  as  an  interest
allocation   to   the   discontinued  operations.    Interest
allocated to discontinued operations was $7.5 million in 1995
and $19.4 million in 1994.


Interest Expense:               1995        1994

Total (Before Allocations         
  to Discontinued Operations)   $36.4       $51.7
Continuing Operations            25.9        29.2


Income  from Continuing Operations.  The Company  had  income
from  continuing  operations of $12.0 million,  or  $.71  per
share,  in  1995,  which  included unusual  charges  of  $9.0
million  and  a  deferred tax benefit of $17.0  million.   In
1994,  income from continuing operations was $.2 million,  or
$.01 per share.  See "Other Operating Results" for discussion
regarding Unusual Items and Provision for Income Taxes.

Income (Loss) from Discontinued Operations.  The Company  had
income from discontinued operations of $22.1 million (net  of
income  tax expense of $6.1 million), or $1.29 per share,  in
1995 as compared to income of $9.0 million (net of income tax
expense  of $1.4 million), or $.53 per share, in  1994.   The
income  recorded in 1995 includes an aggregate  net  gain  of
$21.6   million   on   the  sale  of  the  Company's   former
Turbomachinery business and substantially all of  its  former
Electro-Optical  Systems  business.   The  Company   retained
certain  liabilities  upon the sales of  the  Electro-Optical
Systems and Turbomachinery businesses of approximately  $16.0
million and $25.0 million, respectively.   1995 required cash
outlays  were  $5.7 million and $14.1 million,  and  expected
1996  cash  requirements are approximately $7.0  million  and
$5.5  million,  related  to the Electro-Optical  Systems  and
Turbomachinery sales, respectively.  Results from  operations
for  the  discontinued  operations  include  allocations  for
interest of $7.5 million and $19.4 million for 1995 and 1994,
respectively.

Net  Income .  Net income in 1995 was $29.7 million  compared
with $3.9 million in 1994.  Net income per share in 1995  was
$1.74  compared with a net income per share of $.23 in  1994.
Net  income  (loss) per share by component for each  year  is
summarized below:


Earnings (loss) per share:          1995        1994

Continuing Operations
  Before Extraordinary Item         $ .71       $ .01
Discontinued Operations              1.29         .53
Extraordinary Item                   (.26)       (.31)
Net income                          $1.74       $ .23


1994 Compared to 1993

Sales.   Net  sales from continuing operations in  1994  were
$360.8 million, compared with $416.5 million in 1993.   Sales
from  core operations (excluding operations sold in 1994  and
1993  that were not accounted for as discontinued operations)
were  $356.0 million in 1994 compared with $340.8 million  in
1993,  an  increase of 4.5%.  Sales in the Power Transmission
and  Morse  Controls  business segments  increased  8.6%  and
10.1%,  respectively, in 1994 compared with 1993.   Sales  in
the  Pumps and the Instrumentation business segments in  1994
remained  near 1993 levels.  See "Segment Operating  Results"
below.

Gross  Profit.   The  gross profit margin in  1994  decreased
slightly to 31.0% of sales compared with 31.8% in 1993.   See
"Segment Operating Results" below.

Selling,   General  and  Administrative  Expenses.   Selling,
general  and administrative expenses declined $24.9  million,
or  24.2%,  in  1994 from the 1993 level, with  most  of  the
decline  attributable to businesses sold subsequent  to  June
30,  1993,  the  phase-out of certain postretirement  benefit
subsidies   in  1994,  and  lower  levels  of   general   and
administrative  staff in 1994 as a result of  the  1993  cost
reduction  plan. As a percent of sales, selling, general  and
administrative expenses decreased to 21.6% in  1994  compared
with  24.7%  in  1993. Research and development  expenditures
were 1.3% of sales in 1994 compared with 1.8% in 1993.

Interest   Expense.    Average  borrowings   in   1994   were
approximately $50 million lower than in 1993.  As  a  result,
total  interest  expense (before allocation  to  discontinued
operations)  of  $51.7 million in 1994 was $5.5  million,  or
10%,  less  than  in  1993. Interest expense  for  continuing
operations excludes interest expense incurred by discontinued
operations of $3.1 million and $4.3 million in 1994 and 1993,
respectively,   as   well  as  an  interest   allocation   to
discontinued  operations of $19.4 million in 1994  and  $19.6
million in 1993.


Interest Expense:               1994        1993

Total (Before Allocations  
  to Discontinued Operations)   $51.7       $57.2
Continuing Operations            29.2        33.3


Income  (Loss) from Continuing Operations.  The  Company  had
income from continuing operations of $.2 million, or $.01 per
share, in 1994.  In 1993, loss from continuing operations was
$37.9  million, or $2.25 per share, primarily as a result  of
the  net unusual charges of $14.3 million and a $13.5 million
tax  reserve provided against previously recorded future  tax
benefits.   See  "Other  Operating  Results"  for  discussion
regarding Unusual Items and Provision for Income Taxes.

Income (Loss) from Discontinued Operations.  The Company  had
income  from discontinued operations of $9.0 million (net  of
income  tax  expense of $1.4 million),or $.53 per  share,  in
1994  as  compared to a net loss of $214.5 million (including
income tax expense of $1.5 million), or $12.70 per share,  in
1993.   The loss recorded in 1993 includes an estimated  loss
on  the  disposal  of  the Company's Electro-Optical  Systems
business of $168.0 million, most of which represented a  non-
cash  adjustment to reduce the carrying value  of  assets  to
estimated realizable value.  Of the total estimated  loss  on
disposal  recorded  in  1993,  required  cash  outlays   were
approximately  $8.4   million and $4.6 million  in  1995  and
1994, respectively, the remainder of  which, represented non-
cash  charges.  Results from operations for the  discontinued
operations include allocations for interest of $19.4  million
and $19.6 million for 1994 and 1993, respectively.

Net  Income  (Loss).   Net income in 1994  was  $3.9  million
compared  with  a net loss of $270.6 million  in  1993.   Net
income  per share in 1994 was $.23 compared with a  net  loss
per share of $16.02 in 1993.  Net income (loss) per share  by
component for each of the periods is summarized below:


Earnings (loss) per share:          1994        1993

Continuing Operations               
   Before Extraordinary Item        $ .01       $ (2.25)
Discontinued Operations               .53        (12.70)
Extraordinary Item                   (.31)        (1.07)
Net income (loss)                   $ .23       $(16.02)


Other Operating Results

Unusual  Items.   During  the fourth  quarter  of  1995,  the
Company  recognized unusual charges of $9.0 million, or  $.53
per  share,  in  income  from  continuing  operations.  These
charges include $4.0 million in severance benefits and  other
expenses related to a Company-wide program to reduce  general
and   administrative  costs  ($.9  million  included  in  the
Instrumentation segment, $1.5 million included in  the  Morse
Controls  segment  and  $1.6 million  included  in  Corporate
Expense), and $5.0 million related to the write-down of  non-
operating  real estate to net realizable value  (included  in
Corporate Expense).  Of the $9.0 million of unusual  charges,
the  required  cash outlay in 1995 was $.4  million  and  the
expected cash requirements during 1996 are $3.2 million.  The
remainder represents non-cash charges.  There were no unusual
items in 1994.

During the twelve months ended December 31, 1993, the Company
recognized  unusual  charges of $14.3 million,  or  $.85  per
share, in loss from continuing operations.  During the fourth
quarter  of  1993,  the Company recognized charges  of  $20.3
million  that include provisions of $5.2 million  related  to
the   restructuring  and  consolidation  of  certain  of  the
Company's  operating  units ($.2 million,  $.5  million,  $.9
million, $2.4 million and $1.2 million, included in the Power
Transmission,  Pumps,  Instrumentation  and  Morse   Controls
segments and Corporate Expense, respectively), $10.1  million
expected  net  loss  overall related to the  Company's  asset
divestiture program (included in a non-core segment  entitled
"Other")  and  $5.0  million in debt related  financing  fees
(included  in Corporate Expense). These charges  are  net  of
unusual  income of $6.0 million recorded in the third quarter
of  1993 as a result of a change in estimate related to legal
costs  associated  with pending litigation (included  in  the
Other  segment).   Of the $20.3 million of  unusual  charges,
required  cash outlays were approximately $1.3 million,  $7.1
million,   and   $.2  million  in  1995,   1994   and   1993,
respectively,   with  the  remainder  representing   non-cash
charges.

Extraordinary  Items.  The twelve months ended  December  31,
1995  include an extraordinary charge of $4.4 million  after-
tax,  or $.26 per share, representing charges related to  the
early  extinguishment  of portions  of  its  debt  under  the
Existing Credit Agreement and the 12.25% Debentures.

The  twelve  months  ended  December  31,  1994  include   an
extraordinary  charge  of $5.3 million  after-tax,  $.31  per
share,    representing   fees   and   charges   related    to
extinguishment  of debt in connection with the  restructuring
of the Company's credit facilities in August 1994.

The  results  of  operations  for  the  twelve  months  ended
December  31,  1993 included an extraordinary item  of  $18.1
million,  $1.07  per share, representing  fees  and  expenses
related   to   extinguishment  of  senior   debt   of   which
approximately  $4.0 million required immediate cash  outlays,
approximately  $2.0  million  related  to  the  write-off  of
previously  deferred  debt expense  and  approximately  $12.0
million was provided as an estimate for the prepayment of its
senior  notes.  Additionally, approximately $4.0  million  of
fees  related  to  the 1993 restructuring  of  the  Company's
credit  facilities were paid in 1993. This amount  was  being
amortized  until August 1994, at which time, the balance  was
recognized as an extraordinary charge in connection with  the
extinguishment of the restructured credit facilities.

Provision  for  Income Taxes.  Income tax  expense  (benefit)
from  continuing operations was a benefit of $(14.8)  million
for  1995, and expense of $1.8 million and $13.5 million  for
1994 and 1993, respectively. The 1995 amount is comprised  of
current tax expense of $2.2 million representing foreign  and
state income taxes, as the Company is utilizing existing U.S.
net  operating  loss carryforwards on its domestic  earnings.
This  amount is offset by a deferred tax benefit in  1995  of
$(17.0) million, representing a reduction in the deferred tax
valuation   allowance  against  U.S.   net   operating   loss
carryforwards.

The  1994  income  tax expense represents foreign  and  state
income taxes. The 1993 amount is principally comprised of the
provision  of  a  reserve  against  previously  recorded  tax
benefits. The Company did not record a benefit for  the  1993
loss  as  a valuation allowance was established in accordance
with  the  provisions of FASB Statement No. 109,  "Accounting
for  Income Taxes." The Company is recognizing these benefits
only as reassessment demonstrates that it is more likely than
not  that they will be realized.  This was the basis for  the
benefit of $(17.0) million recognized in 1995.

The  Company  has  a  net  operating  loss  carryforward   of
approximately  $85  million expiring in  years  2002  through
2010, foreign tax credit carryforwards of approximately  $8.3
million  expiring through 2000, and minimum  tax  credits  of
approximately  $2.1  million which  may  be  carried  forward
indefinitely.  These  carryforwards are available  to  offset
future taxable income.  These existing tax loss carryforwards
will  allow  the Company's future earnings to be  essentially
free  from  the  payment of U.S. taxes  for  the  foreseeable
future.

Taxes  have  not been provided on the unremitted earnings  of
foreign subsidiaries, since it is the Company's intention  to
indefinitely reinvest these earnings overseas. The amount  of
foreign withholding taxes that would be payable on remittance
of these earnings is approximately $.9 million.

Retiree  Medical  and Life Insurance.   In  March  1994,  the
Company amended its policy regarding retiree medical and life
insurance  plans. This amendment, which affects some  current
retirees  and  all future retirees, phases  out  the  Company
subsidy for retiree medical and life insurance over a  three-
year period ending December 31, 1996. The Company expects  to
amortize   associated  reserves  to  income  from  continuing
operations  over  the phase-out period.  The  pre-tax  amount
amortized  to  income  from continuing  operations  was  $4.6
million and $4.4 million in 1995 and 1994, respectively.  The
Company  does  not  anticipate  a  significant  increase   or
decrease  in  cash  requirements related to  this  change  in
policy during the phase-out period.


Segment Operating Results

Operating  results by business segment for  the  years  1995,
1994 and 1993 are summarized below:


Power Transmission:          1995       1994        1993
Net Sales                    $ 95.1     $ 93.3      $ 85.9
                                                                      
Segment Operating Income
  Before Unusual Items         11.3        8.9         2.5
Unusual Items                   ---        ---         (.2)
Segment Operating Income     $ 11.3      $ 8.9       $ 2.3


Power  Transmission segment net sales remained strong  across
substantially all markets in 1995, increasing 1.9% over 1994,
despite  a  nearly  $2.0  million decline  in  sales  to  the
printing market. Operating income rose more than 25% for  the
year,  largely as a result of cost containment efforts and  a
shift  in  product mix which resulted in a  higher  level  of
manufacturing activity.

Power  Transmission  segment net sales increased  8.6%  while
operating  profit more than tripled in 1994 as compared  with
1993  levels,  as  results benefited from an  upturn  in  the
general mechanical and printing markets in the United States,
as  well  as  the  favorable effect of the  phasing  out  the
subsidy for certain benefit plans.  See "Retiree Medical  and
Life Insurance" above.


Pumps:                      1995       1994       1993
Net Sales                   $94.4      $90.4      $91.6
                                                                       
Segment Operating Income
  Before Unusual Items        9.9       10.4       10.9
Unusual Items                 ---        ---        (.5)
Segment Operating Income    $ 9.9      $10.4      $10.4
                              

Pumps segment net sales in 1995 were up 4.4% from 1994,  2.1%
of  which  was due to the effects of foreign exchange  rates.
However,  segment operating  income decreased 5.4% due  to  a
shift in product mix. Startup costs related to a new line  of
corrosive-resistant composite pumps also  adversely  affected
income,  as  did  expenses caused by now  resolved  technical
difficulties  related to a custom, high  performance  product
order.

The  Company is in the process of acquiring substantially all
of  the  assets of a long-time three-screw pump  licensee  in
France,  which  will  allow the Company  to  gain  additional
market penetration in Europe and North Africa.

Pumps segment net sales and operating profit in 1995 and 1994
were  adversely affected by a decline in U.S. Navy  sales  of
over $6.0 million in 1994 and over $10.0 million in 1995,  as
compared  with  1993 levels.  These declines were  offset  by
increases  in commercial sales of over $5.0 million  in  1994
and over $13.5 million in 1995, as compared with 1993 levels.


Instrumentation:            1995       1994       1993
Net Sales                   $76.1      $72.2      $72.4
                                    
Segment Operating Income
  Before Unusual Items        7.6        9.8        8.9
Unusual Items                 (.9)       ---        (.9)
Segment Operating Income    $ 6.7       $9.8      $ 8.0


Instrumentation segment experienced a double-digit growth
rate in its industrial business in 1995, offset by a 40% drop
in  sales  to  the  U.S.  Navy.  The result  was  an  overall
increase  in  net sales of 5.4% for the year.  1995  earnings
were  negatively  impacted by the  costs  associated  with  a
restructuring  of this segment's European operations  coupled
with  a  significant  investment in new marketing  and  sales
initiatives.

During 1995, the Instrumentation segment closed its plant  in
Frankfurt, Germany and shifted production of certain products
into  a  lower-cost  manufacturing  facility  in  the  United
Kingdom.  Total  fourth  quarter  costs  relating   to   this
relocation  exceeded $1.2 million, including $.9  million  of
unusual items.  In response to the growing global markets for
fluid  sensor products, the Company spent an additional  $2.0
million   in   1995  to  upgrade  its  sales  and   marketing
organization  and launched several new marketing initiatives.
The  marketing  efforts  included  an  aggressive  new  trade
advertising  program designed to produce a continuing  source
of new sales leads.  These investments should result in lower
manufacturing costs and greater sales beginning in 1996.

Instrumentation segment net sales in 1994 were  approximately
$.2  million  less  than 1993 net sales.   Segment  operating
income in 1994, however, increased 23.1% from 1993. Excluding
the  unusual charge of $.9 million incurred in 1993,  segment
income  in  1994  increased 10.6% from 1993 levels  resulting
from improved performance in the European operations.


Morse Controls:             1995       1994       1993
Net Sales                   $107.7     $100.1     $ 90.9
                                               
Segment Operating Income
  Before Unusual Items         6.8        5.7        2.9
Unusual Items                 (1.5)       ---       (2.4)
Segment Operating Income     $ 5.3      $ 5.7      $  .5


Morse  Controls segment net sales of $107.7 million  were  up
7.6%  for 1995, as compared with $100.1 million in net  sales
in  1994,  due to increases in the mobile equipment, aviation
and   other   general  industrial  markets.    1995   segment
operating income of $5.3 million decreased only $.4  million,
as  compared  with  the 1994 level of $5.7  million.  In  the
fourth  quarter of 1995, the segment recorded unusual charges
of $1.5 million related to a major downsizing of its European
operations,   and  non-cash  adjustments  of  $1.5   million,
principally  related to inventory.  Excluding  unusual  items
and  non-cash charges, segment operating income increased  to
$8.3 million in 1995, as compared with $5.7 million in 1994.

In  the  third quarter of 1995, Morse entered into  a  joint-
venture  in  China  with  an affiliate  of  Dong  Feng  Motor
Corporation,  China's largest truck manufacturer.  The joint-
venture  will manufacture push-pull cables, pull-only  cables
and other products used in trucks and other vehicles.  In the
last  quarter  in  1995, Morse also completed  the  strategic
acquisition   of   RMH   Controls,   a   small,   specialized
manufacturer of electronic controls with operations in Sweden
and  the United Kingdom.  RMH's technology will permit  Morse
to   expand  its  product  offering  in  microprocessor-based
electronic controls for marine and industrial applications.

The Morse Controls segment had net sales of $100.1 million in
1994,  compared with net sales of $90.9 million for 1993,  an
increase of  10.1%, based on increased pleasure marine sales.
The  increased sales level resulted in operating  income  for
the  segment  of  $5.7  million in 1994,  compared  with  $.5
million  in  1993. Operating income in 1993 included  unusual
charges   of  $2.4  million  related  to  restructuring   and
facilities consolidations.


Company-wide Fourth Quarter Results

Net sales from continuing operations in the fourth quarter of
1995  were $90.0 million, compared with $90.3 million in  the
fourth  quarter  of  1994.   The  Company  had  income   from
continuing operations of $4.0 million, or $.23 per share,  in
the  fourth  quarter  of  1995  compared  with  a  loss  from
continuing operations of $.3 million, or $.02 per  share,  in
the   comparable   1994  period.   Income   from   continuing
operations benefited from a reduction in deferred  tax  asset
valuation  allowances of $17.0 million, partially  offset  by
the unusual charges of $9.0 million in the fourth quarter  of
1995.

Power Transmission segment net sales experienced a decline of
3.6%  to $22.4 million in the fourth quarter of 1995 compared
to  the  same period in 1994 as the general mechanical market
slowed.   Despite  this  sales  decrease,  segment  operating
income  increased 11.7% to $2.2 million  in the  1995  fourth
quarter as compared with the 1994 period, largely as a result
of cost containment efforts and a shift in product mix.

Pumps segment net sales of $24.8 million were up 4.9%  in the
fourth quarter of 1995 compared to the same  period in  1994.
Segment  operating income  was  down  20.8%  to $1.6 million,
when compared to the same period in  1994,  due in part to  a
shift in product mix and to  startup  costs  related to a new
line of  corrosive-resistant  composite  pumps and  expenses
caused  by  now-resolved  technical   difficulties related to
a custom, high performance product order.

Instrumentation segment fourth quarter  1995  net  sales
were  $18.6  million, a decrease of 2.9%, compared  with  the
same  period  in 1994.  Fourth quarter 1995 earnings  of  $.2
million,  which  compared with $ 2.8 million  in  the  fourth
quarter  of 1994, were negatively impacted primarily  by  the
costs   associated  with  a  restructuring  of  its  European
operations.  Total costs relating to this relocation exceeded
$1.2  million  including $.9 million  of  unusual  items.  In
addition, the increased investment in new marketing and sales
initiatives during 1995 contributed to the decrease  compared
to the 1994 fourth-quarter period.

Morse  Controls  segment net sales in the fourth  quarter  of
both  1995 and 1994 were $24.2 million.  The segment incurred
an  operating loss of $1.9 million in the fourth  quarter  of
1995,  as  compared with operating income of $1.3 million  in
the  comparable  1994  period.  Unusual items  totaling  $1.5
million  were recorded related to a major downsizing  of  its
European   Operations.  Additionally,  fourth  quarter   1995
results  were  negatively  impacted  by  approximately   $1.5
million  of  non-cash  adjustments  principally  related   to
inventory.


Liquidity and Capital Resources

Short-term and Long-term Debt

The  Company's domestic liquidity requirements are  currently
served   by   the  $60  million  revolving  credit   facility
(including a letter of credit subfacility) under the Existing
Credit  Agreement, while its needs outside the United  States
are  covered by short and intermediate term credit facilities
from  foreign  banks.  As of December 31,  1995,  there  were
$18.2 million of revolving credit borrowings and $7.8 million
of  standby letters of credit outstanding under the  Existing
Credit Agreement .

The  Company  also has, in the aggregate, foreign  short-term
credit  facilities  of approximately $35.5  million.   As  of
December  31, 1995, $18.8 million is outstanding under  these
foreign   facilities,  of  which  $9.8  million  relates   to
indebtedness of discontinued operations.

In   addition,  at  December  31,  1995,  the   Company   had
outstanding  $70.0 million in aggregate principal  amount  of
the 12.25% Debentures, maturing in 1997, and $150 million  in
aggregate principal amount of the 12% Debentures, maturing in
amounts  of $37.5 million in 1999, $37.5 million in 2000  and
$75.0  million  in  2001.  The Debentures  contain  covenants
that,  among other things, restrict indebtedness to specified
levels.   Under  certain circumstances, such covenants  could
result  in  the  Company's inability  to  fully  utilize  the
revolving credit facility under the Existing Credit Agreement
and the foreign short-term credit facilities.

The  Company  sold  its CEC Instruments  division,  corporate
headquarters building and other previously identified  assets
for aggregate proceeds of $13.2 million in 1994, and its Heim
Bearings,  Aerospace  and Barksdale Controls  operations  for
aggregate  proceeds  of approximately $91  million  in  1993.
The  Company used the net proceeds from these sales to reduce
amounts outstanding under its then existing senior notes  and
revolving credit facility.  In the first quarter of 1995, the
Company  repaid outstanding term and bridge loans  under  the
Existing Credit Agreement in the aggregate principal  amounts
of  $36.7  million and $45.0 million, respectively. In  1995,
the  Company  redeemed  $80 million  in  aggregate  principal
amount  of  the 12.25% Debentures at 100% of their  principal
amount, $40 million of which were redeemed in March 1995 with
proceeds from the sale of the Company's former Turbomachinery
business,  and  an  additional  $40  million  of  which  were
redeemed  in  July  1995 with proceeds from  the  sale  of  a
majority  of the Company's Electro-Optical Systems  business.
As a result of these actions, total interest expense has been
significantly reduced as compared with prior period levels.

As  a result of the early extinguishment of debt referred  to
above, a $4.1 million, or $.24 per share, charge was recorded
as  an  extraordinary item in the first quarter of 1995.  The
charge  consisted of the write-off of deferred  debt  expense
associated  with  the portions of the debt repaid  under  the
Existing Credit Agreement and the redemption of a portion  of
the  12.25%  Debentures.  The redemption of  $40  million  in
aggregate principal amount of the 12.25% Debentures  on  July
6,  1995 resulted in an extraordinary charge of approximately
$.3  million,  or  $0.02 per share, in the third  quarter  of
1995.

Management  continues  to  actively pursue  opportunities  to
further  reduce its high interest debt. The Company plans  to
use  the  proceeds  from the sales of  its  Roltra-Morse  and
Varo's   Electronic  Systems  businesses  to   reduce   debt.
Moreover,  the Company is currently negotiating to  refinance
the Existing Credit Agreement and the Debentures.  Management
expects  to  complete the refinancing in the  first  half  of
1996.

Cash Flow

The Company's operating activities used cash of $31.7 million
in  1995,  compared with providing cash of $16.8  million  in
1994,  due principally to cash requirements of $22.0  million
related to discontinued operations, cash requirements related
to previously sold operations (not classified as discontinued
operations)  and  a  net  increase in working  capital  items
within   the  Company's  continuing  operations.   Net   cash
provided by investing activities was $145.5 million in  1995,
compared  with  cash used of $.3 million in 1994.   The  1995
increase  in  net  cash provided by investing  activities  is
principally  a  result  of  $174.9 million  of  net  proceeds
generated  from  the sale of businesses and  assets  in  1995
versus  $13.6  million  in 1994.  Cash and  cash  equivalents
decreased  to  $3.8 million at December 31, 1995  from  $26.9
million  at December 31, 1994, due to cash used by  operating
activities and increased capital expenditures during 1995.

Working  capital  at December 31, 1995 was $81.0  million,  a
decrease  of  $51.2  million  from  the  end  of  1994,   due
principally   to   the   sales  of   the   Company's   former
Turbomachinery business and substantially all of its Electro-
Optical  Systems  business.   The  reduction  in  assets  was
partially  offset by a reduction in current debt and  accrual
levels  (related primarily to previously sold businesses)  in
1995.  The ratio of current assets to current liabilities was
2.0  at December 31, 1995, compared with 2.2 at December  31,
1994.  Principally as a result of the aforementioned sales of
businesses,  the  gain on the disposal of the  Turbomachinery
business  and  the related debt repayments during  1995,  the
Company's total debt as a percent of its total capitalization
decreased to 97.2%, compared to 107.0% and 109.4% at December
31, 1994 and 1993, respectively.

Capital  expenditures  of  continuing  operations  of   $14.6
million  increased significantly over the 1994 level of  $6.0
million.  The 1995 level was a planned increase over the 1994
level in order to make investments to maintain and to improve
competitive  advantages  at  the  Company's  operations.  The
Company  anticipates that capital expenditures in  1996  will
increase  slightly over the 1995 level primarily  to  improve
productivity. There were no material outstanding  commitments
for  the  acquisition  of property, plant  and  equipment  at
December 31, 1995.

Management  of  the  Company believes  that  cash  flow  from
operations, cash available from unused credit facilities  and
cash  generated by additional asset sales will be  sufficient
to meet its foreseeable liquidity needs.

Seasonality; Customer Concentration; Inflation

General  economic  conditions worldwide  continue  to  create
business  opportunities for the coming year in  many  of  the
markets  in  which the Company operates. Management  believes
that because of the nature of its industrial products and the
fact that the Company sells diverse products to many markets,
the  Company  is not significantly affected by  the  cyclical
behavior,  or seasonality, of any particular market  that  it
serves.

Total sales to the United States Department of Defense in the
form  of prime and subcontracts were approximately 7% of  net
sales from continuing operations in 1995, 9% of sales in 1994
and 14% of sales in 1993.

Approximately 31% of the property, plant and equipment of the
Company's  continuing operations has been acquired  over  the
past  five years and has a remaining useful life ranging from
five years to fifteen years for equipment to thirty years for
buildings. In addition, property, plant and equipment of  the
businesses  acquired  by the Company have  been  adjusted  to
their  fair value at the time of acquisition. Assets acquired
in  prior  years are expected to be replaced at higher  costs
but  this  will take place over many years. The newer  assets
will  result  in  higher depreciation charges  but,  in  many
cases,  due  to  technological improvements,  there  will  be
operating  cost savings as well. The Company considers  these
matters in establishing its pricing policies.


Item 8.      Financial Statements and Supplementary Data.

The  consolidated financial statements and supplementary data
required by Part II, Item 8 of Form 10-K are included in Part
IV of this Form 10-K Report as indexed at Item 14(a)(1).


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

Not Applicable.



                            PART III

Item 10.  Directors and Executive Officers of the Registrant.

Reference is made to the information to be set forth  in  the
section  entitled  "Election of Directors" in  the  Company's
Proxy Statement, for the Annual Meeting of Stockholders which
will  be held on May 21, 1996 (the "Proxy Statement"),  which
section  is  incorporated  herein by  reference.   The  Proxy
Statement  will  be  filed with the Securities  and  Exchange
Commission not later than 120 days after December  31,  1995,
pursuant to Regulation 14A of the Securities Exchange Act  of
1934, as amended.

The  information under the caption "Executive Officers of the
Company,"  following  Item 4 of Part I  of  this   Form  10-K
Report, is incorporated herein by reference.

None of the executive officers or directors of the Company is
related  to any of the other executive officers or  directors
of the Company.


Item 11.     Executive Compensation.

Reference is made to the information to be set forth  in  the
section  entitled  "Executive  Compensation"  in  the   Proxy
Statement,   which  section  (except  for  its   Compensation
Committee  Report and its Performance Graph) is  incorporated
herein by reference.


Item 12.     Security Ownership of Certain Beneficial Owners and
              Management.

Reference is made to the information to be set forth  in  the
section  entitled "Beneficial Ownership of Common  Stock"  in
the Proxy Statement, which section is incorporated herein  by
reference.


Item 13.     Certain Relationships and Related Transactions.

Not Applicable.


                            PART IV

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

(a) (1)   Financial Statements

          The Financial Statements and Supplementary Data required by
          Part II, Item 8 of Form 10-K are included in this Part IV of
          this Form 10-K Report as follows:

          Consolidated Financial Statements                        Page

            Consolidated Statements of Income for the Years
              Ended December 31, 1995, 1994 and 1993................F-1
            Consolidated Balance Sheets at December 31, 1995 
              and 1994..............................................F-2
            Consolidated Statements of Cash Flows for the 
              Years Ended December 31, 1995, 1994 and 1993......... F-3
            Consolidated Statements of Shareholders' Equity
              for the Years Ended December 31, 1995, 1994 and 1993..F-4
            Notes to Consolidated Financial Statements............. F-5
            Report of Independent Auditors..........................F-28
            Quarterly Financial Information.........................F-29

    (2)   Financial Statement Schedules

             The  following consolidated  financial  statement schedule for
           the year ended December  31, 1995, 1994  and 1993 is  filed as
           part of this Report and should be read in conjunction with the
           Company's Consolidated Financial Statements.

           Schedule                                                Page

             II       Valuation and Qualifying Accounts..........  S-1

             All  other  schedules  for which  provision  is made in the
           applicable regulation of the Securities and Exchange Commission
           are omitted because they are not required under the related
           instructions or because the required information is given in
           the financial statements or notes thereto.

    (3)   Exhibits

             The Exhibits listed in the accompanying Index to Exhibits are
           filed as part of this Report.

(b)  Reports on Form 8-K

     Not Applicable.


                          EXHIBIT INDEX


Exhibit No.   Note No.                   Description


 3(i)         (10)  The Company's Restated Certificate of Incorporation,
                    as amended March 10, 1989 and November 10, 1992

 3(ii)        (14)  The Company's Bylaws

 4.1 (A)       (6)  Indenture agreement dated August 15, 1987 between the
                    Company and IBJ Schroder Bank & Trust Company, Trustee

     (B)      (12)  First Supplemental Indenture dated as of February 14,
                    1994 between the Company and IBJ Schroder Bank & Trust
                    Company, Trustee

 4.2           (6)  Indenture agreement dated November 1, 1989 between the
                    Company and IBJ Schroder Bank & Trust Company, Trustee

 4.3 (A)       (3)  Rights Agreement dated as of April 22, 1987 between the
                    Company and Philadelphia National Bank, as Rights Agent

     (B)      (10)  Amendment dated December 16, 1991 between the Company 
                    and First Chicago Trust Company of New York

                    Management Contracts, Compensatory Plans and Arrangements:

 10.1         (16)  Amended and restated Equity Incentive Plan for Key
                    Employees

 10.2         (18)  Amended and restated 1988 Equity Incentive Plan for
                    Outside Directors

 10.3         (17)  1995 Equity Incentive Plan for Outside Directors

 10.4               The Company's Supplemental Retirement Income Plan

 10.5         (10)  Change in Control Agreement dated January 9, 1987 between
                    the Company and John J. Carr

 10.6         (10)  Change in Control Agreement dated December 23, 1988
                    between the Company and Brian Lewis

 10.7         (10)  Change in Control Agreement dated August 5, 1992 between
                    the Company and William M. Brown

 10.8         (10)  Change in Control Agreement dated August 13, 1992 between
                    the Company and Thomas J. Bird

 10.9 (A)     (12)  Employment Agreement dated September 13, 1993 between the
                    Company and Donald K. Farrar

      (B)     (14)  Amendment dated November 17, 1994 to the Employment
                    Agreement between the Company and Donald K. Farrar

 10.10        (12)  Change in Control Agreement dated September 13, 1993 
                    between the Company and Donald K. Farrar

 10.11              Change in Control Agreement dated October 2, 1995 between
                    the Company and David C. Christensen

                    Other Material Contracts:

 10.12(A)  (4), (6) The Company's Salaried Employees Stock Savings Plan as
                    amended on July 1,1987 and as amended on June 14, 1988

      (B)      (9)  Amendment dated March 16, 1989 to the Imo Industries Inc.
                    Employees Stock Savings Plan

      (C)      (7)  Amendments dated September 6, 1990 and February 14, 1991
                    to the Imo Industries Inc. Employees Stock Savings Plan

      (D)      (8)  Amendment dated May 9, 1991 to the Imo Industries Inc.
                    Employees Stock Savings Plan

      (E)     (10)  Amendments dated December 30, 1991 and August 3, 1992 to
                    the Imo Industries Inc. Employees Stock Savings Plan

      (F)     (14)  Trust Agreement for the Imo Industries Inc. Employees
                    Stock Savings Plan as of March 1, 1995 between the
                    Company and Eagle Trust Company

 10.13         (1)  Distribution Agreement dated December 18, 1986 between
                    Transamerica Corporation and the Company

 10.14         (1)  Tax Agreement between the Company and Transamerica
                    Corporation

 10.15(J)     (11)  Warrant dated July 15, 1993 issued by the Company to The
                    Prudential Insurance Company of America

 10.16         (2)  Stock Purchase Agreement dated November 30, 1987 between
                    the Company and TRIFIN B.V.

 10.17         (5)  Agreement and Plan of Merger, dated as of August 21, 
                    1988 by and among the Company, VI Acquisition Corp. and
                    Varo Inc.

 10.18         (5)  Stock option agreement, dated as of August 21, 1988,
                    between VI  Acquisition Corp. and Varo Inc.

 10.19         (6)  Agreement for the purchase of the stock of Warren Pumps
                    Inc. by the Company dated April 3, 1989 among the
                    Company, Warren Pumps Inc. and the holders of all of the
                    issued and outstanding stock of Warren Pumps Inc.

 10.20         (7)  Stock Purchase Agreement dated as of May 31, 1990 among
                    United Scientific Holdings PLC, United Scientific Inc.
                    and the Company

 10.21        (12)  Stock Purchase Agreement dated as of October 28, 1993
                    among the Company, Imo Industries GmbH, Mark Controls
                    Corporation and Mark Controls GmbH i. Gr., as amended

 10.22        (12)  German Asset Purchase Agreement among Imo Industries
                    GmbH, Mark Controls GmbH i. Gr., the Company and Mark
                    Controls Corporation, as amended

 10.23(A)     (13)  Credit Agreement dated as of August 5, 1994 among the
                    Company, as Borrower, Baird Corporation, as Guarantor,
                    Warren Pumps Inc., as Guarantor, the Institutions from
                    time to time party thereto as Lenders and as Issuing
                    Banks, and Citibank, N.A., as Agent

      (B)     (14)  First Amendment dated as of November 18, 1994, Second
                    Amendment dated as of January 11, 1995, and Third
                    Amendment dated as of February 17, 1995 to the Credit
                    Agreement dated as of August 5, 1994 among the Company as
                    Borrower, Baird Corporation, as Guarantor, Warren Pumps
                    Inc., as Guarantor, the Institutions from time to time
                    party thereto as Lenders and as Issuing Banks, and
                    Citibank, N.A., as Agent

      (C)           Fourth Amendment dated as of May 3, 1995, Fifth 
                    Amendment dated as of August 14, 1995, Sixth Amendment
                    dated as of December 11, 1995, and Seventh Amendment
                    dated as of March 4, 1996 to the Credit Agreement dated
                    as of August 4, 1994 among the Company as Borrower,
                    Baird Corporation, as Guarantor, Warren Pumps Inc., as
                    Guarantor, the Institutions from time to time party
                    thereto as Lenders and as Issuing Banks, and Citibank,
                    N.A., as Agent

 10.24(A)     (13)  Asset Purchase Agreement dated as of November 4, 1994 by
                    and among the Company, Imo Industries International Inc.
                    and Mannesmann Capital Corporation

      (B)     (14)  Agreement, Amendment and Waiver dated January 17, 1995
                    by and among the Company and Mannesmann Capital
                    Corporation

 10.25        (14)  Asset and Stock Purchase Agreement dated as of January 1,
                    1995 by and among the Company and Thermo Jarrell Ash
                    Corporation

 10.26        (15)  Purchase and Sale Agreement among Litton Industries,
                    Inc., and Litton Systems, Inc. and Imo Industries Inc.,
                    Baird Corporation, Optic-Electronic International, Inc.
                    and Varo Inc. dated May 11, 1995 and amended and restated
                    as of June 2, 1995

 20                 Proxy Statement for the Company's 1996 Annual Meeting of
                    Stockholders (incorporated by reference to the Company's
                    Proxy Statement to be filed separately with the Commission
                    pursuant to Regulation 14A of the Securities Exchange Act
                    of 1934, as amended)

 21                 Subsidiaries of the Company

 23                 Consent of Ernst & Young LLP dated March 25, 1996

 27                 Financial Data Schedule as of December 31, 1995

_______________________________________________
NOTES

(1)    Incorporated by reference to the Company's Form 8 Amendment No. 2
       filed with the Commission on December 9, 1986 amending the Company's
       Form 10 as filed with the Commission on October 15, 1986.
(2)    Incorporated by reference to the Company's Form 8-K filed with the
       Commission on February 17, 1987.
(3)    Incorporated by reference to the Company's Form 8-K filed with the
       Commission on May 4, 1987.
(4)    Incorporated by reference to the Imo Industries Inc. Employees Stock
       Savings Plan Form 11-K filed with the Commission on April 13, 1988.
(5)    Incorporated by reference to the Company's Form 8-K filed with the
       Commission on October 14, 1988.
(6)    Incorporated by reference to the Company's Form 10-K filed with the
       Commission on March 29, 1990.
(7)    Incorporated by reference to the Company's Form 10-K filed with the
       Commission on March 28, 1991.
(8)    Incorporated by reference to the Company's Form S-8 filed with the
       Commission on June 17, 1991.
(9)    Incorporated by reference to the Company's Form 10-K filed with the
       Commission on March 26, 1992.
(10)   Incorporated by reference to the Company's Form 10-K filed with the
       Commission on April 19, 1993.
(11)   Incorporated by reference to the Company's Form 10-K/A filed with the
       Commission on August 6, 1993 amending the Company's Form 10-K as filed
       with the Commission on April 19, 1993.
(12)   Incorporated by reference to the Company's Form 10-K filed with the
       Commission on March 31, 1994.
(13)   Incorporated by reference to the Company's Form 10-Q filed with the
       Commission on November 14, 1994.
(14)   Incorporated by reference to the Company's Form 10-K filed with the
       Commission on March 29, 1995.
(15)   Incorporated by reference to the Company's Form 8-K filed with the
       Commission on June 19, 1995.
(16)   Incorporated by reference to the Company's Form S-8 as filed with the
       Commission on June 23, 1995, Registration No. 33-60533
(17)   Incorporated by reference to the Company's Form S-8 as filed with the
       Commission on June 23, 1995, Registration No. 33-60535
(18)   Incorporated by reference to the Company's Form 10-Q filed with the
       Commission on November 13, 1995.




                                SIGNATURES

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

Date: March 25, 1996

                                             IMO INDUSTRIES INC.



                                             By: /s/ DONALD K. FARRAR
                                                     Donald K. Farrar
                                                     Chief Executive Officer,
                                                     President and Director


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


/s/ DONALD K. FARRAR             Chief Executive Officer,
Donald K. Farrar                 President and Director
                                 (principal executive officer)  March 25, 1996


/s/ WILLIAM M. BROWN             Executive Vice President,
William M. Brown                 Chief Financial Officer/
                                 Corporate Controller
                                 (principal financial and 
                                  accounting officer)           March 25, 1996


/s/ JAMES B. EDWARDS             Director                       March 25, 1996
James B. Edwards


/s/ J. SPENCER GOULD             Director                       March 25, 1996
J. Spencer Gould


/s/ RICHARD J. GROSH             Director                       March 25, 1996
Richard J. Grosh


/s/ CARTER P. THACHER            Director                       March 25, 1996
Carter P. Thacher


/s/ DONALD C. TRAUSCHT           Director                       March 25, 1996
Donald C. Trauscht


/s/ ARTHUR E. VAN LEUVEN         Director                       March 25, 1996
Arthur E. Van Leuven


<TABLE>
Imo Industries Inc. and Subsidiaries
Consolidated Statements of Income
(Dollars in thousands except per share amounts)

<CAPTION>
Year Ended December 31,                     1995       1994*       1993*
<S>                                     <C>         <C>         <C>     

Net Sales                               $373,227    $360,785    $416,526
Cost of products sold                    258,335     248,835     284,227
                                                           
Gross Profit                             114,892     111,950     132,299
                                      
Selling, general and administrative 
     expenses                             80,964      77,973     102,916
Research and development expenses          4,831       4,646       7,537
Unusual items                              9,020         ---      14,338
                                                           
Income from Operations                    20,077      29,331       7,508
                                                           
Interest expense                          25,860      29,168      33,341
Interest income                           (1,980)     (1,592)       (511)
Other income                                (739)       (219)     (1,074)
Equity in (income) loss of 
     unconsolidated companies               (302)        ---         231
                                                           
Income (Loss) From Continuing                              
     Operations Before Taxes and
     Extraordinary Item                   (2,762)      1,974     (24,479)   
                                                           
Income taxes (benefit):                                    
     Current                               2,209       1,790         ---
     Deferred                            (17,000)        ---      13,450
Total Income Taxes (Benefit)             (14,791)      1,790      13,450
                                                                               
Income (Loss) From Continuing Operations
     Before Extraordinary Item            12,029         184     (37,929)
                                                           
Discontinued Operations:                                   
  Income (Loss) from Operations (net of
      income tax expense of $.9 million 
      in 1995, $1.4 million in 1994 and
      $1.5 million in 1993)                  500       9,046     (46,528)
  Estimated Gain (Loss) on Disposal (net
      of income taxes of $5.2 million in
      1995)                               21,625         ---    (168,014)
        Total Income (Loss) from        
          Discontinued Operations         22,125       9,046    (214,542)   
                                                           
Extraordinary Item - Loss on             
      Extinguishment of Debt              (4,444)     (5,299)    (18,095)      
                                                           
Net Income (Loss)                        $ 29,710    $ 3,931   $(270,566)

Earnings (loss) per share:                                 
   Continuing operations before
      extraordinary item                   $  .71     $  .01     $ (2.25)
   Discontinued operations                 $ 1.29     $  .53     $(12.70)
   Extraordinary item                      $ (.26)    $ (.31)    $ (1.07)
   Net income (loss)                       $ 1.74     $  .23     $(16.02)
                                                           
Weighted average number of shares   
   outstanding                         17,048,622  16,926,071  16,890,501
   
See accompanying notes to consolidated financial statements.
*Reclassified to conform to 1995 presentation.
                                          F-1
</TABLE>

<TABLE>
Imo Industries Inc. and Subsidiaries
Consolidated Balance Sheets
(Dollars in thousands)

<CAPTION>
December 31,                                           1995      1994*
<S>                                                    <C>       <C>

Assets                                              
Current Assets                                      
Cash and cash equivalents                               $ 3,809   $ 26,942
Trade accounts and notes receivable, less
  allowance of $2,030 in 1995 and $2,192 in 1994         53,965     53,909
Inventories-net                                          85,030     76,902
Deferred income taxes                                    11,371      4,328
Net assets of discontinued operations - current           5,220     75,165
Prepaid expenses and other current assets                 4,617      5,089
Total Current Assets                                    164,012    242,335
Property, Plant and Equipment - on the basis of cost                  
Land                                                     10,407      5,930
Buildings and improvements                               44,786     40,449
Machinery and equipment                                 109,156    102,730
                                                        164,349    149,109
Less allowances for depreciation and amortization       (82,996)   (71,867)
Net Property, Plant and Equipment                        81,353     77,242
Intangible Assets, Principally Goodwill                  68,664     73,834
Investments in and Advances to Unconsolidated Companies   5,415      3,653
Deferred income taxes - Long-Term                         4,609        ---
Net Assets of Discontinued Operations - Noncurrent       29,190     89,313
Other Assets                                             30,644     26,242
Total Assets                                          $ 383,887  $ 512,619
                                                    
Liabilities and Shareholders' Equity
Current Liabilities                                 
Notes payable                                         $   9,019  $   9,699
Trade accounts payable                                   23,733     22,012
Accrued expenses and other liabilities                   38,069     51,620
Accrued costs related to discontinued operations          3,055      6,444
Income taxes payable                                      8,354      6,671
Current portion of long-term debt                           805     13,675
Total Current Liabilities                                83,035    110,121
Long-Term Debt                                          245,802    372,365
Deferred Income Taxes                                       ---      7,364
Accrued Postretirement Benefits - Long-Term              24,372     30,918
Accrued Pension Expense and Other Liabilities            23,794     17,696
Total Liabilities                                       377,003    538,464
Shareholders' Equity                                
Preferred stock:  $1.00 par value; authorized and 
  unissued 5,000,000 shares                                 ___        ___
Common stock:  $1.00 par value; authorized 25,000,000                          
  shares; issued 18,756,397 and 18,680,428 in 1995
  and 1994, respectively                                 18,756     18,680
Additional paid-in capital                               80,275     79,789
Retained earnings (deficit)                             (76,592)  (106,302)
Cumulative foreign currency translation adjustments       4,266        861
Minimum pension liability adjustment                     (1,801)      (853)
Treasury stock at cost - 1,672,788 shares 
  in 1995 and 1994                                      (18,020)   (18,020)
Total Shareholders' Equity                                6,884    (25,845)
Total Liabilities and Shareholders' Equity            $ 383,887  $ 512,619

See accompanying notes to consolidated financial statements.
* Restated to conform to 1995 presentation.
                                      F-2
</TABLE>

<TABLE>
Imo Industries Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Dollars in thousands)

<CAPTION>
Year Ended December 31,                         1995      1994*      1993*
<S>                                             <C>       <C>        <C>
OPERATING ACTIVITIES                                       
Net income (loss)                               $29,710   $ 3,931    $(270,566) 
Adjustments to reconcile net income                        
  (loss) to net cash (used by) provided 
  by continuing operations:
    Discontinued operations                     (22,125)   (9,046)     214,542
    Depreciation                                 12,100    12,771       15,325
    Amortization                                  3,122     5,832        4,471
    Provision (credit) for deferred   
      income taxes                              (17,000)      ---       13,450
    Extraordinary item                            4,444     5,299       18,095
    Unusual items                                 9,020       ---       14,338
    Other                                           172       666        1,243
    Other changes in operating assets                            
      and liabilities:
        Decrease (increase) in accounts and 
          notes receivable                          236    (1,557)       9,491
        (Increase) decrease in inventories       (7,157)     (368)       7,198
        Decrease in recoverable income taxes        ---     3,826        7,270
        (Decrease) increase in accounts 
          payable and accrued expenses          (13,273)   (9,160)           7
        Other operating assets and 
          liabilities                            (9,014)   (5,387)      (8,846)
   Net cash (used by) provided by continuing
         operations                              (9,765)    6,807       26,018
   Net cash (used by) provided by 
         discontinued operations                (21,978)    9,971          986

Net Cash (Used in) Provided by Operating
   Activities                                   (31,743)   16,778       27,004

INVESTING ACTIVITIES                                       
Net proceeds from sale of businesses and 
   sales of property, plant and equipment       174,922    13,568       86,619
Purchases of property, plant and equipment      (14,600)   (6,025)      (6,343)
Acquisitions, net of cash acquired               (5,247)      ---          ---
Net investing activities of discontinued
   operations                                    (9,426)   (6,994)      (9,724)
Other                                              (122)     (857)         252
Net Cash Provided by (Used in) Investing 
   Activities                                   145,527      (308)      70,804

FINANCING ACTIVITIES                                       
(Decrease) increase in notes payable              5,407   (31,346)     (29,915)
Proceeds from long-term borrowings               45,461    86,951        4,377
Principal payments on long-term debt           (188,200)  (56,759)     (55,575)
Payment of debt financing costs                    (401)  (11,277)      (8,326)
Proceeds from stock options exercised               535       415          ---
Other                                                59        15         (318)
Net Cash Used in Financing Activities          (137,139)  (12,001)     (89,757)

Effect of exchange rate changes on cash             222       117         (462)
(Decrease) increase in Cash and Cash
   Equivalents                                  (23,133)    4,586        7,589
Cash and cash equivalents at         
   beginning of year                             26,942    22,356       14,767
  
Cash and Cash Equivalents at 
   End of Year                                  $ 3,809   $26,942      $22,356

See accompanying notes to consolidated financial statements.
*Reclassified to conform to 1995 presentation.
                             F-3
</TABLE>

<TABLE>
Imo Industries Inc. and Subsidiaries
Consolidated Statements of Shareholders' Equity
(Dollars in thousands)
<CAPTION>
                                           Cumulative 
                        Addit-             Foreign     Minimum            
                        ional    Retained  Currency    Pension
                Common  Paid-In  Earnings  Translation Liability  Treasury
                Stock   Capital  (Deficit) Adjustments Adjustment Stock    Total
<S>             <C>     <C>      <C>       <C>         <C>        <C>       <C> 
Balance at                                                            
  January 1,
  1993 *        $18,554 $78,557  $160,333  $  491      $  ---     $(18,020) $239,915
Net loss            ---     ---  (270,566)    ---         ---          ---  (270,566)
Foreign currency                                                       
  translation     
  adjustments       ---     ---       ---  (1,638)        ---          ---    (1,638)
Minimum pension                                                        
  liability       
  adjustment        ---     ---       ---     ---      (1,768)         ---    (1,768)
Issuance of                                                           
  common stock 
  warrants          ---     336       ---     ---         ---          ---       336
Restricted shares                                                     
  issued under
  the equity  
  incentive plan     30     187       ---     ---         ---          ---       217
Balance at                                                             
  December 31,
  1993 *         18,584  79,080  (110,233) (1,147)     (1,768)     (18,020)  (33,504)
Net income          ---     ---     3,931     ---         ---          ---     3,931
Foreign currency                                                      
  translation  
  adjustments       ---     ---       ---   2,008         ---          ---     2,008
Minimum pension                                                       
  liability 
  adjustment        ---     ---       ---     ---         915          ---       915
Shares issued                                                         
  under stock
  option plan        56     359       ---     ---         ---          ---       415
Restricted shares                                                     
  issued under    
  the equity
  incentive plan     40     350       ---     ---         ---          ---       390
Balance at                                                             
  December 31,   
  1994 *         18,680  79,789  (106,302)    861        (853)     (18,020)  (25,845)
Net income          ---     ---    29,710     ---         ---          ---    29,710
Foreign currency                                                      
  translation 
  adjustments       ---     ---       ---   3,405         ---          ---     3,405
Minimum pension                                                        
  liability 
  adjustment        ---     ---       ---     ---        (948)         ---      (948)
Shares issued                                                         
  under stock       
  option plan        73     462       ---     ---         ---          ---       535
Restricted shares                                                     
  issued under
  the equity 
  incentive plan      3      24       ---     ---         ---          ---        27
Balance at                                                            
  December 31,   
  1995          $18,756 $80,275  $(76,592) $4,266     $(1,801)    $(18,020)   $6,884

See accompanying notes to consolidated financial statements.
* Reclassified to conform to current year presentation.
                                  F-4
</TABLE>
        

Imo Industries Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 1  Significant Accounting Policies

Consolidation:   The  consolidated financial  statements
include  the  accounts of the Company and its  majority-
owned     subsidiaries.     Significant     intercompany
transactions have been eliminated in consolidation.  The
Company   uses   the  equity  method  to   account   for
investments in corporations in which it does not  own  a
majority voting interest.

Translation   of   Foreign   Currencies:    Assets   and
liabilities  of international operations are  translated
into U.S. dollars at current exchange rates.  Income and
expense  accounts are translated into  U.S.  dollars  at
average  rates of exchange prevailing during  the  year.
Translation  adjustments  are reflected  as  a  separate
component of shareholders' equity.

Cash  Equivalents:  Cash equivalents include investments
in  government  securities  funds  and  certificates  of
deposit.  Investment periods are generally less than one
month.

Financial   Instruments:   The  Company   uses   forward
exchange   contracts  to  hedge  certain  firm   foreign
commitments denominated in foreign currencies.  Gains or
losses  on  forward  contracts are deferred  and  offset
against  the  foreign exchange gains and losses  on  the
underlying hedged item.  The forward exchange  contracts
are  for  periods of less than one year, and the amounts
outstanding as well as gains or losses on such contracts
are not material.

Inventories:   Inventories are carried at the  lower  of
cost or market, cost being determined principally on the
basis of standards which approximate actual costs on the
first-in, first-out method.

Revenue  Recognition:  Revenues are  recorded  generally
when the Company's products are shipped.

Depreciation   and   Amortization:    Depreciation   and
amortization   of  plant  and  equipment  are   computed
principally by the straight-line method.

Interest Expense:  Interest expense incurred during  the
construction of facilities and equipment is  capitalized
as  part  of  the cost of those assets.  Total  interest
paid  by the Company amounted to $39.5 million in  1995,
$49.5  million in 1994 and $56.7 million in 1993.  There
was   no   interest  capitalized  in   1995.    Interest
capitalized  in  1994 and 1993 was $.2 million  and  $.1
million, respectively.

Earnings  Per Share:  Earnings per share are based  upon
the  weighted  average number of shares of common  stock
outstanding.  Common stock equivalents related to  stock
options  are  excluded  because  their  effect  is   not
material.

Impact of Recently Issued Accounting Standards: In March
1995, the FASB issued Statement No. 121, "Accounting for
the  Impairment of Long-Lived Assets to Be Disposed Of",
which requires impairment losses to be recorded on long-
lived  assets  used  in operations  when  indicators  of
impairment  are present and the undiscounted cash  flows
estimated to be generated by those assets are less  than
the   assets'  carrying  amount.  Statement   121   also
addresses the accounting for long-lived assets that  are
expected  to  be  disposed of. The  Company  will  adopt
Statement 121 in the first quarter of 1996 and, based on
current  circumstances, does not believe the  effect  of
adoption will be material.

Stock  Compensation:    The Company grants stock options
and  shares  of  restricted stock to  certain  employees
under its Equity Incentive Plan.  The stock options  are
for  a fixed number of shares and have an exercise price
equal  to  the fair value of the shares at the  date  of
grant.   Restricted shares are valued at fair  value  of
the shares at the date of grant and compensation expense
is recognized over the vesting period.

The   Company   accounts  for  its  stock   compensation
arrangements under the provisions of APB 25, "Accounting
for  Stock Issued to Employees", and intends to continue
to do so.

Intangible  Assets:  Goodwill of companies  acquired  is
being  amortized  on  the straight-line  basis  over  40
years.  The carrying value of goodwill is reviewed  when
indicators  of  impairment are  present,  by  evaluating
future  cash  flows  of  the  associated  operations  to
determine  if  impairment exists.  Goodwill  related  to
continuing operations at December 31, 1995 and 1994  was
$63.1  million and $61.2 million, respectively,  net  of
respective accumulated amortization of $14.6 million and
$12.9 million. Patents are amortized over the shorter of
their legal or estimated useful lives.

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

Restatements:    The Consolidated Financial  Statements,
and the notes thereto, have been restated to reflect the
Company's   Roltra-Morse   business   segment    as    a
discontinued  operation  in accordance  with  Accounting
Principles  Board  Opinion No. 30.  Certain  prior  year
amounts have been reclassified to conform to the current
year presentation.


Note 2  Discontinued Operations

Electro-Optical Systems
In  January  1994, pursuant to a plan  approved  by  the
Board  of Directors, the Company announced its intention
to dispose of its Electro-Optical Systems operations. On
January 3, 1995, the Company completed the sale  of  its
Baird   Analytical   Instruments  Division   to   Thermo
Instruments   Systems   Inc.  for  approximately   $12.3
million,  which  was  used to repay  a  portion  of  the
Company's  domestic senior debt. On June 2,  1995,   the
Company completed the sale of the Optical Systems and Ni-
Tec  divisions  of  Varo Inc. and  the  Optical  Systems
division  of  Baird Corporation, which  represented  the
major  part of its Electro-Optical Systems business,  to
Litton  Industries  for approximately  book  value.  The
proceeds  were  used  to pay off $8 million  outstanding
under the revolving credit facility on June 2, 1995  and
to  redeem $40 million of its 12.25% senior subordinated
debentures on July 6, 1995. Remaining assets to be  sold
include  the  Electro-Optical System's  Varo  Electronic
Systems  division and non-operating real  estate,  which
continue to be marketed to interested parties.

Turbomachinery
In August 1994 the Board of Directors approved a plan to
sell the Company's Turbomachinery operations. On January
17,  1995, the Company completed the sale of its Delaval
Turbine and TurboCare divisions and its 50% interest  in
Delaval-Stork,  to Mannesmann Demag. The final  adjusted
purchase  price was $119 million of which, $109  million
was  received  at  closing, with the  remainder  earning
interest  to the Company and to be received at specified
future  contract dates subject to adjustment as provided
in  the agreement.  It is management's expectation  that
there  will  be  no further adjustment to  the  purchase
price.   A  portion  of the proceeds were  used  by  the
Company  to pay off its domestic senior debt in  January
1995  and in March 1995 the Company redeemed $40 million
of  its  12.25% senior subordinated debentures with  the
remainder of the proceeds.

Roltra-Morse
In  February 1996 the Company announced a plan  to  sell
its Roltra-Morse operations. The Company has engaged  an
investment banking firm to assist in the sale  which  is
expected to be completed in 1996 with proceeds in excess
of net book value of the operations.

In  accordance with APB Opinion No. 30, the disposals of
these  business  segments have  been  accounted  for  as
discontinued   operations   and,   accordingly,    their
operating  results have been segregated and reported  as
Discontinued Operations in the accompanying Consolidated
Statements  of  Income. Prior year financial  statements
have  been  reclassified to conform to the current  year
presentation.

Discontinued   operations  include   management's   best
estimates of amounts expected to be realized at the time
of  disposal.  The amounts the Company  will  ultimately
realize  could differ materially in the near  term  from
the  amounts  used  to determine the  gain  or  loss  on
disposal of the discontinued operations.

Net   assets   and   liabilities  of  the   Discontinued
Operations consist of the following:

December 31 (Dollars in thousands)              1995      1994
                                                       
  Current Assets:                                   
     Receivables                               $ 25,956  $ 88,793
     Inventories                                 21,484    70,194
     Other current assets                         6,351     4,986
                                                 53,791   163,973
  Current Liabilities:                              
     Notes Payable                                9,849     3,072
     Trade accounts payable                      27,687    46,733
     Other current liabilities                   11,035    39,003
                                                 48,571    88,808
                                                       
  Net Current Assets                           $  5,220  $ 75,165
                                                       
  Long-term Assets:                                 
     Property                                  $ 22,112  $ 82,684
     Intangible assets                           12,645    12,589
     Other long-term assets                      11,666     9,308
                                                 46,423   104,581
                                                       
  Long-term Liabilities                          17,233    15,268
                                                       
  Net Long-term Assets                         $ 29,190  $ 89,313
                                                       
  Net Assets                                   $ 34,410  $164,478

Net   assets  related  to  the  Electro-Optical  Systems
business  are  $11.9  million  and  $85  million  as  of
December  31,  1995 and 1994, respectively;  net  assets
related  to the Turbomachinery business are $1.0 million
and  $60  million  as  of December 31,  1995  and  1994,
respectively; and net assets related to the Roltra-Morse
business  are  $21.5  million and $19.5  million  as  of
December 31, 1995 and 1994, respectively.

The  Discontinued  Operations  have  $19.4  million   in
foreign   short-term  credit  facilities  with   amounts
outstanding at December 31, 1995 of $9.8 million.  Total
long-term  debt of discontinued operations  amounted  to
$7.1  million and $9.6 million as of December  31,  1995
and  1994, respectively. Of these amounts, $1.6  million
and $3.4 million represent the current portion.

A  condensed  summary  of operations  for  the  Discontinued
Operations is as follows:
                                                      
Year Ended December 31                                
(Dollars in thousands)               1995      1994      1993
     Net Sales                   $159,339  $444,656  $396,731
                                                      
     Income (loss) from 
      operations before 
      income taxes and
      minority interest               653    10,882   (44,431)

     Income taxes                     878     1,443     1,550
     Minority interest               (725)      393       547
                                                      
     Income (loss) from
      operations                 $    500   $ 9,046  $(46,528)

The income (loss) from operations of the  Discontinued
Operations  for  1995, 1994 and 1993 includes  allocated
interest  expense.  Interest expense  of  $7.5  million,
$19.4  million,  and  $19.6 million,  respectively,  was
allocated based on the ratio of the estimated net assets
to  be  sold  in  relation to the sum of  the  Company's
shareholders'  equity and the aggregate  of  outstanding
debt at each year end.

Electro-Optical Business
The  Electro-Optical  loss  from  operations  was  $45.3
million   for  1993.  Losses  from  the  Electro-Optical
Systems operations for 1995 and 1994 resulted in  a  net
charge  of  $1.0 million and $6.2 million, respectively,
to reserves established as of December 31, 1993.

The  Company   recorded  charges of  $155.3  million  at
December  31,  1993,  which included  a  $104.6  million
goodwill write-off to reduce the carrying amount of  the
Electro-Optical  discontinued  operation  to   estimated
realizable value.  During 1995 the Company recognized an
additional  $13.3 million loss on disposal. Included  in
the  additional  loss was $6.8 million  related  to  the
resolution of contingencies associated with the sale  of
the  business and fourth quarter charges of $6.5 million
primarily  to  write-down remaining  non-operating  real
estate to net realizable value. As of December 31, 1995,
the  Company  has  an accrual for anticipated  operating
losses   of  $.6  million  (including  $.9  million   of
allocated interest) through the date of sale,  which  is
expected to occur during the second half of  1996.

Turbomachinery Business
The  Turbomachinery business income from operations  was
$5.6  million  and   $1.0 million  for  1994  and  1993,
respectively.

As  a  result of the sale of the Turbomachinery business
in  1995,  the Company recognized an estimated  gain  on
disposal of $35.0 million, net of income taxes  of  $5.2
million.   The gain is net of fourth quarter charges  of
$4.6    million,   related   to   the   resolution    of
contingencies  associated with the  sale  to  Mannesmann
Demag  and  to a write-down of remaining assets  to  net
realizable value.

Roltra-Morse
The Roltra-Morse business had income from operations  of
$.5   million  and  $3.5  million  for  1995  and  1994,
respectively, and a loss from operations of $2.1 million
in 1993.

Note 3 Restructuring Plan

Asset Sales
In  October  1992,  the  Company  announced  a  plan  to
strengthen its balance sheet through the sale of certain
businesses and the application of the proceeds to reduce
debt.   Pursuant to this plan, the Company divested  its
Heim  Bearings,  Aerospace, Barksdale Controls  and  CEC
Instruments  businesses. In 1993, the Company  sold  its
Heim   Bearings,   Aerospace  and   Barksdale   Controls
operations  for proceeds of approximately  $91  million,
and in 1994, sold its CEC Instruments and Turboflex Ltd.
operations,  its  Corporate  headquarters  building  and
other   previously  identified  assets   for   aggregate
proceeds  of  $13.2  million.  These  proceeds,  net  of
related expenses, were used to repay senior debt in  the
amount  of  $81.9 million in 1993 and $13.2  million  in
1994,   in  accordance  with  the  terms  of  the   1993
restructured credit facilities.

Other non-operating real estate, representing less  than
10% of the original value of assets announced to be sold
in  October  1992,  remain for sale.   Results  for  the
fourth quarter of 1995 include an unusual charge of $5.0
million  related to the write-down of this non-operating
real  estate to its net realizable value (See  Note  6).
The  Company targets completion of the divestitures over
the next 9 to 12 months.

In  the  fourth quarter of 1993, management initiated  a
strategy  to reposition the Company on its less  capital
intensive  businesses that exhibited strong  brand  name
recognition, a broad customer base and market leadership
with  less  dependence  on U.S.  Government  sales.   In
connection with this strategy, the Company divested  its
Turbomachinery  and most of its Electro-Optical  Systems
businesses in 1995. This repositioning will be completed
upon  the  sales of the Roltra-Morse business,  and  the
remaining   portion   of  the  Electro-Optical   Systems
business, which are expected to be completed in 1996 
(See Note 2).

Cost Reduction Programs
In  the  fourth quarter of 1995, the Company recorded  a
charge   to  continuing  operations  of  $4.0   million,
including  severance  and other expenses  related  to  a
Company-wide    program   to    reduce    general    and
administrative  costs  (See  Note  6).    This   program
includes a reduction of 65 employees, or 2% of the total
number  of  Company employees, including a reduction  of
the  corporate headquarters staff by 20%.  This  program
is   expected   to  reduce  general  and  administrative
expenses  by  approximately $2.9 million in  1996,  $4.0
million  in  1997 and $5.0 million annually  thereafter.
The required cash outlay related to this program was $.4
million  in  1995,  and the expected  cash  requirements
during  1996 are $3.2 million.  The remainder represents
non-cash charges.

In  1993,  the  Company recorded a charge to  continuing
operations of $5.2 million for a cost reduction  program
which  benefited  1994 and 1995 operating  results  (See
Note  6).  The Company implemented cost-cutting measures
at  its  core operations to reduce its expense structure
and to eliminate duplicative functions. In addition,  in
connection  with this 1993 cost reduction  program,  the
Company  consolidated certain operations in its European
Instruments  and Morse Controls businesses  and  revised
operating processes and reduced employment levels at its
Pumps  segment  and  other  operations.  The  number  of
Company employees in core operations declined by 205, or
7%,  between mid-1993 and mid-1994. These organizational
restructuring  measures  have been  providing  net  cash
benefits,  compared  to 1993 levels, which  approximated
$4.5 million and $1.5 million for continuing operations,
in  1995  and  1994, respectively, and are  expected  to
approximate  $5.5  million  annually  thereafter,  based
largely on reduced employment costs.


Note 4 Inventories

Inventories are summarized as follows:

December 31 (Dollars in thousands)          1995           1994
                                                          
Finished products                       $ 39,684       $ 33,350
Work in process                           31,235         30,049
Materials and supplies                    26,372         27,022
                                          97,291         90,421
Less customers' progress payments            689          1,635
Less valuation allowance                  11,572         11,884
                                                          
                                        $ 85,030       $ 76,902

Note 5  Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities consist of the
following:

December 31 (Dollars in thousands)          1995           1994
                                                        
Accrued contract completion costs       $     94       $    556
Accrued product warranty costs             2,737          4,310
Accrued litigation and claims costs        1,674          4,493
Payroll and related items                 14,328         12,547
Accrued interest payable                   6,511         10,167
Accrued restructuring costs                1,688            960
Accrued divestiture costs                  2,861          8,582
Other                                      8,176         10,005
                                                          
                                        $ 38,069       $ 51,620


Note 6  Unusual Items

During   the   fourth  quarter  of  1995,  the   Company
recognized  unusual charges of $9.0  million  ($.53  per
share)  in  income  from  continuing  operations.  These
charges  include $4.0 million in severance benefits  and
other  expenses  related  to a Company-wide  program  to
reduce general and administrative costs (See Note 3) and
$5.0  million related to the write-down of certain  non-
operating real estate to net realizable value (See  Note
3).

During  the twelve months ended December 31,  1993,  the
Company  recognized  unusual charges  of  $14.3  million
($.85  per  share)  in loss from continuing  operations.
During   the   fourth  quarter  of  1993,  the   Company
recognized   charges  of  $20.3  million  that   include
provisions  of $5.2 million related to the restructuring
and  consolidation of certain of the Company's operating
units  (See  Note  3), $10.1 million expected  net  loss
overall  related  to  the  Company's  asset  divestiture
program  (See  Note 3) and $5.0 million in debt  related
financing  fees associated with obtaining consents  from
holders of its 12.25% senior subordinated debentures  to
amend  the  indenture  governing  these  debentures  and
obtain   waivers  from  its  senior  lenders  for   non-
compliance  with  certain  financial  covenants  as   of
December 31, 1993, as a result of the fourth quarter net
loss.  These charges are net of unusual income  of  $6.0
million  recorded  in the third quarter  of  1993  as  a
result  of  a change in estimate related to legal  costs
associated with pending litigation.

Note 7  Income Taxes

The components of income tax expense (benefit) from  
continuing operations are:

Year Ended December 31                                  
(Dollars in thousands)                     1995      1994      1993
                                                
Current:                                                
     Federal                           $    ---  $    ---  $    ---
     Foreign                              1,906     1,330       ---
     State                                  303       460       ---
                                          2,209     1,790       ---
                                                        
Deferred:                                               
     Federal                            (17,000)      ---    13,000
     Foreign and State                      ---       ---       450
                                        (17,000)      ---    13,450
                                                        
                                       $(14,791) $  1,790  $ 13,450
                                         

Income  tax   expense  from discontinued operations,  in
thousands, is as follows:  1995 - $878; 1994  -  $1,443;
and 1993 - $1,550.

Deferred  income taxes reflect the net  tax  effects  of
temporary  differences between the carrying  amounts  of
assets  and liabilities for financial reporting purposes
and   the   amounts  used  for  income   tax   purposes.
Significant  components  of the Company's  deferred  tax
assets and liabilities as of December 31, 1995 and  1994
are as follows:

December 31                                    
(Dollars in thousands)                  1995                  1994

                                  Current  Long-term    Current  Long-term
Deferred tax assets:                           
     Postretirement benefit     
        obligation               $    765  $   8,940    $   765  $  11,593
     Expenses not currently   
        deductible                 19,101      9,895     19,174     25,879
     Net operating loss carryover     ---     30,041        ---     24,673
     Tax credit carryover             ---      5,033        ---      8,653
Total deferred tax assets          19,866     53,909     19,939     70,798
Valuation allowance for
   deferred tax assets             (8,495)   (23,180)   (15,140)   (53,770)
                                                       
Net deferred tax assets            11,371     30,729      4,799     17,028

Deferred tax liabilities:
     Tax over book depreciation       ---     18,593        ---     18,838
     Difference between book                                           
        and tax basis of income   
        recognition                   ---        ---        471      1,230
     Other                            ---      7,527        ---      4,324
Total deferred tax liabilities        ---     26,120        471     24,392

Net deferred tax assets 
  (liabilities)                   $11,371    $ 4,609     $ 4,328  $ (7,364)

At  December  31, 1995, unremitted earnings  of  foreign
subsidiaries were approximately $23.4 million.  Since it
is  the  Company's  intention to  indefinitely  reinvest
these  earnings,  no  U.S.  taxes  have  been  provided.
Determination of the amount of unrecognized deferred tax
liability   on   these  unremitted   earnings   is   not
practicable.   The  amount of foreign withholding  taxes
that  would be payable upon remittance of those earnings
is approximately $.9 million.

The   components   of  income  (loss)  from   continuing
operations before income taxes and extraordinary item:

Year Ended December 31                                
(Dollars in thousands)               1995         1994         1993

United States                     $(5,584)     $  (322)    $(21,086)
Foreign                             2,822        2,296       (3,393)
                                                        
                                  $(2,762)     $ 1,974     $(24,479)

U.S.  income tax expense (benefit) at the statutory  tax
rate is reconciled below to the overall U.S. and foreign
income tax expense (benefit).

Year Ended December 31                                  
(Dollars in thousands)                    1995         1994         1993
                                               
Tax at U.S. federal income tax rate  $    (967)    $    691     $ (8,567)
State taxes, net of federal income
  tax effect                               197          299          396
Impact of foreign tax rates and         
  credits                                  918          526          ---
Net U.S. tax on distributions of   
  current foreign earnings                 586          935          ---
Goodwill amortization                      643          656          694
Other/valuation reserve                (16,168)      (1,317)      20,927
Income tax expense (benefit)         $ (14,791)    $ (1,790)    $ 13,450

Net  income  taxes paid during 1995 and 1994  were  $6.3
million  and $.2 million, respectively, and  net  income
tax refunds received during 1993 were $7 million.

The  Company  has  net operating loss  carryforwards  of
approximately $85 million expiring in years 2002 through
2010,  foreign tax credit carryforwards of approximately
$8.3 million expiring through 2000, which, for financial
reporting purposes, are reflected as deductible  foreign
taxes,  and  minimum  tax credits of approximately  $2.1
million  which  may  be  carried  forward  indefinitely.
These  carryforwards  are  available  to  offset  future
federal taxable income.

In  1995,  the  Company reduced the valuation  allowance
applied  against the net operating loss carryforward  by
$17  million to a level where management believes it  is
more  likely  than  not that the  tax  benefit  will  be
realized.  The total amount of future taxable income  in
the U.S. necessary to realize the asset is approximately
$48  million.   The Company would generate  this  income
from  the  execution  of  reasonable  and  prudent   tax
planning   strategies  and  based  upon  future   income
projections, including the Company's announced  plan  to
sell  Roltra-Morse  SpA  in 1996.   The  amount  of  the
deferred tax asset considered realizable, however, could
be  reduced  in  the  near term if estimates  of  future
taxable  income  during  the  carryforward  period   are
reduced.


Note 8  Notes Payable and Long-Term Debt

In  August  1994, the Company obtained credit facilities
for  borrowings  up  to $150 million  from  a  group  of
lenders  (the "Existing Credit Agreement"),  secured  by
the  assets of the Company's domestic operations and all
or  a  portion of the stock of certain of the  Company's
subsidiaries. The Existing Credit Agreement provided for
a $65 million revolving credit facility through July 31,
1997,  a $40 million term loan amortizing to July  1997,
and  a  $45  million bridge loan maturing January  1996.
The revolving credit facility is extendible to July 1999
under  certain conditions.  Proceeds from  the  Existing
Credit  Agreement  were  used  to  repay  the  Company's
working  capital loans under the former domestic  senior
credit  facilities, as well as other outstanding  senior
debt obligations.

In  January 1995, proceeds from the sales of  the  Baird
Analytical  Instruments division and the  Turbomachinery
business were used to repay amounts outstanding  on  the
term  and bridge loans of $36.7 million and $45 million,
respectively  (See  Note 2). At the same  time,  and  in
keeping with the terms of the Existing Credit Agreement,
the $65 million revolving credit facility was reduced to
$50.0  million.  In December 1995, the  Existing  Credit
Agreement  was amended to increase the revolving  credit
facility  to  $60  million.  At December  31,  1995  the
Company  had  borrowings of  $18.2  million  outstanding
under the revolving credit facility in addition to  $7.8
million  of  outstanding standby letters of credit.  The
Company's  continuing  operations currently  have  $16.1
million  in  foreign short-term credit  facilities  with
amounts  outstanding  at  December  31,  1995  of   $9.0
million.   Due  to the short-term nature of  these  debt
instruments  it  is  the  Company's  opinion  that   the
carrying  amounts  approximate  the  fair  value.    The
weighted  average  interest  rate  on  short-term  notes
payable was 8.0% and 8.5% at December 31, 1995 and 1994,
respectively.

Long-term debt of continuing operations consists of the
following:

December 31 (Dollars in thousands)              1995       1994
                                                      
Borrowings on revolving credit facility 
  expiring July 31, 1997              (1)    $18,200     $  ---
Bridge loan due January 31, 1996                 ---     45,000
Term loan, $3.3 million due quarterly   
  October 31, 1994 to July 31, 1997              ---     36,667
Senior subordinated debentures with
  interest at 12.25%, due August 15, 1997     70,000    150,000  
Senior subordinated debentures with                                  
  interest at 12%, due November 1, 
  1999 to 2001                               150,000    150,000
Other                                          8,407      4,373
                                             246,607    386,040
Less current portion                             805     13,675
                                                      
                                            $245,802   $372,365
(1)  These loans bear interest at a rate equal to LIBOR plus 2.25%.
___________________________________________________________________

The  aggregate annual maturities of long-term debt  from
continuing operations, in thousands, for the four  years
subsequent  to 1996 are: 1997 - $90,460;  1998  -  $935;
1999 - $37,672; and 2000 - $37,662.


The 12.25% senior subordinated debentures are redeemable
in whole or in part, at the option of the Company at any
time,  at  100% of their principal amount, plus  accrued
interest. Interest is payable semi-annually on  February
15 and August 15. The fair value of these instruments at
December 31, 1995, based on market bid prices, was $70.4
million. In March 1995, $40 million of the 12.25% senior
subordinated debentures were redeemed from the  proceeds
received from the sale of the Turbomachinery business in
January  1995  and  on July 6, 1995  an  additional  $40
million were redeemed with proceeds from the sale of the
Company's  Electro-Optical Systems businesses (See  Note
2).

The  12%  senior subordinated debentures  are  currently
redeemable  in  whole or in part, at the option  of  the
Company,  at  102.5%  of  their principal  amount,  plus
accrued interest.  The redemption price declines to 100%
on or after November 1, 1996.  Interest is payable semi-
annually  on  May 1 and November 1. The  fair  value  of
these  instruments at December 31, 1995, based on market
bid prices, was $153.0 million.

The  Existing Credit Agreement requires the  Company  to
meet certain objectives with respect to financial ratios
and  it  and  the  12.25%  and 12%  senior  subordinated
debentures   contain  provisions  which  place   certain
limitations on dividend payments and outside borrowings.
Under  the  most  restrictive of  such  provisions,  the
Company  must maintain certain minimum consolidated  net
worth   levels,  interest  coverage  and  fixed   charge
coverage  levels  and  the Company  is  prohibited  from
declaring or paying cash dividends through at least July
31,  1997.   The senior subordinated debentures  contain
covenants    that,   among   other   things,    restrict
indebtedness   to  specified  levels.    Under   certain
circumstances,  such  covenants  could  result  in   the
Company's  inability  to  fully  utilize  the  revolving
credit facility under the Existing Credit Agreement  and
the  foreign short-term credit facilities.  At  December
31,  1995, the Company was in technical violation of one
of  the  covenants  under the Existing Credit  Agreement
which was subsequently amended.  The Company received  a
waiver of this technical violation.

In connection with the early repayment and redemption of
domestic  senior  debt  and $80 million  of  the  12.25%
senior  subordinated  debentures, as  discussed  in  the
preceding paragraphs,  a  $4.4 million ($.26 per  share)
charge  was recorded as an extraordinary item  in  1995.
The  charge consisted of  the write-off of deferred debt
expense associated with portions of the domestic  senior
debt   repaid   and   the  12.25%  senior   subordinated
debentures redeemed.

Bank,  advisory and legal fees associated with the  1994
refinancing of the Existing Credit Agreement amounted to
approximately $5.6 million in 1994. In addition, a  $5.3
million   ($.31  per  share)  charge  related   to   the
extinguishment of senior debt under the former  domestic
senior   credit   facilities   was   recorded   as    an
extraordinary charge in 1994. The $5.3 million charge is
comprised of a $3.7 million premium paid in 1994 on  the
prepayment  of its $30 million 12.75% senior  promissory
note and the write-off of approximately $1.6 million  of
previously deferred loan costs.

Bank,  advisory and legal fees associated with the  1993
restructuring  of the Company's domestic  senior  credit
facilities   amounted  to  approximately  $8.0   million
payable in 1993.  In addition, 200,000 warrants for  the
Company's  common  stock, valued  at  approximately  $.4
million, were issued to one senior lender and,  as  part
of  the  $125  million repayment plan, the  Company  has
recognized a charge in 1993 of approximately $12 million
on   the  prepayment  of  its  senior  notes  which  was
partially financed with Make-Whole Notes issued  to  one
of its senior lenders and the write-off of approximately
$2   million   of   previously  deferred   loan   costs.
Approximately  $18.1 million ($1.07 per  share)  of  the
above  amounts  relate to the extinguishment  of  senior
debt and were recorded as an extraordinary item in 1993.


Note 9  Shareholders' Equity

Equity Incentive Plan
Under  the  Company's  Equity  Incentive  plan,  up   to
3,050,000 shares of the Company's $1.00 par value common
stock  can be issued pursuant to the granting  of  stock
options,  stock  appreciation rights,  restricted  stock
awards  and  restricted unit awards  to  key  employees.
Options  can be granted at no less than 100  percent  of
the  fair market value of the stock on the date of grant
or  on  the  prospective  date fixed  by  the  Board  of
Directors.   None of these options can be exercised  for
at  least  a  one-year period from the  date  of  grant.
After this waiting period, 25 percent of each option, on
a  cumulative  basis, can be exercised in  each  of  the
following  four years.  Additionally, each option  shall
terminate no later than 10 years from the date of grant.

On August 17, 1993,  the Board of Directors approved the
repricing  of  certain outstanding  non-qualified  stock
options  granted on previous dates under the Plan.  This
resulted  in  the  replacement of 468,000  non-qualified
stock  options at various exercise prices  ranging  from
$10.375  to  $20.375,  by  272,865  non-qualified  stock
options at an exercise price of $7.375, the fair  market
value  at the date of the replacement grant, subject  to
the  market  price of the Company's stock exceeding  $10
per  share  for a period of 30 days.  During  1994,  the
aforementioned criteria was met.  Vested dates are based
on the original grant dates of the replaced options.

On  June  20, 1994, certain additional outstanding  non-
qualified stock options, granted on previous dates under
the  Plan, were repriced pursuant to the August 17, 1993
Board  of  Directors  approval.  This  resulted  in  the
replacement  of  15,000 non-qualified stock  options  at
various exercise prices ranging from $11.625 to $20.375,
by  9,970  non-qualified stock options  at  an  exercise
price  of $10.25, the fair market value at the  date  of
the  replacement grant.  Vested dates are based  on  the
original grant dates of the replaced options.

On  June  23, 1995, the Company's Equity Incentive  Plan
was  amended  to increase the total issuable  shares  by
850,000  to 3,050,000 and to prohibit repricing  without
prior shareholder approval.

The  Plan  permits  awards of restricted  stock  to  key
employees subject to a restricted period and a  purchase
price,  if any, to be paid by the employee as determined
by  the  Committee of the Equity Incentive Plan.  Grants
of  40,000 shares and 30,000 shares of restricted  stock
were  made in 1994 and 1993, respectively, all of  which
were  outstanding as of December 31, 1995.   Vesting  of
such  awards is subject to a defined vesting period  and
to  the  Company's  stock achieving certain  performance
levels during such period.


Stock option activity under the plan was as follows:

Year Ended December 31   
(Shares in thousands)                  1995      1994        1993

Options:                                             
     Granted                            250       410         498
     Exercised                          (73)      (56)        ---
     Canceled                          (210)     (159)       (150)
     Repricing                                       
       Canceled                         ---       (15)       (468)
       Issued                           ---        10         273
Outstanding at end of year            1,464     1,497       1,307
Exercisable at end of year              691       654         652
Available for grant at end of year      865        55         341

Option price range per share:
    Granted                         $  6.00   $  9.75-    $ 7.375
                                              $ 10.25            
    Exercised                       $  7.00-  $  7.00-        ---
                                    $  7.375  $  7.375            


During  1988,  the Company adopted the Equity  Incentive
Plan  for Outside Directors.  The plan provides for  the
granting of non-qualified stock options of up to 360,000
shares of the Company's common stock to directors of the
Company who are not employees of the Company or  any  of
its  affiliates.  Pursuant to this plan, options can  be
granted  at no less than 100 percent of the fair  market
value  of  the stock on a date five business days  after
the  option  is  granted and no option  granted  may  be
exercised during the first year after its grant.   After
this  waiting  period, 25 percent of each option,  on  a
cumulative  basis,  can  be exercised  in  each  of  the
following  four years.  In February 1988, 320,000  stock
options  were granted at $16.19 per share, all of  which
were  exercisable as of December 31, 1995.   In December
1990,  40,000 stock options were granted at $10.375  per
share, all of which were exercisable as of December  31,
1995.  In June 1995, the Plan was amended to reduce  the
number of shares issuable to an aggregate of 360,000.

In  June  1995,  the  Company adopted  the  1995  Equity
Incentive Plan for Outside Directors.  The Plan provides
for  the  granting of restricted stock awards  and  non-
qualified stock options of up to 240,000 shares  of  the
Company's  common  stock  to outside  directors  of  the
Company who are not employees of the Company or  any  of
its  affiliates.   Pursuant to this Plan,  each  outside
director will be granted, on an annual basis, options to
purchase 4,000 shares of the Company's common stock. The
exercise  price of the options  will be 100  percent  of
the fair market value of the common stock at the date of
grant and no option granted may be exercised during  the
first  year  after  its grant subject  to  certain  plan
provisions.   After  this waiting  period,  the  options
become exercisable in four equal annual installments  of
1,000  shares.  Additionally, each option terminates  no
later  than 10 years from the date of grant.   The  plan
also  provides for the granting of an annual  restricted
stock  award  of  1,000 shares of the  Company's  common
stock. Each award is made in four quarterly installments
of  250  shares  beginning  July  1,  1995.  The  shares
comprising the restricted stock awards may not  be  sold
or  otherwise transferred by the outside director  until
termination  from  service.  During 1995,  24,000  stock
options  were granted at $8.00 per share, none of  which
were  excercisable as of December 31,  1995,  and  3,000
shares of restricted stock awards were issued.

Preferred Stock Purchase Rights
On  April  22, 1987, the Board of Directors  declared  a
distribution of one Preferred Stock Purchase  Right  for
each share of common stock outstanding.  Each right will
entitle  the  holder  to buy from  the  Company  a  unit
consisting  of  1/100 of a share of Junior Participating
Preferred Stock, Series A, at an exercise price  of  $70
per  unit.  The rights become exercisable ten days after
public  announcement that a person or group has acquired
20  percent or more of the Company's common stock or has
commenced  a  tender  offer for 30 percent  or  more  of
common  stock.   The  rights may be  redeemed  prior  to
becoming exercisable by action of the Board of Directors
at a redemption price of $0.025 per right.  If more than
35 percent of the Company's common stock becomes held by
a  beneficial  owner, other than pursuant  to  an  offer
deemed  in the best interest of the shareholders by  the
Company's  independent  directors,  each  right  may  be
exercised  for common stock, or other property,  of  the
Company  having a value of twice the exercise  price  of
each  right.  If the Company is acquired by  any  person
after  the  rights become exercisable, each  right  will
entitle  its  holder  to receive  common  stock  of  the
acquiring  company having a market value  of  twice  the
exercise price of each right.  The rights expire on  May
4, 1997.

Employee Stock Savings Plan
Up  to 600,000 shares of the Company's common stock  are
reserved for issuance under the Company's Employee Stock
Savings Plan.  (See Note 11)

Common Stock Warrants
In  July  1993, the Company issued warrants to  purchase
200,000  shares of its common stock at $9.02  per  share
(subject to adjustment in certain events), to one of its
senior  lenders in connection with the restructuring  of
its   senior   credit  facilities.   The  warrants   are
exercisable on or before December 31, 1998.


Note 10  Operations by Industry Segment and Geographic
Area

The  Company  classifies its continuing operations  into
four  core business segments: Power Transmission, Pumps,
Instrumentation and Morse Controls. Detailed information
regarding  products  by  segment  is  contained  in  the
section entitled "Business" included in Part I,  Item  1
of  this  Form  10-K  Report. A fifth  business  segment
entitled Other is included in continuing operations  for
financial  reporting  purposes, and includes  operations
previously sold and operations to be sold as part of the
Company's asset divestiture program. The 1994  and  1993
amounts have been restated to reflect Roltra-Morse as  a
discontinued  operation  and  the  redefinition  of  the
Company's  business  segments.  Information  about   the
business  of  the  Company by business segment,  foreign
operations and geographic area is presented below:


Year Ended December 31                                 
(Dollars in thousands)                    1995       1994       1993         
Net Sales                                              
     Power Transmission               $ 95,075   $ 93,308   $ 85,906
     Pumps                              94,375     90,428     91,556
     Instrumentation                    76,113     72,226     72,434
     Morse Controls                    107,664    100,075     90,876
     Other                                 ---      4,748     75,754
                                                       
Total net sales                       $373,227   $360,785   $416,526
Segment operating income
     Power Transmission               $ 11,348   $  8,905   $  2,338
     Pumps                               9,884     10,447     10,357
     Instrumentation                     6,746      9,791      7,951
     Morse Controls                      5,292      5,743        457
     Other                                 ---       (216)       886
Total segment operating income          33,270     34,670     21,989
  
Equity in income (loss) of
  unconsolidated companies                 302        ---       (231)
Unallocated corporate expenses         (12,454)    (5,120)   (13,407)
Net interest expense                   (23,880)   (27,576)   (32,830)
Income (loss) from continuing                                      
  operations before income taxes
  and extraordinary item              $ (2,762)  $  1,974  $ (24,479)

A reconciliation of segment operating income to income from 
operations follows:

Year Ended December 31                                 
(Dollars in thousands)                     1995       1994       1993         
Segment operating income               $ 33,270   $ 34,670   $ 21,989
     Unallocated corporate expenses     (12,454)    (5,120)   (13,407)
     Other income                          (739)      (219)    (1,074)
Income from operations                 $ 20,077   $ 29,331   $  7,508

Segment operating income for the year ended December 31,
1995, includes $2.4 million of unusual charges, of which
$.9   million   and   $1.5   million   relate   to   the
Instrumentation    and    Morse    Controls    segments,
respectively.   Unallocated corporate  expenses  include
unusual  charges  of  $6.6 million for  the  year  ended
December 31, 1995.

Segment operating income for the year ended December 31,
1993, includes $8.1 million of unusual charges, of which
$.2  million, $.5 million, $.9 million, $2.4 million and
$4.1  million relates to the Power Transmission,  Pumps,
Instrumentation,  Morse Controls,  and  Other  segments,
respectively.  Unallocated  corporate  expenses  include
unusual  charges  of  $6.2 million for  the  year  ended
December 31, 1993.

The  Pumps and Instrumentation segments had sales to the
United  States  Department of Defense, in  the  form  of
prime  and  subcontracts, which  accounted  for  14%  of
consolidated  sales in 1993.  No one customer  accounted
for 10% or more of consolidated sales  in 1995 and 1994.


Year Ended December                                    
(Dollars in thousands)                    1995       1994       1993          
                                                       
Identifiable assets                                    
     Power Transmission              $  86,343  $  88,284  $  89,301
     Pumps                              69,347     63,172     60,430
     Instrumentation                    42,538     44,862     47,017
     Morse Controls                    111,482    107,471    101,986
     Other                              13,321     18,054     40,413
     Corporate                          26,446     26,298     55,915
     Discontinued Operations:
        Electro-Optical                 11,893     85,000     85,000
        Turbomachinery                     983     59,970     56,711
        Roltra-Morse                    21,534     19,508     14,765
Total identifiable assets             $383,887   $512,619   $551,538
Depreciation and amortization
     Power Transmission               $  4,618   $  4,778   $  4,053
     Pumps                               3,972      3,578      3,878
     Instrumentation                     1,840      1,464      1,518
     Morse Controls                      3,392      4,155      3,518
     Other                                 ---        655      3,313
     Corporate                           1,400      3,973      3,516
Total depreciation and amortization   $ 15,222   $ 18,603   $ 19,796
Capital expenditures                                   
     Power Transmission               $  3,384   $  1,245   $  1,317
     Pumps                               7,367      2,164      1,694
     Instrumentation                     1,445      1,177      1,054
     Morse Controls                      2,131      1,080        886
     Other                                 ---         39      1,042
     Corporate                             273        320        350
                                                       
Total capital expenditures           $  14,600   $  6,025   $  6,343      


The continuing operations of the Company on a geographic  
basis are as follows:

Year Ended December 31                                 
(Dollars in thousands)                    1995       1994       1993
                                                       

Net sales                                              
     United States                    $244,341   $246,601   $307,918
     Foreign (principally Europe)      128,886    114,184    108,608
Total net sales                       $373,227   $360,785   $416,526
Segment operating income
     United States                    $ 29,642   $ 31,679   $ 26,046
     Foreign                             3,628      2,991     (4,057)
Total segment operating income        $ 33,270   $ 34,670   $ 21,989
Identifiable assets                                    
  Continuing Operations:
     United States                    $234,382   $238,916   $283,614
     Foreign                           115,095    109,225    111,448
  Discontinued Operations:
     United States                      12,876    141,053    135,585
     Foreign                            21,534     23,425     20,891
                                                       
Total identifiable assets             $383,887   $512,619   $551,538

Export sales                                           
     Asia                             $  4,060      2,763      4,362
     Latin America                       2,747      2,368      1,699
     Canada                              4,643      3,748      3,132
     Mexico                                472        861        701
     Europe                              2,704      2,857      2,750
     Other                               2,568      3,293      2,596
                                                       
Total export sales                    $ 17,194   $ 15,890   $ 15,240


Note 11  Pension Plans

The  Company  and its subsidiaries have various  pension
plans  covering  substantially all of  their  employees.
Benefits  are based on either years of service or  years
of  service  and average compensation during  the  years
immediately  preceding retirement.  It  is  the  general
policy  of  the  Company to fund its  pension  plans  in
conformity  with  requirements of  applicable  laws  and
regulations.

Pension  expense was $4.2 million in 1995, $7.9  million
in   1994   and  $8.4  million  in  1993,  and  includes
amortization  of  prior  service  cost  and   transition
amounts  for periods of 5 to 15 years. The 1995  expense
includes  costs related to retained pension  liabilities
of  discontinued  operations.  In 1994  and  1993  these
amounts  were  charged to discontinued  operations.   In
1993  the  Company's divestiture program resulted  in  a
decrease  in U.S. pension plan participants.  The  total
curtailment  and  settlement  gain,  in  1993,  of  $1.2
million was applied to the reserve for divestitures (See
Note   3).    The  Company  included  $2.0  million   of
curtailment  and  settlement  losses  in  its  gain   on
disposal related to the discontinued operations in 1995.
Net  pension  expense (including $5.7 million  and  $4.5
million  charged to discontinued operations in 1994  and
1993, respectively) is comprised of the following:

Year Ended December 31                                 
(Dollars in thousands)                        1995       1994       1993
                                                       
Service cost                               $ 4,297    $ 7,237    $ 7,678
Interest cost on projected                             
   benefit obligation                       13,429     14,158     13,802
Actual return on plan assets               (17,797)      (449)   (22,646)
Net amortization and deferral                4,274    (12,963)     9,567
Net pension expense                        $ 4,203    $ 7,983    $ 8,401

Assumptions used in the accounting for the Company-
sponsored defined benefit plans:

Year Ended December 31                        1995       1994       1993
                                                       
Weighted average discount rate                7.5%       8.5%       7.5%
Rate of increase in compensation levels       5.3%       5.3%       5.3%

Expected long-term rate of return on assets   9.0%       9.0%       9.0%

The  following  table sets forth the funded  status  and
amounts recognized in the consolidated balance sheet for
the defined benefit pension plans:


Year Ended December 31                       
(Dollars in thousands)                              1995                     
                                          Assets          Accumulated
                                          Exceed            Benefits   
                                        Accumulated          Exceed
                                         Benefits            Assets
Actuarial present value of                             
benefit obligations:         
     Vested benefit obligation            $117,455          $  46,445
     Accumulated benefit obligation       $124,808          $  46,564
Projected benefit obligation              $138,866          $  47,454
Plan assets at fair value                  148,275             35,226
Plan assets in excess of (less than)                          
 projected benefit obligation                9,409            (12,228)
Unrecognized net (gain) or loss             (9,566)               107
Prior service cost not yet recognized                             
 in net periodic pension cost                2,812                956
Unrecognized net (asset) obligation          
 at transition                               2,037                171
Adjustment required to recognize                        
 minimum liability                             ---             (3,132)
Pension asset (liability) recognized
 in the balance sheet                     $  4,692           $(14,126)
  


Year Ended December 31                       
(Dollars in thousands)                             1994                   
                                         Assets          Accumulated
                                         Exceed            Benefits
                                       Accumulated          Exceed
                                        Benefits            Assets
Actuarial present value of                             
benefit obligations:             
     Vested benefit obligation           $101,869          $  60,492
     Accumulated benefit obligation      $105,020          $  61,253
Projected benefit obligation             $119,886          $  62,661
Plan assets at fair value                 127,850             47,542
Plan assets in excess of (less than)                          
 projected benefit obligation               7,964            (15,119)
Unrecognized net (gain) or loss            (5,897)              (175)
Prior service cost not yet recognized
 in net periodic pension cost               4,066              3,348
Unrecognized net (asset) obligation
 at transition                              3,407                821
Adjustment required to recognize                        
 minimum liability                            ---             (4,165)
Pension asset (liability) recognized 
 in the balance sheet                    $  9,540          $ (15,290)
 

Plan  assets at December 31, 1995, are invested in fixed
dollar  guaranteed investment contracts,  United  States
Government   obligations,  fixed   income   investments,
guaranteed annuity contracts and equity securities whose
values  are  subject to fluctuations of  the  securities
market.

The Company maintains two defined contribution (Employee
Stock   Savings)   plans  covering   substantially   all
domestic,  non-union employees.  Eligible employees  may
generally   contribute  from  1%   to   12%   of   their
compensation  on a pre-tax basis.  Company contributions
to  the  plans  are  based on a percentage  of  employee
contributions.   In July 1995 the Company  restored  its
matching  contribution,  previously  suspended  in  July
1992, at 25% of the first 6% of each participant's  pre-
tax  contribution.  The Company's expense for  1995  was
$.3 million.


Note 12  Postretirement Benefits

In  addition to providing pension benefits, the  Company
provides certain health care and life insurance benefits
for   retired  employees.   Substantially  all  of   the
Company's  non-union  employees  retiring  from   active
service  and  immediately receiving retirement  benefits
from  one  of  the  Company's  pension  plans  would  be
eligible   to  receive  such  benefits.   The  Company's
unionized  retiree  benefits  are  determined  by  their
individually   negotiated  contracts.    The   Company's
contribution  toward the full cost of  the  benefits  is
based  on  the  retiree's  age and  continuous  unbroken
length  of  service  with  the Company.   The  Company's
policy  is to pay the cost of medical benefits as claims
are  incurred.  Life insurance costs are paid as insured
premiums are due.

In  March 1994, the Company amended its policy regarding
retiree  medical  and  life insurance.  This  amendment,
which  affects  some  current retirees  and  all  future
retirees,  phases  out the Company subsidy  for  retiree
medical  and  life  insurance over a three  year  period
ending January 1, 1997. The pre-tax amount amortized  to
income  from continuing operations was $4.6 million  and
$4.4 million in 1995 and 1994, respectively. The Company
will   amortize   remaining   associated   reserves   of
approximately  $5  million  to  income  in  1996.    The
amendment has not resulted in a significant increase  or
decrease  in  cash  requirements  during  the  phase-out
period.

The  following  tables  set forth  the  plans'  combined
status  reconciled  with  the amounts  included  in  the
consolidated balance sheet:

December 31 (Dollars in thousands)                 1995
                                                   Life      
                                      Medical    Insurance     
                                       Plans       Plans      Total
Accumulated postretirement                  
benefit obligation:
     Retirees                         $11,780     $4,974      $16,754
     Fully eligible active plan  
      participants                      1,277        312        1,589
     Other active plan participants     1,011         81        1,092
                                       14,068      5,367       19,435
Plan assets                               ---        ---          ---
Unrecognized prior service cost         3,109      3,924        7,033
Unrecognized net gain (loss)            2,379     (2,290)          89
Postretirement benefit liability 
 recognized in the balance sheet      $19,556     $7,001      $26,557


December 31 (Dollars in thousands)                 1994
                                                   Life      
                                      Medical    Insurance     
                                       Plans       Plans      Total
Accumulated postretirement                        
benefit obligation:
     Retirees                         $16,709      $ 4,826    $21,535
     Fully eligible active plan 
      participants                      1,365          262      1,873
     Other active plan participants     1,326           68      1,148
                                       19,400        5,156     24,556
Plan assets                               ---          ---        ---
Unrecognized prior service cost         7,840        7,376     15,216
Unrecognized net loss                  (2,423)      (2,043)    (4,466)
Postretirement benefit liability
 recognized in the balance sheet      $24,817      $10,489    $35,306
  

The  1995  accrued  postretirement  benefits  amount  is
classified  as follows: $2.2 million current liabilities
and  $24.4  million  long-term liabilities.   For  1994,
these  amounts  are  $2.2 million  current  liabilities,
$30.9 million long-term liabilities and $2.2 million  in
net assets of discontinued operations - noncurrent.

As  a  result of the divestitures in 1994 and 1993,  the
Company  recognized  a  $0.3 million  gain  and  a  $2.2
million  gain, respectively, related to the  curtailment
of  its postretirement benefit plans.  These curtailment
gains were applied to the reserve for divestitures  (See
Note 3).

As  a  result  of  the Company's decision  to  sell  its
Electro-Optical Systems operations a curtailment gain of
$1.3  million  was recognized in 1993. This  curtailment
gain  is  a  component  of  the  loss  on  disposal   of
discontinued operations (See Note 2).

Net periodic postretirement benefit cost (including $2.3
million  credited  in 1994 and $1.0 million  charged  in
1993  to discontinued operations) included the following
components:




Year Ended December 31                             
(Dollars in thousands)                            1995
                                                  Life       
                                      Medical   Insurance     
                                       Plans      Plans         Total
                                                                             
Service cost                          $    59    $     5      $    64 
Interest cost                           1,057        415        1,472
Amortization of prior service cost     (3,110)    (2,319)      (5,429)
Amortization of gain (loss)              (166)       102          (64)
Net periodic postretirement          
     benefit cost                     $(2,160)   $(1,797)     $(3,957)

Year Ended December 31                    
(Dollars in thousands)                            1994
                                                  Life       
                                      Medical   Insurance     
                                       Plans      Plans         Total
                                                                               
Service cost                          $   100    $     7      $   107
Interest cost                           1,547        289        1,836
Amortization of prior service cost     (5,955)    (1,967)      (7,922)
Amortization of loss                      543        103          646
Net periodic postretirement  
     benefit cost                     $(3,765)   $(1,568)     $(5,333)

Year Ended December 31                                             
(Dollars in thousands)                            1993
                                                  Life       
                                      Medical   Insurance     
                                       Plans      Plans         Total
                                        
Service cost                          $   372    $    63      $   435
Interest cost                           2,999        750        3,749
Amortization of prior service cost        ---        ---          ---
Amortization of loss                      ---        ---          ---
Net periodic postretirement   
     benefit cost                     $ 3,371    $   813      $ 4,184

Actual  negotiated  health care premiums  were  used  in
calculating 1995, 1994 and 1993 health care  costs.   It
is  expected  that the annual increase in medical  costs
will  be 8.0% from 1995 to 1996, grading down in  future
years by 1.0% per year until it reaches a future general
medical  inflation  level of  5%.   Inflation  has  been
capped  at  200%  for active non-union  employees.   The
health care cost trend rate assumption has a significant
effect  on  the  amounts reported.  For  example,  a  1%
increase  in  the health care trend rate would  increase
the  accumulated  postretirement benefit  obligation  at
December  31, 1995 by $1.1 million and the net  periodic
cost by $.1 million for the year.  Effective January  1,
1995, the Company changed its medical inflation rate  to
reflect  actual experience.  Such change resulted  in  a
reduction of the 1995 net periodic cost of $.8  million.
The  weighted average discount rate used in  determining
the  accumulated postretirement benefit  obligation  was
7.5% and 8.5% in 1995 and 1994, respectively.


Note 13  Leases

The  Company  leases  certain manufacturing  and  office
facilities,  equipment, and automobiles under  long-term
leases.   Future minimum rental payments required  under
operating  leases  of  continuing operations  that  have
initial or remaining noncancelable lease terms in excess
of one year, as of December 31, 1995, are:

 (Dollars in thousands)                                
1996                                             $5,355
1997                                              4,362
1998                                              3,799
1999                                              2,649
2000                                              1,268
Thereafter                                        4,854
                                                       
Total minimum lease payments                    $22,287

Total  rental  expense  under operating  leases  charged
against continuing operations was $7.3 million in  1995,
$8.2 million in 1994 and $8.0 million in 1993.


Note 14  Contingencies

Legal Proceedings

LILCO Litigation.  In August 1985, the Company was named
as  defendant in a lawsuit filed by Long Island Lighting
Company ("LILCO") following the severing of a crankshaft
in  a  diesel  generator sold to LILCO by  the  Company.
LILCO's complaint contained 11 counts, including  counts
for breach of warranty, negligence and fraud, and sought
$250 million in damages.  In various decisions from 1986
through  1990, 10 of the original 11 counts and  various
additional amended counts were dismissed with  only  the
original   breach  of  warranty  count  remaining.    In
September  1993,  the Second Circuit  Court  of  Appeals
affirmed  a  previous  trial court decision  entering  a
judgment  against  the Company in the  amount  of  $18.3
million, and in October 1993, the judgment was satisfied
by  payment  to LILCO of approximately $19.3 million  by
two of the Company's insurers.

In January 1993, the Company was served with a complaint
in  a  case brought in the U.S. District Court  for  the
Northern  District of California by one of its insurers,
International   Insurance   Company   ("International"),
alleging that, because, among other things, its policies
did not cover the matters in question in the LILCO case,
it  was entitled to recover $10 million in defense costs
previously paid in connection with such case   and  $1.2
million of the judgment which was paid on behalf of  the
Company.  In June 1995, the Court entered a judgment  in
favor  of International awarding it $11.2 million,  plus
interest from March 1995 (the "International Judgment").
The  International Judgment, however, was not  supported
by  an order, and in July of 1995, the court vacated the
International   Judgment  as  being  premature   because
certain outstanding issues of recoverability of the  $10
million   in   defense  costs  had  not   been   finally
determined.   The Company is awaiting a final  decision.
If the International Judgment is reinstated, the Company
intends  to  appeal.  If the ultimate  outcome  of  this
matter  is unfavorable, the Company will record a charge
for the judgment amount plus accrued interest.

In  June 1992, the Company filed an action, subsequently
transferred   to  the  U.S.  District  Court,   Southern
District of New York, that is currently pending  against
Granite  State Insurance Co. ("Granite State"),  one  of
its  insurers,  in  an  attempt to collect  amounts  for
defense costs paid to counsel retained by the Company in
defense of the LILCO litigation.  After reimbursing  the
Company for $1.7 million in defense costs, Granite State
refused to reimburse the Company for an additional  $8.5
million  in defense costs paid by the Company,  alleging
that defense costs above reasonable levels were expended
in   defending  the  LILCO  litigation.    The   insurer
subsequently paid $18.1 million of the judgment rendered
against  the Company, thereby exhausting its $20 million
policy.   The Company claims that the insurer's  refusal
to pay defense costs was in bad faith and the Company is
entitled to its cost of money and other damages.   In  a
counterclaim, Granite State is seeking reimbursement  of
all  or  part  of  the  $1.7 million  in  defense  costs
previously  paid by it, and has indicated  that  it  may
seek  additional  damages beyond  the  reimbursement  of
defense  costs,  including recoupment  of  approximately
$4.0  million of the amount awarded by the jury  in  the
LILCO  litigation  (which represents amounts  previously
paid  by LILCO to the Company for generator repairs  and
which Granite State had paid on behalf of the Company).

Additional  Litigation.   The Company  and  one  of  its
subsidiaries are two of a large number of defendants  in
a  number  of  lawsuits brought by approximately  17,500
claimants  who  allege  injury  caused  by  exposure  to
asbestos.  Although neither the Company nor any  of  its
subsidiaries has ever been a producer or direct supplier
of  asbestos,  it  is  alleged that the  industrial  and
marine  products sold by the Company and the  subsidiary
named  in  such  complaints contained  components  which
contained asbestos.  Suits against the Company  and  its
subsidiary have been tendered to their insurers who  are
defending  under  their  stated reservation  of  rights.
Should settlements for these claims be reached at levels
comparable to those reached by the Company in the  past,
they would not be expected to have a material effect  on
the Company.

The  activities  of  certain  employees  of  the  Ni-Tec
Division  of  the  Company's Varo Inc. subsidiary  ("Ni-
Tec"), headquartered in Garland, Texas, are the focus of
an  ongoing investigation by the Office of the Inspector
General  of  the  U.S. Department  of  Defense  and  the
Department  of  Justice  (Criminal  Division).    Ni-Tec
received subpoenas for certain records as a part of  the
investigation in 1992, 1993 and 1994, each of which  was
responded  to.   The investigation appears  directed  at
quality  control,  testing and documentation  activities
which  began at Ni-Tec while it was a division of Optic-
Electronic Corp.  Optic-Electronic Corp. was acquired by
the  Company  in  November 1990 and subsequently  merged
with  Varo  Inc.  in  1991.  The  Company  continues  to
cooperate  fully with the investigation and is  pursuing
settlement discussions with the U.S. government.  Should
settlement   be   reached   consistent   with    current
discussions, it would not be expected to have a material
effect on the Company.

The  operations  of  the Company, like  those  of  other
companies  engaged  in similar businesses,  involve  the
use, disposal and clean-up of substances regulated under
environmental protection laws.  In a number of instances
the   Company  has  been  identified  as  a  Potentially
Responsible  Party by the U.S. Environmental  Protection
Agency,  and in one instance by the State of Washington,
with  respect to the disposal of hazardous wastes  at  a
number  of facilities that have been targeted for clean-
up  pursuant  to CERCLA or similar State law.   Although
CERCLA  and corresponding State law liability  is  joint
and  several,  the Company believes that  its  liability
will not have a material adverse effect on the financial
condition  of  the  Company since it  believes  that  it
either qualifies as a de minimis or minor contributor at
each  site.  Accordingly, the Company believes that  the
portion of remediation costs that it will be responsible
for  will  not be material.  For additional  information
see  section entitled Environmental Matters in  Part  I,
Item I of this Form 10-K Report.

The Company also has a lawsuit pending against it in the
U.S.   District  Court  for  the  Western  District   of
Pennsylvania  alleging component failures  in  equipment
sold  by  its former diesel engine division and claiming
damages  of approximately $3.0 million and a lawsuit  in
the  Circuit  Court  of Cook County, Illinois,  alleging
performance  shortfalls  in products  delivered  by  the
Company's  former Delaval Turbine Division and  claiming
damages of approximately $8.0 million.  Each lawsuit  is
in the document discovery stage.

With  respect to the litigation and claims described  in
the  preceding  paragraphs, management  of  the  Company
believes that it either expects to prevail, has adequate
insurance   coverage  or  has  established   appropriate
reserves to cover potential liabilities.  There  can  be
no assurance, however, on the ultimate outcome of any of
these matters.

The  Company  is also involved in various other  pending
legal proceedings arising out of the ordinary course  of
the  Company's business.  The adverse outcome of any  of
these  legal  proceedings is  not  expected  to  have  a
material  adverse effect on the financial  condition  of
the  Company.  However, if all or substantially  all  of
these  legal proceedings were to be determined adversely
to the Company, there could be a material adverse effect
on the financial condition of the Company.

Reported  profits from the sale of certain  products  to
the  U.S.  Government and its agencies  are  subject  to
adjustments.  In the opinion of management, refunds,  if
any,   will  not  have  a  material  effect   upon   the
consolidated financial statements.

The Company is self-insured for a portion of its product
liability   and   certain  other  liability   exposures.
Depending on the nature of the liability claim, and with
certain  exceptions, the Company's maximum  self-insured
exposure ranges from $250,000 to $500,000 per claim with
certain maximum aggregate policy limits per claim  year.
With respect to the exceptions, which relate principally
to  diesel  and  turbine  units sold  before  1991,  the
Company's  maximum self-insured exposure is  $5  million
per claim.




               REPORT OF INDEPENDENT AUDITORS


Board  of  Directors,
Imo Industries Inc.

We have audited the accompanying consolidated balance sheets 
of Imo  Industries Inc. and  subsidiaries as of December 31, 
1995 and 1994, and  the  related  consolidated statements of
income,  cash flows and shareholders' equity for each of the 
three years in the period ended December 31,1995. Our audits 
also included the financial statement schedule listed in the
Index at Item 14(a). These financial statements and schedule 
are the responsibility  of the  Company's  management.   Our
responsibility  is to express an opinion on  these financial   
statements and schedule 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
misstatements.   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 Imo Industries Inc. and  subsidiaries
at  December 31, 1995 and 1994, and the consolidated results
of  their  operations and their cash flows for each  of  the
three  years  in  the  period ended December  31,  1995,  in
conformity  with  generally accepted accounting  principles.
Also,  in  our  opinion,  the  related  financial  statement
schedule, when considered in relation to the basic financial
statements  as  a  whole, presents fairly  in  all  material
respects the information set forth therein.



                                      ERNST & YOUNG LLP
Princeton, New Jersey
February 15, 1996


                                   
Imo Industries Inc. and Subsidiaries
Quarterly Financial Information (Unaudited)


Quarterly financial information for 1995 and 1994 is as 
follows:
                                                
1995 (Dollars in thousands except        1st*     2nd*     3rd*     4th
  per share amounts (a)                Quarter  Quarter  Quarter  Quarter

Net Sales                             $95,884  $98,576  $88,727  $90,040
Gross profit                           30,894   30,943   27,389   25,666
Income (loss) before                                             
extraordinary item:
     Continuing Operations              2,586    2,962    2,515    3,966
     Discontinued Operations           40,577      448   (6,938) (11,962)
     Extraordinary Item                (4,140)     ---     (304)     ---
Net income (loss)                      39,023    3,410   (4,727)  (7,996)
Earnings (loss) per share:                                       
     Before extraordinary item:                                  
          Continuing Operations           .15      .18      .15      .23
          Discontinued Operations        2.38      .02     (.41)    (.70)
     Extraordinary Item                  (.24)     ---     (.02)     ---
     Net income (loss)                   2.29      .20     (.28)    (.47)


1994 (Dollars in thousands except        1st*     2nd*     3rd*     4th*
  per share amounts (a)                Quarter  Quarter  Quarter  Quarter

Net Sales                             $87,800  $91,478  $91,235  $90,272
Gross profit                           27,759   28,296   27,278   28,617
Income (loss) before                                             
extraordinary item:
     Continuing Operations                341   (1,045)   1,208     (320)
     Discontinued Operations              564    2,797    1,580    4,105
     Extraordinary Item                   ---      ---   (5,299)     ---
Net income (loss)                         905    1,752   (2,511)   3,785
Earnings (loss) per share:                                       
     Before extraordinary item:                                  
          Continuing Operations           .02     (.06)     .07     (.02)
          Discontinued Operations         .03      .17      .09      .24
     Extraordinary Item                   ---      ---     (.31)     ---
     Net income (loss)                    .05      .11     (.15)     .22

(a)  The notes to the consolidated financial statements located in 
     Part IV of this Form 10-K Report as indexed at Item 14(a)(1) 
     should be read in conjunction with this summary.

*    Reclassified to conform to 1995 full year presentation.



<TABLE>
                                                                                
                                  SCHEDULE II
                      IMO INDUSTRIES INC. AND SUBSIDIARIES
                        VALUATION AND QUALIFYING ACCOUNTS
                             (Dollars in thousands)
THREE-YEAR PERIOD ENDED DECEMBER 31, 1995
<CAPTION>
                                                ADDITIONS                                      
                             BALANCE AT   CHARGED TO                            BALANCE                                 
                             BEGINNING    COSTS AND    OTHER -    DEDUCTIONS -  AT END
                             OF YEAR      EXPENSES    DESCRIBE    DESCRIBE      OF YEAR 
<S>                          <C>          <C>         <C>         <C>           <C>
YEAR ENDED DECEMBER 31, 1995:
Allowance for doubtful   
   accounts                  $ 2,192       $   394     $   74(2)   $   642(4)    $ 2,030
                                                           12(9)
Inventory Valuation
   Allowance                 $11,884       $ 2,454     $  312(2)   $ 2,918(7)    $11,572
                                                           30(9)       190(3) 
Valuation allowance for
   deferred tax assets       $68,910       $   ---     $  ---      $15,550(3)    $31,675    
                                                                    17,000(10)        
                                                                     4,685(11)  
Accrued product warranty
   liability                 $ 4,310       $ 1,563     $    9(9)   $ 1,341(5)    $ 2,737
                                                           45(2)     2,253(3) 
                                                          404(3)             
Accrued contract completion
   costs                     $   556       $    91     $  ---      $   183(6)    $    94
                                                                       370(3)   
YEAR ENDED DECEMBER 31, 1994: *
Allowance for            
   doubtful accounts         $ 2,371       $   742     $  123(2)   $   839(4)    $ 2,192
                                                                       205(3)   
Inventory Valuation 
   Allowance                 $11,577       $ 5,452     $  ---      $ 4,381(7)    $11,884
                                                                       764(3)  
Valuation allowance for     
   deferred tax assets       $60,215       $   ---     $ 8,695(3)  $   ---       $68,910
Accrued product warranty
   liability                 $ 3,777       $ 1,188     $    17(2)  $   672(5)    $ 4,310
Accrued contract completion
   costs                     $   886       $   324     $   ---     $   179(3)    $   556
                                                                       475(6)   
YEAR ENDED DECEMBER 31, 1993: *
Allowance for
   doubtful accounts         $ 2,338       $ 1,374     $   ---     $   327(8)    $ 2,371
                                                                       914(4)        
                                                                        37(2)        
                                                                        63(3)        
Inventory Valuation
   Allowance                 $14,033       $ 3,435     $   ---     $ 2,591(7)    $11,577
                                                                     1,870(3)
                                                                     1,430(8)
Valuation allowance for      
   deferred tax assets       $ 1,500       $15,000     $43,715(1)  $   ---       $60,215
Accrued product warranty
   liability                 $ 5,272       $ 1,191     $    30(2)  $ 2,719(5)    $ 3,777
                                                            63(3)       60(3)   
Accrued contract completion
   costs                     $   701       $   627     $    60(3)  $   502(6)    $   886

*    Reclassified to conform to the 1995 presentation (continuing operations).
(1)  Net change in allowance primarily to offset tax benefit of current year tax loss.             
(2)  Foreign exchange adjustments.
(3)  Reclassification and adjustments.
(4)  Uncollectible accounts written off, net of recoveries.
(5)  Product warranty claims honored during the year.
(6)  Current year charges for contract completion. 
(7)  Charges against inventory valuation account during the year.
(8)  Ending balances of businesses sold.
(9)  Opening balance of companies acquired during the year.
(10) Reduction due to revaluation of realizable tax benefit.
(11) Utilization of net operating loss carryforwards by discontinued operations.
                                   S-1
</TABLE>