Noel Group Inc · 10-K405 · For 12/31/98

Filed On 3/31/99   ·   SEC File 0-19737   ·   Accession Number 950117-99-685

Annual Report -- [X] Reg. S-K Item 405   ·   Form 10-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-K405     Noel 10-K405                                          58    327K 
 2: EX-21       Subsidiaries of the Registrant                         1      4K 
 3: EX-27       Financial Data Schedule                                1      8K 

10-K405   ·   Noel 10-K405
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UNITED STATES 

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.                                                          

For the fiscal year ended December 31, 1998       Commission File Number 0-19737

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

For the transition period from ___________ to __________.                       

----------------------

NOEL GROUP, INC.  
(Exact name of registrant as specified in its charter)

                                                        · Enlarge/Download Table
                                                                                                    
                      DELAWARE                                   13-2649262                         
(State or other jurisdiction of incorporation or organization)  (I.R.S. Employer Identification No.)

667 Madison Avenue, New York, New York 10021
(Address of principal executive offices, including zip code)
(212) 371-1400
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:             None    

                                                                · Download Table
                                                                             
Title of each class                      Name or exchange on which registered
      None                                          Not Applicable           

Securities registered pursuant to Section 12(g) of the Act:                     
Common Stock, $.10 par value per share
(Title of Class 

----------------------

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

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

The aggregate market value of voting stock held by non-affiliates of the        
registrant on March 22, 1999, was approximately $15,161,138. On such date, the  
last sale price of registrant's common stock was $1.25 per share. Solely for the
purposes of this calculation, shares beneficially owned by directors and        
officers of the registrant and beneficial owners of in excess of 10% of the     
registrant's common stock have been excluded, except shares with respect to     
which such persons or entities disclaim beneficial ownership. Such exclusion    
should not be deemed a determination or admission by registrant that such       
individuals or entities are, in fact, affiliates of registrant.                 

Indicate number of shares outstanding of each of the registrant's classes of    
common stock, as of March 22, 1999.                                             

                                                                · Download Table

           Class                              Outstanding on March 22, 1999
           -----                              -----------------------------
                                                                           
Common Stock, par value $.10 per share        20,567,757                   

DOCUMENTS INCORPORATED BY REFERENCE:

                                                        · Enlarge/Download Table

                                                                   Part of the Form 10-K in to which 
            Document                                               the Document is Incorporated      
            --------                                               ----------------------------------
                                                                                                     
Definitive proxy Statement to Shareholder for 1999 Annual Meeting  Part III, Items 10, 11, 12 and 13 

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This Annual Report on Form 10-K contains, in addition to historical information,
certain forward-looking statements including those regarding valuation of Noel's
assets and liabilities, the amounts ultimately to be distributed to shareholders
and Noel's plans for the liquidation or disposition of assets and future plans  
of entities in which Noel holds interests. Such statements involve certain risks
and uncertainties. Should one or more of these risks or uncertainties           
materialize, actual outcomes may vary materially from those indicated.          

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PART I

ITEM 1.  BUSINESS                                                               

(a) General development of business.                

      On May 21, 1996, the Board of Directors of Noel Group, Inc. ("Noel" or
the "Company") adopted a Plan of Complete Liquidation and Dissolution (the      
"Plan") pursuant to which the assets of Noel will either be distributed in kind 
to Noel's shareholders or sold; the proceeds of such sales, after paying or     
providing for all claims, liabilities, expenses and other obligations of Noel,  
will be distributed to Noel's shareholders together with other available cash;  
and thereafter Noel will be dissolved. The Plan was approved by the shareholders
at a Special Meeting of Shareholders held on March 19, 1997.                    

Prior to the approval of the Plan, Noel conducted its principal 
operations through small and medium-sized operating companies in which Noel held
controlling or other significant equity interests. As a consequence of the      
approval of the Plan, Noel's activities are limited to winding up its affairs,  
taking such action as may be necessary to preserve the value of its assets and  
distributing its assets in accordance with the Plan.                            

On March 27, 1998, Noel distributed pro rata to its shareholders
approximately $14,400,000 in cash at the rate of $0.70 for each share of Noel's 
common stock ("Common Stock") issued and outstanding at the close of business on
the March 20, 1998 record date.                                                 

On April 30, 1998, Noel distributed pro rata to its shareholders
approximately $9,300,000 in cash at the rate of $0.45 for each share of Common  
Stock issued and outstanding at the close of business on the April 22, 1998     
record date.                                                                    

        On June 8, 1998 pursuant to a Stock Purchase Agreement of the same date,
Noel sold to Brynwood Partners III L.P. ("Brynwood") 3,569,755 shares of common 
stock of Lincoln Snacks Company ("Lincoln") at a price of $2.00 per share or    
$7,139,510 in the aggregate. Under the Agreement, Noel received $4,500,000 in   
cash and a 6% interest bearing note in the principal amount of $2,639,510. The  
payment of the note and accrued interest and proceeds of $400,000 for the sale  
of the remaining 200,000 Lincoln shares owned by Noel was received in July 1998.

      In June 1998, the stock of Ferrovia Novoeste S.A. ("Novoeste") held by
Noel, and each of the other Novoeste stockholders, was acquired by Ferronorte   
Participacoes S.A. ("Ferropar") in exchange for stock in Ferropar. Concurrently 
with such exchange, Ferropar acquired all of the outstanding stock of Ferronorte
S.A. Ferrovia Norte Brasil ("Ferronorte") in exchange for stock in Ferropar.    
After such exchanges, Noel owned approximately 2.8% of the outstanding stock of 
Ferropar. Ferropar is the holding company for Novoeste and Ferronorte. Novoeste 
operates the Brazilian western railroad network (SR-10), and Ferronorte operates
the Brazilian railroad network between Mato Grosso and several destinations, and
a port terminal in Sao Paulo, Brazil.                                           

 On August 14, 1998, Noel distributed pro rata to its shareholders
approximately $18,922,000 in cash at the rate of $0.92 for each share of Common 
Stock issued and outstanding at the close of business on the July 31, 1998      
record date.                                                                    

 On March 17, 1999, Noel announced the distribution of trust units
representing ownership of Noel's entire holding of 2,026,104 shares of Career   
Blazers Inc. ("Career Blazers") common stock to Noel shareholders (the          
"Distribution"). The Distribution will be made in accordance with the Plan. The 
record date for the Distribution was set at March 29, 1999 and the distribution 
date is expected to be April 12, 1999.                                          

PRINCIPAL REMAINING ASSETS OF THE COMPANY                                       

As of March 22, 1999, Noel's principal remaining assets included:               

*   Career Blazers Inc.:  2,026,104 shares of common stock, representing        
approximately 11.6% of the outstanding shares of Career Blazers Inc.    
common stock;                                                           

*   Carlyle Industries, Inc.: 9,920,908 of Series B preferred stock,            
representing approximately 93% of the outstanding shares of Carlyle     
Industries, Inc. Series B preferred stock; and                          

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*   Ferronorte Participacoes S.A.: 10,624,886 shares of stock, representing     
approximately 2.8% of the outstanding shares of Ferronorte Participacoes
S.A. stock.                                                             

FACTORS TO BE CONSIDERED WITH RESPECT TO THE DISTRIBUTION OR SALE OF THE        
COMPANY'S REMAINING ASSETS                                                      

Set forth below is a brief description of the status of Noel's current
plans to sell or distribute its principal remaining holdings. Except as set     
forth below, the Board of Directors and management have not yet determined      
whether or when to sell or distribute any of its remaining holdings. The        
determination of which holdings will be sold and which will be distributed      
in-kind to the Company's shareholders will be based on the judgment of the Board
of Directors and management as to whether the sale or distribution of a         
particular holding will result in realization of the highest possible value to  
Noel's shareholders and will be based on several factors, including, and not    
necessarily in order of priority (i) whether the security in question is        
publicly traded; (ii) the anticipated effect on the market price of a           
distribution as opposed to a sale; (iii) whether the security in question could 
be sold with little disruption to the public market; (iv) whether an orderly    
public market exists and would continue to exist after distribution; (v) whether
a distribution or a sale would require registration under the Securities Act of 
1933, as amended (the "Securities Act") and the Securities Exchange Act of 1934,
as amended (the "Exchange Act"); (vi) the need to raise cash through sales of   
securities to pay corporate taxes payable upon the distribution and sale of the 
Company's assets and the amount of additional cash required to be raised; (vii) 
the availability of one or more purchasers of the security in a private sale;   
(viii) the Board's opinion as to the future prospects of the entity; (ix) the   
prices obtainable for such asset in public or privately negotiated transactions;
and (x) with respect to assets to be sold in private transactions, the          
availability of purchasers for such assets. Currently, the Company's publicly   
traded holdings are thinly traded. Accordingly, a public sale or distribution   
thereof could result in a disruption in the public market. As noted above,      
pursuant to the Distribution, Noel has announced a distribution to its          
shareholders of trust units representing its holdings of Career Blazers Inc.    
common stock.                                                                   

 With respect to securities held by the Company which are expected to be
distributed to shareholders (other than in trust), applicable laws and          
regulations of the Securities Exchange Commission (the "Commission") will be    
complied with so that all shareholders (with the possible exception of          
affiliates of the Company or of the issuer of the securities which are          
distributed) will receive securities which will thereafter be freely            
transferable by them under applicable Federal securities laws. The securities to
be distributed to the shareholders will have been registered under the Exchange 
Act and, if required by applicable law and regulation, the Securities Act.      
Accordingly, the issuer of such securities will be subject to substantially the 
same reporting and proxy rules as currently apply to the Company. Securities    
which under current law and regulation may not be distributed without such      
registration will not be distributed unless and until the required registration 
has been effectuated. In addition, assuming satisfaction of required eligibility
standards, the Company may seek to cause any of its holdings of securities not  
currently listed on a securities exchange or authorized for quotation through   
The Nasdaq Stock Market ("Nasdaq") to be so authorized for quotation or listed, 
although there can be no assurance that the Company will do so. If any          
distributed securities are not authorized for quotation through Nasdaq or listed
on an exchange, the effect may be to render such securities illiquid and/or to  
diminish the price realizable upon sale. The sale or distribution of the        
Company's holdings and the anticipation of such sale or distribution may, at    
least temporarily, reduce the market price of such securities and therefore the 
values realized by the shareholders.                                            

The sale by the Company or the distribution by the Company to its     
shareholders of an appreciated asset results in the recognition of taxable gain 
by the Company to the extent the fair market value of such asset exceeds the    
Company's tax basis in such asset. The proceeds of any such sales are generally 
made available to pay (i) the taxes, if any, payable as a result of such sale   
and (ii) other expenses incurred in connection with the consummation of the     
Plan. The remaining proceeds after payment of such taxes and expenses are       
generally made available for cash distributions to the shareholders. The Company
currently believes that it has sufficient cash to pay its current tax           
obligations and expenses, although there can be no assurance that this will be  
the case. In the event that available cash is insufficient to pay such taxes and
expenses the Company may be required to sell additional assets. The             
determination by the Board of Directors as to which additional assets would be  
sold to raise the cash to pay any additional taxes and expenses will depend on a
variety of factors, including, those set forth in the preceding paragraph.      

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CARLYLE INDUSTRIES, INC.                                                        

Noel currently holds 9,920,908 shares of Series B preferred stock of  
Carlyle, representing approximately 93% of the outstanding shares of such Series
B preferred stock (the "Preferred Stock"), or 55% of the aggregate voting power,
with an estimated value as of December 31, 1998 of approximately $10.8 million. 
See Footnote 2 of Notes to Financial Statements on page F-11. Under the terms of
Carlyle's charter, dividends are payable upon the Preferred Stock when, as and  
if declared by the Carlyle Board of Directors out of legally available funds. In
addition, the Preferred Stock is required to be redeemed by Carlyle in annual   
installments beginning March 15, 1995 through March 15, 1999, subject, among    
other things, to the extent of legally available funds as determined by the     
Board of Directors and the approval of Carlyle's senior lenders, if any. Prior  
to March 27, 1997, Carlyle did not make any payments on account of the Preferred
Stock (either dividend or redemption) as Carlyle's lenders declined to approve  
such payments. However, as of that date, Carlyle discharged its credit facility.
Consequently, Carlyle is now in default of its obligations to redeem the        
Preferred Stock to the extent of its legally available funds. Accrued but unpaid
dividends are added to the redemption value of the Preferred Stock and the total
continues to accrue interest at a compound rate of 6% per annum.                

    Carlyle has informed Noel that it intends to fulfill its obligation to the
holders of the Preferred Stock as required by the Company's charter to the      
extent Carlyle has cash resources in excess of those required to operate its    
business. On June 23, 1998, Carlyle paid $12.5 million to holders of its        
Preferred Stock of record as of June 22, 1998. $10.1 million of this amount     
represented the original redemption amount and $2.4 million reflected the       
increase in redemption amount resulting from accumulated and unpaid dividends.  
As of December 31, 1998, the Preferred Stock payment arrearages to Noel         
aggregated $8.8 million, including accrued but unpaid preferred dividends of    
$2.7 million. Carlyle is currently engaged in discussions with Noel with a view 
to satisfying the balance of its obligations to holders of Preferred Stock in   
accordance with the terms of Carlyle's charter and consistent with Carlyle's    
resources. Discussions include the timing and amount of future payments as well 
as the possibility of modifying the terms and condition of the Preferred Stock. 
Carlyle has also informed Noel that, as Carlyle believes that it does not       
currently have the necessary resources, its ability to make further payments on 
account of the Preferred Stock will depend on Carlyle's future cash flow, the   
timing of the settlement of the liabilities recorded in its financial           
statements, the outcome of the negotiations with Noel described above, the      
ability of Carlyle to obtain additional financing and compliance with Carlyle's 
new credit facility. In addition, as Carlyle has agreed to notify the Pension   
Benefit Guaranty Corporation ("PBGC") prior to making any redemption payments,  
Carlyle's decision to make any such payments will depend on the successful      
resolution of any issues which may arise with the PBGC relating to Carlyle's    
unfunded liability to its defined benefit plan. Carlyle is also exploring       
strategic alternatives to redemption of the Preferred Stock.                    

FERRONORTE PARTICIPACOES, S.A.                                                  

    Noel's wholly-owned subsidiary, Noel Brazil, Inc., holds 10,624,886 shares
of stock in Ferronorte Participacoes, S.A. ("Ferropar") representing 2.8% of the
total outstanding shares of Ferropar. Previously, Noel Brazil, Inc. held        
1,200,000 shares of common stock and 5,657,142 shares of preferred stock of     
Ferrovia Novoeste, S.A. ("Novoeste"). In June 1998, the stock of Novoeste held  
by Noel and the other Novoeste stockholders, was acquired by Ferropar in        
exchange for stock in Ferropar. Concurrently with such exchange, Ferropar       
acquired all of the outstanding stock of Ferronorte S.A. Ferrovia Norte Brasil  
("Ferronorte") in exchange for stock in Ferropar. After such exchanges, Noel    
owned the approximately 2.8% of the outstanding stock of Ferropar referenced    
above. The estimated value of Noel's interest in Ferropar as of December 31,    
1998 was $6.3 million. See Footnote 2 of Notes to Financial Statements on page  
F-11. The transfer of Noel's interest in Ferropar is subject to certain         
restrictions. Noel does not anticipate a public distribution to its shareholders
of its interest in Ferropar and expects to dispose of its interest therein      
through private sales as permitted by Brazilian law and the terms of its        
investment therein. In February 1999, Noel engaged a Brazilian investment bank  
to sell its interest in Ferropar.                                               

CAREER BLAZERS INC.                                                             

 Noel currently holds 2,026,104 shares of common stock of Career Blazers
Inc. ("Career Blazers"), representing 11.6% of the outstanding shares of such   
common stock, with an estimated value as of December 31, 1998 of approximately  
$10.5 million. See Footnote 2 of Notes to Financial Statements on page F-10. On 
March 17, 1999, Noel announced the distribution of trust units representing     
ownership of Noel's entire holding of Career Blazers common stock to Noel       
shareholders (the "Distribution"). The Distribution will be made in accordance  
with Noel's Plan of Complete Liquidation and Dissolution. The record date for   
the Distribution was set at March 29, 1999 and the distribution date is expected
to be April 12, 1999.                                                           

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PRINCIPAL PROVISIONS OF THE PLAN                                                

PURSUANT TO THE PLAN:                                                           

(a) The Company is in the process of distributing pro rata to its     
shareholders in-kind, selling, or otherwise disposing of all its assets. The    
liquidation is expected to be concluded prior to March 19, 2000 by a final      
liquidating distribution either directly to the shareholders or to one or more  
liquidating trusts. Any sales of the Company's assets will be made, in private  
or public transactions, on such terms as are approved by the Board of Directors.
It is not anticipated that any further shareholder votes will be solicited with 
respect to the approval of the specific terms of any sale of assets approved by 
the Board of Directors as the Company has been advised by its counsel that such 
further votes are not required by the Delaware General Corporate Law ("DGCL").  
See "Sales of the Company's Remaining Assets." Reference is made to "Factors to 
be Considered with Respect to Distribution or Sale of the Company's Remaining   
Assets" for a discussion of the factors to be considered by the Board in making 
its determination of which assets will be sold and which will be distributed    
in-kind.                                                                        

  (b) Subject to the payment or the provision for payment of the Company's
obligations, the cash proceeds of any asset sales together with other available 
cash will be distributed from time to time pro rata to the holders of the Common
Stock on record dates selected by the Board of Directors with respect to each   
such distribution. Only shareholders of record on the record date set for a     
particular distribution will receive distributions with respect to such record  
date. The Company may establish a reasonable reserve (a "Contingency Reserve")  
in an amount determined by the Board of Directors to be sufficient to satisfy   
the liabilities, expenses and obligations of the Company not otherwise paid,    
provided for or discharged. The net balance, if any, of any such Contingency    
Reserve remaining after payment, provision or discharge of all such liabilities,
expenses and obligations will also be distributed to the Company's shareholders 
pro rata. The Company's accrued obligations at December 31, 1998 were           
approximately $2.6 million. The Company currently has no plans to repurchase    
shares of Common Stock from its shareholders. However, if the Company were to   
repurchase its shares of Common Stock from its shareholders, such repurchases   
would be open market purchases and would decrease amounts distributable to other
shareholders if Noel were to pay amounts in excess of the per share values      
distributable in respect of the shares purchased and would increase amounts     
distributable to other shareholders if Noel were to pay amounts less than the   
per share values distributable in respect of such shares. See "Liquidating      
Distributions; Nature; Amount; Timing" and "Contingent Liabilities; Contingency 
Reserve; Liquidating Trust" below.                                              

(c) Any further distributions in-kind of the Company's holdings of    
securities will be made pro rata to the holders of Common Stock on record dates 
selected by the Board of Directors with respect to each such distribution. Only 
shareholders of record on the record date set for a particular distribution will
receive distributions with respect to such record date. A distribution of the   
Company's holdings in a security may also be effected by the distribution to    
Noel shareholders of interests in a trust holding such security. If securities  
held by the Company are to be distributed directly to shareholders (other than  
in trust), applicable rules and regulations of the Commission will be complied  
with so that all shareholders (with the possible exception of affiliates of the 
Company or of the issuer of the securities which are distributed) will receive  
securities which will thereafter be freely transferable by them under applicable
Federal securities laws. The securities to be distributed to the shareholders   
will have been registered under the Exchange Act and, if required by applicable 
law and regulation, the Securities Act. Accordingly, the issuer of such         
securities will be subject to substantially the same reporting and proxy rules  
as currently apply to the Company. As described under "Principal Remaining      
Assets of the Company" only certain of Noel's holdings constitute entities which
are currently subject to the reporting obligations of the Exchange Act.         
Securities which under current law and regulation may not be distributed without
such registration will not be distributed unless and until the required         
registration has been effectuated. In addition, assuming satisfaction of        
required eligibility standards, the Company may seek to cause any of its        
holdings of securities not currently listed on an securities exchange or        
authorized for quotation on Nasdaq, to be so authorized for quotation or listed,
although there can be no assurance that the Company will do so. If any          
distributed securities are not authorized for quotation through Nasdaq or listed
on an exchange, the effect may be to render such securities illiquid and/or to  
diminish the price realizable upon sale. In any event, the sale or distribution 
of the Company's holdings and the anticipation of such sale or distribution     
resulting from the approval of the Plan may reduce, at least temporarily, the   
market price of such securities and therefore the values realized by the        
shareholders. See "Factors to be Considered with Respect to Distribution or Sale
of the Company's Remaining Assets."                                             

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(d) If deemed necessary by the Board of Directors for any reason, the 
Company may, from time to time, transfer any of its unsold assets to one or more
trusts established for the benefit of the then shareholders which property would
thereafter be sold or distributed on terms approved by its trustees. If all of  
the Company's assets (other than the Contingency Reserve) are not sold or       
distributed prior to March 19, 2000, it is anticipated that the Company would   
transfer in final distribution such remaining assets to a trust. The Board of   
Directors may also elect in its discretion to transfer the Contingency Reserve, 
if any, to such a trust. Any of such trusts are referred to herein as           
"liquidating trusts." Notwithstanding the foregoing, to the extent that a       
distribution or transfer of any asset cannot be effected without the consent of 
a governmental authority, no such distribution or transfer shall be effected    
without such consent. In the event of a transfer of assets to a liquidating     
trust, the Company would distribute, pro rata to the holders of its Common      
Stock, beneficial interests in any such liquidating trust or trusts. It is      
anticipated that the interests in any such trusts will not be transferable;     
hence, although the recipients of the interests would be treated for tax        
purposes as having received their pro rata share of property transferred to the 
liquidating trust or trusts and will thereafter take into account for tax       
purposes their allocable portion of any income, gain or loss realized by such   
liquidating trust or trusts, the recipients of the interests will not realize   
the value thereof unless and until such liquidating trust or trusts distributes 
cash or other assets to them. The Plan authorizes the Board of Directors to     
appoint one or more individuals or entities to act as trustee or trustees of the
liquidating trust or trusts and to cause the Company to enter into a liquidating
trust agreement or agreements with such trustee or trustees on such terms and   
conditions as may be approved by the Board of Directors. Approval of the Plan by
the shareholders constituted the approval by such shareholders of any such      
appointment and any liquidating trust agreement or agreements. For further      
information relating to liquidating trusts, the appointment of trustees and the 
liquidating trust agreements, reference is made to "Contingent Liabilities;     
Contingent Reserve; Liquidating Trusts."                                        

(e) The Company will close its stock transfer books and discontinue   
recording transfers of shares of Common Stock on the earlier to occur of (i) the
close of business on the record date fixed by the Board of Directors for the    
final liquidating distribution, or (ii) the date on which the dissolution       
becomes effective under the DGCL (the "Final Record Date"), and thereafter      
certificates representing shares Common Stock will not be assignable or         
transferable on the books of the Company except by will, intestate succession or
operation of law. After the Final Record Date the Company will not issue any new
stock certificates, other than replacement certificates. See "Listing and       
Trading of the Common Stock and Interests in the Liquidating Trust or Trusts"   
and "Final Record Date" below.                                                  

   (f) A Certificate of Dissolution will be filed with the State of Delaware
dissolving the Company following completion of the foregoing steps or earlier as
determined by the Board of Directors. The dissolution of the Company will become
effective, in accordance with the DGCL upon proper filing of the Certificate of 
Dissolution with the Secretary of State or upon such later date as may be       
specified in the Certificate of Dissolution. Pursuant to the DGCL, the Company  
will continue to exist for three years after the dissolution becomes effective  
or for such longer period as the Delaware Court of Chancery shall direct, for   
the purpose of prosecuting and defending suits, whether civil, criminal or      
administrative, by or against it, and enabling the Company gradually to settle  
and close its business, to dispose of and convey its property, to discharge its 
liabilities and to distribute to its shareholders any remaining assets, but not 
for the purpose of continuing the business for which the Company was organized. 

ABANDONMENT; AMENDMENT                                                          

 Under the Plan, the Board of Directors may modify, amend or abandon the
Plan, notwithstanding shareholder approval, to the extent permitted by the DGCL.
The Company will not amend or modify the Plan under circumstances that would    
require additional shareholder solicitations under the DGCL or the federal      
securities laws without complying with the DGCL and the federal securities laws.

   The Executive Committee of the Board of Directors may exercise all of the
powers of the Board of Directors in implementing the Plan. Accordingly,         
references to the Board of Directors herein should be deemed also to refer to   
such committee.                                                                 

LIQUIDATING DISTRIBUTIONS; NATURE; AMOUNT; TIMING                               

  Although the Board of Directors has not established a firm timetable for
further distributions to shareholders, other than with respect to Career Blazers
as described herein, the Board of Directors will, subject to exigencies inherent
in winding up the Company's business, make further distributions as promptly as 
practicable. The liquidation is expected                                        

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to be concluded prior to March 19, 2000, by a final liquidating distribution    
either directly to the shareholders or to a liquidating trust. Except as        
described herein, the Board of Directors is currently unable to predict the     
precise nature, amount or timing of any further distributions pursuant to the   
Plan. The actual nature, amount and timing of, and record date for all further  
distributions will be determined by the Board of Directors, in its sole         
discretion, and will depend in part upon the Board of Directors' determination  
as to whether particular assets are to be distributed in-kind or otherwise      
disposed of through sale or other means. Reference is made to "Factors to be    
Considered with Respect to Distribution or Sale of the Company's Remaining      
Assets" for a discussion of the factors to be considered by the Board in making 
its determination of which assets will be sold and which will be distributed    
in-kind.                                                                        

     The Company does not plan to satisfy all of its liabilities and obligations
prior to making further distributions to its shareholders, but instead will     
reserve assets deemed by management and the Board of Directors to be adequate to
provide for such liabilities and obligations. See "Contingent Liabilities;      
Contingency Reserve; Liquidating Trust." Management and the Board of Directors  
believe that the Company has sufficient cash to pay its current and accrued     
obligations, without the sale of any of its assets.                             

  Uncertainties as to the precise value of Noel's remaining assets and the
ultimate amount of its liabilities may materially affect the net values         
ultimately distributable to shareholders. Estimated claims, liabilities and     
expenses from operations (including operating costs, salaries, income taxes,    
payroll and local taxes and miscellaneous office expenses), projected to occur  
during execution of the Plan, have been accrued along with expenses for         
professional fees and other expenses of liquidation. Management and the Board of
Directors believe that available cash and amounts received on the sale of assets
will be adequate to provide for the Company's obligations, liabilities, expenses
and claims (including contingent liabilities) and to make cash distributions to 
shareholders. However, no assurances can be given that this will be the case.   
Any increase to the Company's obligations, liabilities, expenses and claims     
above the accrued amount will reduce the net assets ultimately available to     
shareholders.                                                                   

SALES OF THE COMPANY'S REMAINING ASSETS                                         

The Plan gives the Board of Directors the authority to sell all of the
assets of the Company. Any sales of the Company's remaining assets will be made 
on such terms as are approved by the Board of Directors and may be conducted by 
competitive bidding, public sales on applicable stock exchanges or              
over-the-counter or privately negotiated sales. Any such sales will only be made
after the Board of Directors has determined that any such sale is in the best   
interests of the shareholders. It is not anticipated that any further           
shareholder votes will be solicited with respect to the approval of the specific
terms of any particular sales of assets approved by the Board of Directors, as  
the Company has been advised by its counsel that such further votes are not     
required by the DGCL. The prices at which the Company will be able to sell its  
various assets will depend largely on factors beyond the Company's control,     
including, without limitation, the rate of inflation, changes in interest rates,
the condition of financial markets, the availability of financing to prospective
purchasers of the assets and United States and foreign regulatory approvals. In 
addition, the Company may not obtain as high a price for a particular property  
as it might secure if the Company were not in liquidation.                      

  The Board of Directors will not engage in a sale of all or substantially
all of its assets to an affiliate or group of affiliates. At this stage, the    
Company cannot exclude the possibility, however, that some of the Company's     
assets may be sold to one or more of the Company's officers, directors or       
affiliates, but such a transaction will be effectuated only if such transaction 
is approved by a disinterested majority of the Board of Directors. There have   
been no negotiations regarding any such sale.                                   

CONDUCT OF THE COMPANY FOLLOWING ADOPTION OF THE PLAN                           

     As a consequence of the approval of the Plan by Noel's shareholders, Noel's
activities are limited to winding up its affairs, taking such action as may be  
necessary to preserve the value of its assets and distributing its assets in    
accordance with the Plan. The Company will seek to distribute or liquidate all  
of its assets in such manner and upon such terms as the Board of Directors      
determines to be in the best interests of the Company's shareholders.           

    The Company shall continue to indemnify its officers, directors, employees
and agents in accordance with its certificate of incorporation, as amended, and 
by-laws and any contractual arrangements, for actions taken in connection with  
the Plan and the winding up of the affairs of the Company. The Company's        
obligation to indemnify such persons may be satisfied out of the assets of any  
liquidating trust. The Board of Directors and the trustees of any liquidating   

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trust, in their absolute discretion, are authorized to obtain and maintain      
insurance as may be necessary to cover the Company's indemnification obligations
under the Plan.                                                                 

CONTINGENT LIABILITIES; CONTINGENCY RESERVE; LIQUIDATING TRUST                  

     Under the DGCL the Company is required, in connection with its dissolution,
to pay or provide for payment of all of its liabilities and obligations. The    
Company will pay all expenses and fixed and other known liabilities, or set     
aside as a Contingency Reserve assets which it believes to be adequate for      
payment thereof. The Company is currently unable to estimate with precision the 
amount of any Contingency Reserve, which may be required, but any such amount   
(in addition to any cash contributed to a liquidating trust, if one is utilized)
will be deducted before the determination of amounts available for distribution 
to shareholders.                                                                

   The actual amount of the Contingency Reserve will be based upon estimates
and opinions of management and the Board of Directors and derived from          
consultations with outside experts and a review of the Company's estimated      
operating expenses, including, without limitation, anticipated compensation     
payments, estimated investment banking, legal and accounting fees, rent, payroll
and other taxes payable, miscellaneous office expenses and expenses accrued in  
the Company's financial statements. There can be no assurance that the          
Contingency Reserve in fact will be sufficient. Subsequent to the establishment 
of the Contingency Reserve, the Company will distribute to its shareholders any 
portions of the Contingency Reserve which it deems no longer to be required.    
After the liabilities, expenses and obligations for which the Contingency       
Reserve had been established have been satisfied in full, the Company will      
distribute to its shareholders any remaining portion of the Contingency Reserve.

     If deemed necessary, appropriate or desirable by the Board of Directors for
any reason, the Company may, from time to time, transfer any of its unsold      
assets to one or more liquidating trusts established for the benefit of the then
shareholders which property would thereafter be sold or distributed on terms    
approved by its trustees. The Board of Directors and management may determine to
transfer assets to a liquidating trust in circumstances where the nature of an  
asset is not susceptible to distribution (for example, interests in intangibles)
or where, in view of the limited trading market for the publicly traded         
securities in question, it would not be in the best interests of Noel and its   
shareholders for such securities to be distributed directly to the shareholders 
at such time. In addition, if all of the Company's assets (other than the       
Contingency Reserve) are not sold or distributed prior to March 19, 2000, it is 
anticipated that the Company would transfer in final distribution such remaining
assets to a liquidating trust. The Board of Directors may also elect in its     
discretion to transfer the Contingency Reserve, if any, to such a liquidating   
trust. Notwithstanding the foregoing, to the extent that the distribution or    
transfer of any asset cannot be effected without the consent of a governmental  
authority, no such distribution or transfer shall be effected without such      
consent. The purpose of a liquidating trust would be to distribute such property
or to sell such property on terms satisfactory to the liquidating trustees, and 
distribute the proceeds of such sale after paying those liabilities of the      
Company, if any, assumed by the trust, to the Company's shareholders. Any       
liquidating trust acquiring all the unsold assets of the Company will assume all
of the liabilities and obligations of the Company and will be obligated to pay  
any expenses and liabilities of the Company which remain unsatisfied. If the    
Contingency Reserve transferred to the liquidating trust is exhausted, such     
expenses and liabilities will be satisfied out of the liquidating trust's other 
unsold assets.                                                                  

The Plan authorizes the Board of Directors to appoint one or more     
individuals or entities to act as trustee or trustees of the liquidating trust  
or trusts and to cause the Company to enter into a liquidating trust agreement  
or agreements with such trustee or trustees on such terms and conditions as may 
be approved by the Board of Directors. It is anticipated that the Board of      
Directors will select such trustee or trustees on the basis of the experience of
such individual or entity in administering and disposing of assets and          
discharging liabilities of the kind to be held by the liquidating trust or      
trusts and the ability of such individual or entity to serve the best interests 
of the Company's shareholders. It is anticipated that a majority of the trustees
would be required to be independent of Noel's management. Approval of the Plan  
by the shareholders constituted the approval by the Company's shareholders of   
any such appointment and any liquidating trust agreement or agreements.         

The Company has no present plans to use a liquidating trust or trusts,
except as disclosed herein, but the Board of Directors believes that the        
flexibility provided by the Plan with respect to the liquidating trusts to be   
advisable. The trust would be evidenced by a trust agreement between the Company
and the trustees. The purpose of the trust would be to serve as a temporary     
repository for the trust property prior to its disposition or distribution to   
Noel's shareholders. The transfer to the trust and distribution of interests    
therein to Noel's shareholders would enable Noel to divest itself of the trust  
property and permit Noel's shareholders to enjoy the economic benefits of       
ownership thereof. Pursuant to the trust                                        

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agreement, the trust property would be transferred to the trustees immediately  
prior to the distribution of interests in the trust to Noel's shareholders, to  
be held in trust for the benefit of the shareholder beneficiaries subject to the
terms of the trust agreement. It is anticipated that the interests would be     
evidenced only by the records of the trust and there would be no certificates or
other tangible evidence of such interests and that no holder of Common Stock    
would be required to pay any cash or other consideration for the interests to be
received in the distribution or to surrender or exchange shares of Common Stock 
in order to receive the interests. It is further anticipated that pursuant to   
the trust agreements (i) a majority of the trustees would be required to be     
independent of Noel's management; (ii) approval of a majority of the trustees   
would be required to take any action; (iii) the trust would be irrevocable and  
would terminate after, the earlier of (x) the trust property having been fully  
distributed, or (y) a majority in interest of the beneficiaries of the trust, or
a majority of the trustees, having approved of such termination, or (z) a       
specified number of years having elapsed after the creation of the trust.       

UNDER THE DGCL, IN THE EVENT THE COMPANY FAILS TO CREATE AN ADEQUATE  
CONTINGENCY RESERVE FOR PAYMENT OF ITS EXPENSES AND LIABILITIES, OR SHOULD SUCH 
CONTINGENCY RESERVE AND THE ASSETS HELD BY THE LIQUIDATING TRUST OR TRUSTS BE   
EXCEEDED BY THE AMOUNT ULTIMATELY FOUND PAYABLE IN RESPECT OF EXPENSES AND      
LIABILITIES, EACH SHAREHOLDER COULD BE HELD LIABLE FOR THE PAYMENT TO CREDITORS 
OF SUCH SHAREHOLDER'S PRO RATA SHARE OF SUCH EXCESS, LIMITED TO THE AMOUNTS     
THERETOFORE RECEIVED BY SUCH SHAREHOLDER FROM THE COMPANY OR FROM THE           
LIQUIDATING TRUST OR TRUSTS.                                                    

If the Company were held by a court to have failed to make adequate   
provision for its expenses and liabilities or if the amount ultimately required 
to be paid in respect of such liabilities exceeded the amount available from the
Contingency Reserve and the assets of the liquidating trust or trusts, a        
creditor of the Company could seek an injunction against the making of          
distributions under the Plan on the grounds that the amounts to be distributed  
were needed to provide for the payment of the Company's expenses and            
liabilities. Any such action could delay or substantially diminish the cash     
distributions to be made to shareholders and/or interest holders under the Plan.

FINAL RECORD DATE                                                               

   The Company will close its stock transfer books and discontinue recording
transfers of shares of Common Stock on the Final Record Date, and thereafter    
certificates representing shares of Common Stock will not be assignable or      
transferable on the books of the Company except by will, intestate succession or
operation of law. After the Final Record Date the Company will not issue any new
stock certificates, other than replacement certificates. It is anticipated that 
no further trading of the Company's shares will occur on or after the Final     
Record Date. All liquidating distributions from the Company or a liquidating    
trust on or after the Final Record Date will be made to shareholders according  
to their holdings of Common Stock as of the Final Record Date. Subsequent to the
Final Record Date, the Company may at its election require shareholders to      
surrender certificates representing their shares of the Common Stock in order to
receive subsequent distributions. Shareholders should not forward their stock   
certificates before receiving instructions to do so. If surrender of stock      
certificates should be required, all distributions otherwise payable by the     
Company or the liquidating trust, if any, to shareholders who have not          
surrendered their stock certificates may be held in trust for such shareholders,
without interest, until the surrender of their certificates (subject to escheat 
pursuant to the laws relating to unclaimed property). If a stockholder's        
certificate evidencing the Common Stock has been lost, stolen or destroyed, the 
stockholder may be required to furnish the Company with satisfactory evidence of
the loss, theft or destruction thereof, together with a surety bond or other    
indemnity, as a condition to the receipt of any distribution.                   

LISTING AND TRADING OF THE COMMON STOCK AND INTERESTS IN THE LIQUIDATING        
TRUST OR TRUSTS                                                                 

The Common Stock is currently listed for trading on Nasdaq's National 
Market. For continued listing, a company, among other things, must have $1      
million in net tangible assets (or $4 million if the issuer has sustained losses
from continuing operations and/or net losses in three of its four most recent   
fiscal years), $1 million in market value of securities in the public float and 
a minimum bid price of $1.00 per share (or, in the alternative, $3 million in   
market value of securities in the public float and $4 million of net tangible   
assets). If the Company is unable to satisfy Nasdaq's National Market           
maintenance criteria in the future, its Common Stock may be delisted therefrom  
prior to the Final Record Date. In such event, the Company may seek to list its 
securities on Nasdaq's Small Cap Market. However, if it was unsuccessful,       
trading, if any, in the Common Stock would thereafter be conducted in the       
over-the-counter market                                                         

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in the so-called "pink sheets" or the NASD's "Electronic Bulletin Board". As a  
consequence of such delisting, an investor would likely find it more difficult  
to dispose of, or to obtain quotations as to, the price of the Common Stock.    
Delisting of the Common Stock may result in lower prices for the Common Stock   
than would otherwise prevail.                                                   

    It is anticipated that the interests in a liquidating trust or trusts will
not be transferable, although no determination has yet been made. Such          
determination will be made by the Board of Directors and management prior to the
transfer of unsold assets to the liquidating trust and will be based on, among  
other things, the Board of Directors and management's estimate of the value of  
the assets being transferred to the liquidating trust or trusts, tax matters and
the impact of compliance with applicable securities laws. Should the interests  
be transferable, the Company plans to distribute an information statement with  
respect to the liquidating trust or trusts at the time of the transfer of assets
and the liquidating trust or trusts may be required to comply with the periodic 
reporting and proxy requirements of the Exchange Act. The costs of compliance   
with such requirements would reduce the amount which otherwise could be         
distributed to interest holders. Even if transferable, the interests are not    
expected to be listed on a national securities exchange or quoted through Nasdaq
and the extent of any trading market therein cannot be predicted. Moreover, the 
interests may not be accepted by commercial lenders as security for loans as    
readily as more conventional securities with established trading markets.       

    As shareholders will be deemed to have received a liquidating distribution
equal to their pro rata share of the value of the net assets distributed to an  
entity which is treated as a liquidating trust for tax purposes, the            
distribution of non-transferable interests could result in tax liability to the 
interest holders without their being readily able to realize the value of such  
interests to pay such taxes or otherwise.                                       

BUSINESS OF NOEL PRIOR TO ADOPTION OF PLAN                                      

     Prior to the approval of the Plan by Noel's shareholders on March 19, 1997,
Noel conducted its principal operations through small and medium-sized operating
companies in which Noel held controlling or other significant equity interests. 
Noel's current holdings in operating companies include holdings in (i) Career   
Blazers, a provider of diversified staffing services to a broad range of        
businesses in various industries; (ii) Carlyle, a packager and distributor of   
buttons, gifts and craft products; and (iii) Ferropar, a Brazilian corporation, 
which holds interests in Brazilian companies operating Brazilian railroad       
networks and a port in Sao Paulo, Brazil. As noted herein, Noel expects to      
distribute its interest in Career Blazers through a liquidating trust in April  
1999.                                                                           

  Noel was incorporated in New York in December 1969 and reincorporated in
Delaware in December 1986. Noel was originally a closely-held special purpose   
investment vehicle until March 1988, when under new management organized by     
Louis Marx, Jr., the former Chairman of the Executive Committee, Noel adopted   
its strategy of concentrating on the acquisition of control and other           
significant equity interests in established operating entities. Noel's principal
office is located at 667 Madison Avenue, New York, New York 10021-8029 and its  
telephone number is (212) 371-1400.                                             

(b) Financial information about industry segments.                    

The information required is set forth in Note 19 of Notes to Financial
Statements on page F-25 hereof.                                                 

(c) Narrative description of business.                                

   The following information relates to Noel's principal remaining operating
companies in which it holds a controlling or substantial interest. The          
percentage appearing next to the name of each company indicates the common      
equity ownership (or in the case of Carlyle, the percentage of the aggregate    
voting power) currently held by Noel.                                           

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CARLYLE INDUSTRIES, INC. (55%)

Carlyle (which prior to March 26, 1997 was known as Belding Heminway  
Company, Inc.) and its subsidiaries package and distribute buttons, gifts and   
craft products.                                                                 

  Carlyle was the surviving corporation in a merger (the "Merger") with BH
Acquisition Corporation, a Delaware corporation wholly-owned by Noel. The       
Merger, completed on October 29, 1993, was the second step of a transaction     
pursuant to which Noel acquired the entire equity interest in Carlyle.          

     On March 26, 1997, Carlyle sold the assets and specified liabilities of its
former Thread Division (the "Thread Division") to an affiliate of Hicking       
Pentecost PLC ("HP") for an aggregate cash consideration of $54.9 million of    
which $3.0 million was placed in escrow, subject to certain post-closing        
adjustments, plus the assumption of approximately $6.8 million of liabilities.  
The Thread Division was engaged in the manufacturing and marketing of industrial
thread and special engineered yarn used in non-sewing products. As part of the  
sale of the Thread Division, the corporate name "Belding Heminway" was          
transferred to HP.                                                              

  Carlyle's principal executive offices are located at One Palmer Terrace,
Carlstadt, New Jersey; its telephone number is (201) 935-6220. Joseph S.        
DiMartino and Herbert Friedman, Noel directors, currently serve on Carlyle's    
four member Board of Directors.                                                 

   Carlyle's business is conducted principally through two subsidiaries: the
Blumenthal Lansing Company ("Blumenthal"), and Westwater Industries, Inc.       
("Westwater"). Blumenthal was formed from the merger of B. Blumenthal & Co.,    
Inc., a wholly-owned subsidiary of Carlyle, and Lansing Company, B. Blumenthal's
wholly-owned subsidiary. The corporate name was changed to Blumenthal Lansing   
Company on January 1, 1995. Westwater, a Delaware corporation, was formed in    
June 1998 to acquire the assets and business of Westwater Enterprises, LP.      
Westwater is a wholly owned subsidiary of Carlyle.                              

 Set forth below is a description of Carlyle's business substantially as
described in Carlyle's Annual Report on Form 10-K for the Fiscal Year Ended     
December 31, 1998 filed with the Commission.                                    

Acquisitions. On June 30, 1998, the assets and business of Westwater  
Enterprises LP were acquired by Westwater, a newly formed wholly-owned          
subsidiary of Carlyle. Westwater is an importer and distributor of craft and    
gift products for sale to retail and specialty chain stores. Carlyle paid       
approximately $3.1 million in cash and assumed $.5 million in bank debt. In     
addition, contingent payments of up to $2 million may become payable upon the   
achievement of specified earnings levels or the event an entity other than Noel 
acquires a more than 50% voting control of Carlyle. The contingent payment      
period covers the three years ended December 31, 2000 at which time the         
contingent payment period expires.                                              

     On December 16, 1998 Carlyle's wholly owned subsidiary, Blumenthal acquired
the assets and business of Streamline Industries, Inc. ("Streamline") for       
approximately $1.6 million in cash. Streamline packages and distributes a line  
of carded buttons and embellishments for sale to retail and specialty chain     
stores.                                                                         

     Products. Carlyle packages and distributes an extensive variety of buttons,
embellishments, gift and craft products to mass merchandisers, specialty chains,
and independent retailers and wholesalers throughout the United States. Products
are sold under the La Mode'r', Le Chic'r', Streamline'r' and Westwater          
Enterprises'r' registered trademarks and the Le Bouton, La Petites, Classic,    
Boutique and Mill Mountain brand names. Carlyle also produces and distributes   
private-label lines one for one of the nation's best-known retailers. Carlyle   
markets complementary product lines, including appliques, craft kits, and       
fashion and jewelry.                                                            

   Markets. Carlyle's products are sold primarily for use in the home sewing
market where buttons are used for garment construction, replacement, and the    
upgrading and/or restyling of ready-to-wear clothing. More modest button usage  
is found in craft projects, home decorating, and garment manufacturing on a     
small scale and done by dressmakers and other cottage industry consumers. The   
market is served by large fabric specialty chains, mass merchandisers, local and
regional fabric specialty chains of 4 to 25 stores, independent fabric stores,  
notions wholesalers, and craft stores and chains. During the years ended        
December 31, 1998 and 1997 sales to three major customers (Wal-Mart, Jo-Ann     
Stores and Hancock Fabrics) accounted for 77% and 78% respectively of Carlyle's 
aggregate sales volume. A reduction in sales among any of these customers could 
adversely impact the financial condition and results of operations of Carlyle.  

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     Product Sourcing, Distribution and Sales. The button lines are sourced from
more than 75 button manufacturers around the world, with most buttons coming    
from the traditional markets of Holland, Italy, and Asia. Button manufacturers  
specialize in different materials (plastic, wood, glass, leather, metal, jewel, 
pearl, etc.) and have varying approaches to fashion, coloration, finishing, and 
other factors.                                                                  

     All imported and domestically purchased buttons are shipped to the Lansing,
Iowa facility for carding and distribution to customers. As thousands of button 
styles are received in bulk, computerized card printing systems enable          
Blumenthal to economically imprint millions of button cards with such necessary 
data as style number, price, number of buttons, bar code, country of origin and 
care instructions. Carlyle also blister-packages and shrink-wraps some products.
Shipments are made primarily to individual stores with a small percentage to    
warehouse locations.                                                            

Carlyle's accounts include major fabric specialty chains, most mass   
merchandisers carrying buttons, most regional fabric specialty chains and many  
independent stores. Mass merchandisers and specialty chain customers are        
characterized by the need for sophisticated electronic support, rapid           
turn-around of merchandise and direct-to-store service for hundreds to thousands
of locations nationwide. Carlyle enjoys long-standing ties to all of its key    
accounts and the average relationship with its ten largest customers extends    
over 20 years. Due to the large account nature of its customer base, most       
customer contact is coordinated by management; additional sales coverage is     
provided by regional sales managers. Certain retailers are serviced by          
independent representatives and representative organizations.                   

Competitive Factors. The retail button market is served by several    
competitors. Carlyle competes primarily with full-line button packagers and     
distributors in the general button market and several smaller competitors in the
promotional button market. Carlyle management believes that the principal bases 
for competition are product innovation, range of selection, brand names, price, 
display techniques and speed of distribution.                                   

Carlyle management believes that retail button distribution depends on
trends in the home-sewing market, which Carlyle management believes is mature.  
The retail customer base for buttons has changed substantially over the past two
decades as department stores and small independent fabric stores have been      
replaced by mass merchandisers and specialty retail chains which have continued 
to consolidate recently through mergers and store closings. In response to this 
trend, Carlyle has broadened its button product line to include embellishments  
and novelty buttons used now in the craft industry which is not viewed as a     
mature market.                                                                  

   The bulk of Carlyle's revenues are derived in the United States. In 1998,
less than 1% of revenues related to export sales. Inventory levels remain       
relatively constant throughout the year. Carlyle's policies related to          
merchandise return and payment terms are in accordance with industry standards. 

   Employees; Labor Relations. Carlyle has approximately 140 employees, none
of whom is covered by a collective bargaining agreement. Carlyle management     
believes relations with employees are satisfactory.                             

Properties. Carlyle operates from a 104,000 square foot packaging and 
distribution facility located in Lansing, Iowa which is owned by Carlyle.       
Corporate headquarters and divisional management, sales and marketing, product  
development, fashion and purchasing are headquartered in a 7,307 square foot    
office facility in Carlstadt, New Jersey which is leased by Carlyle. Carlyle    
management believes that Carlyle's facilities are in good condition and adequate
for Carlyle's present and reasonably foreseeable future needs.                  

     Carlyle also owns a former dye facility located in Emporia, Virginia, which
facility is leased to the purchaser of Carlyle's former Home Furnishings'       
Division under a triple net fifty-year lease with a nominal base rent. In       
addition, Carlyle also owns two facilities no longer used in operations: a      
100,000 square foot former production facility at Watertown, Connecticut of     
which approximately 48,000 square feet are leased to unrelated third parties and
a former production facility at North Grosvenordale, Connecticut.               

LEGAL PROCEEDINGS                                                               

 General. To the best of Carlyle's knowledge, Carlyle is not currently a
party to any significant litigation except as indicated below.                  

     Environmental Matters. Carlyle is subject to a number of federal, state and
local environmental laws and regulations, including those concerning the        
treatment, storage and disposal of waste, the discharge of effluents into       

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waterways, the emissions of substances into the air and various health and      
safety matters. In addition, the Comprehensive Environmental Response,          
Compensation and Liability Act of 1980, as amended ("CERCLA") and comparable    
state statutes generally impose joint and several liability on present and      
former owners and operators, transporters and generators for remediation of     
contaminated properties regardless of fault. These parties are typically        
identified as "potentially responsible parties" or PRPs.                        

   Several years ago a property, owned by the Carlyle Manufacturing Company,
Inc. ("CM") located at 30 Echo Lake Road in Watertown, Connecticut was being    
investigated by the United States Environmental Protection Agency ("EPA") for   
possible inclusion on the National Priorities List promulgated pursuant to      
CERCLA but no such listing has yet occurred. A Site Inspection conducted at this
location detected certain on-site soil and groundwater contamination, as well as
contamination of nearby water. This site is listed on the Connecticut State     
Hazardous Waste Disposal Site list, but remediation activity has not been       
required by the Connecticut Department of Environmental Protection ("CTDEP").   

     CM owns an inactive facility located in North Grosvenordale, Connecticut at
which soil contamination has been found. Carlyle reported this contamination to 
the CTDEP in 1989 and is presently working with the CTDEP to define remedial    
options for the site, which it expects will focus primarily on removal and      
possible stabilization of contaminated soil onsite. Carlyle estimates the cost  
of remediation at this site to be approximately $100,000 based upon information 
on the costs incurred by others in remediating similar contamination at other   
locations. As the actual cost of remediation at this site will depend on the    
real extent of soil contamination and the remediation options approved for this 
site in the future by the CTDEP, no assurances can be given that the actual cost
will not be higher than Carlyle's current estimate.                             

   In or about June 1992, Carlyle received notice from the EPA that Carlyle,
Belding Corticelli Thread Company ("BCTC") and CM had been identified, along    
with 1,300 other parties, as PRP's in connection with the alleged release of    
hazardous substances from the Solvents Recovery Superfund Site in Southington,  
Connecticut (the "SRS site").                                                   

   Carlyle settled its alleged liability in connection with the SRS sites by
paying $1,626, along with other PRP's, to perform the Remedial Investigation and
Feasibility Study ("RIFS") and two Non-Time Critical Removal Actions ("NTCRA")  
at the SRS site. The RIFS and the first NTCRA (except for certain maintenance   
activities) have been completed. BCTC and CM have been allocated .03% and 1.19%,
respectively, of costs incurred to date, based on their alleged volume of waste 
shipped to the SRS site. At this time it is not possible to predict when the EPA
will issue its "Record of Decision" concerning the final remedy at the SRS site.
Carlyle is unable, at this time, to estimate the ultimate cost of the remedy    
for this site.                                                                  

 By letter dated January 21, 1994, the EPA gave notice to CM that it had
been identified as a PRP along with about 335 other parties in connection with  
the alleged release of hazardous waste at the Old Southington Landfill Superfund
site located in Southington, Connecticut (the "OSL site"). The EPA's claim is   
predicated on the allegation that certain waste sent to the SRS site prior to   
October 1967 was commingled and transshipped to the OSL site.                   

    On September 3, 1996, CM entered into an agreement (with the EPA and other
members of the SRS PRP Group) to settle its liability in connection with the    
First Operable Unit of work ("OU#1") at the OSL site for $2,000. The OU#1       
Consent Decree was entered in June, 1998 by the United States District Court for
the District of Connecticut.                                                    

     In September 1997, Pratt and Whitney and the Town of Southington proposed a
de minimis settlement which would allow CM and certain other members of the SRS 
PRP Group (as well as certain Direct Shippers) to settle their future OSL site  
liability for a sum certain (subject to certain reservation of rights by the    
U.S.). Under this proposal, CM's required payment is approximately $3,300. CM   
has accepted the de minimis offer. The Consent Decree in connection with the    
above de minimis settlement will be lodged with the federal court in the near   
future.                                                                         

By letter dated October 30, 1987, the Department of Environmental     
Protection of the State of New Jersey ("DEP") notified Carlyle that CM, together
with 122 parties, had been identified as a party responsible for cleanup costs  
and damage claims paid in connection with the Chemical Control Corporation      
hazardous waste site located in Elizabeth, New Jersey (the "CCC site"). A       
settlement between CM and other members of the Chemical Control Responsible     
Party Group, on the one hand, and the DEP and the New Jersey Spill Compensation 
Fund, on the other hand, was finalized in December 1998. The amount paid by CM  
was $142,219.                                                                   

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    By third-party summons and complaint dated November 27, 1991, CM was named
as a third-party defendant in an action pending in the United States District   
Court for the District of Rhode Island entitled United States v. Davis. In      
addition to CM, approximately 60 other companies were joined as third-party     
defendants. Amended third-party complaints have named additional third-party    
defendants. The third-party complaint against CM alleges claims for contribution
under CERCLA, common law indemnification and state law contribution. The        
third-party complaint alleges that CM (and the majority of the other third-party
defendants) shipped waste to the CCC site, which waste was commingled and then  
shipped to the Davis Liquid Waste site located in Smithfield, Rhode Island.     

     CM has entered into an agreement to settle liability in connection with the
above claims for payment of the sum of $200,000. The Consent Decree was approved
in 1998 by the Federal District Court.                                          

The estimates provided above do not include costs that Carlyle or its 
subsidiaries may incur for consultants or attorney's fees or for administrative 
expenses in connection with their participation as part of the PRP group at the 
SRS and OSL sites. The reserve Carlyle has established for environmental        
liabilities, in the amount of $1.7 million, represents Carlyle's best current   
estimate of the costs of addressing all identified environmental problems,      
including the obligations of Carlyle and its subsidiaries relating to the       
Remedial Investigation and two Non-Time Critical Removal Actions at the Solvents
Recovery Superfund site, based on Carlyle's review of currently available       
evidence, and takes into consideration Carlyle's prior experience in remediation
and that of other companies, as well as public information released by EPA and  
by the PRP groups in which Carlyle or its subsidiaries are participating.       
Although the reserve currently appears to be sufficient to cover these          
environmental liabilities, there are uncertainties associated with environmental
liabilities, and no assurances can be given that Carlyle's estimate of any      
environmental liability will not increase or decrease in the future. The        
uncertainties relate to the difficulty of estimating the ultimate cost of any   
remediation that may be undertaken, including any operating costs associated    
with remedial measures, the duration of any remediation required, the amount of 
consultants' or attorneys' fees that may be incurred, the administrative costs  
of participating in the PRP groups, and any additional regulatory requirements  
that may be imposed by the federal or state environmental agencies.             

    Noel does not believe, based on current applicable environmental law, that
it will be responsible for any of Carlyle's environmental liabilities. However, 
in view of the rapidly developing environmental laws, no assurance can be given 
at this time that Noel would not have such responsibility nor, if such liability
existed, can any determination be made of the amount thereof. Any finding of    
liability on the part of Noel would reduce the amount available for distribution
to Noel's shareholders. In addition, in the event that the amount of any such   
liability exceeded the amount of Noel's assets (and the assets of any           
liquidating trust), the shareholders could be required to return some or all    
amounts previously distributed in liquidation.                                  

In January 1997, the Pension Benefit Guarantee Corporation ("PBGC")   
notified Carlyle that it was considering whether the sale of the Thread Division
would create an obligation under ERISA to immediately fund, in whole or in part,
Carlyle's unfunded liability to its defined benefit plan. In February 1997, at  
the request of the PBGC, Carlyle agreed to provide the PBGC with at least 30    
days advance notice of any proposed dividend, stock redemption, stockholder     
buyback or other distribution to shareholders of any class of equity which is   
projected to occur at any time prior to March 31, 2002. In consideration of such
agreement, the PBGC agreed not to take action solely with respect to the        
proposed sale transaction. In December 1997, Carlyle notified the PBGC that it  
intends to redeem $10 million of preferred stock as soon after year end as is   
practicable, but only to the extent of legally available funds as determined by 
the board of directors and if appropriate bank financing has been satisfactorily
obtained. Following such notice, the PBGC indicated that it would not take any  
action with respect to such payments. If the PBGC takes the position that       
Carlyle should fund, in whole or in part, the unfunded liability to the defined 
benefit plan, after receiving notice of a proposed dividend, stock redemption,  
stockholder buyback or other distribution to shareholders, and if such position 
were upheld, the ability of Carlyle to take any such proposed action would be   
adversely affected. Carlyle's unfunded liability to its deferred benefit plan is
recorded at $.4 million on as of December 31, 1998, when measured in accordance 
with financial accounting standards. Based on an actuarial estimate, the        
obligation to transfer cash in the event of a termination would be $3.3 million 
in excess of the balance sheet liability. Were the plan to be terminated or were
the PBGC to require that the plan be funded according to different standards,   
Carlyle's obligation to transfer cash to the plan could be higher than this     
amount. Any actual amounts transferred in the event of a plan termination, would
depend on PBGC action and market conditions at the time of transfer and could   
differ significantly from this estimate.                                        

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     Noel received a letter from the PBGC dated August 15, 1996 stating that the
PBGC believed that a "controlled group" existed between Noel and Carlyle. The   
letter indicated that the PBGC would like to discuss the pending Plan of        
Liquidation and its impact on the Carlyle pension plan. Noel submitted a        
memorandum to the PBGC setting forth Noel's position that a controlled group did
not exist between Noel and Carlyle. In the event that the PBGC's belief was     
correct, Noel could in certain circumstances be jointly and severally liable for
obligations of Carlyle with respect to its pension plan including the           
obligations referred to above.                                                  

    Escrow Agreement. In connection with the sale of the Thread Division to an
affiliate of HP, $3.0 million of the proceeds were placed in escrow. Pursuant to
a written indemnity, and under a reservation of rights, Carlyle had assumed the 
defense and indemnity of Barbour Threads, Inc. ("Barbour"), as the successor in 
interest to Danfield Threads, Inc., Barbour Industries, Inc. and Blue Mountain  
Industries, Inc. and an individual, H.D. Whitlow ("Whitlow"), in an adversary   
proceeding which relates to a Chapter 11 reorganization, In re Needlecraft      
Industries, Inc. ("Needlecraft"), Case No. LA 97-41233 LF. Carlyle had no role  
in the bankruptcy or the prosecution of Barbour's claims against Needlecraft and
other counsel represents Barbour for that purpose.                              

 In the adversary proceeding, Needlecraft originally sought compensatory
damages of $600,000 and punitive damages of $1,000,000, reformation of contract,
and declaratory relief from Barbour for alleged breach of an oral contract,     
detrimental reliance, and negligent and intentional interference with           
prospective economic advantage. At a hearing in January 1998, the Bankruptcy    
Court dismissed the claims against Whitlow.                                     

 On February 9, 1999, the Court permitted Needlecraft to file an amended
complaint that added new claims, among other things, for alleged resale price   
maintenance, price discrimination, disparagement/trade libel, and unfair        
competition and increased the compensatory damages claimed to $8.1 million. On  
February 24, 1999, Carlyle notified HP and the defendants in the litigation that
it is rejecting the claim for indemnification and will no longer fund the       
defense. On March 1, 1999, HP and Barbour disputed Carlyle's rejection of their 
claim for indemnification and made a new claim for indemnification based on the 
amended complaint.                                                              

 By letter dated February 8, 1999, the CTDEP notified Carlyle that it is
CTDEP's position that Carlyle and the buyer of the Thread Division filed an     
inappropriate form in connection with the transfer of certain Connecticut       
property as part of the sale of the Thread Division. The CTDEP has asserted that
an alternate form and an environmental condition assessment is required. Carlyle
has notified HP and Barbour that Carlyle believes that compliance with the      
CTDEP's requirements are their responsibility. HP and Barbour have responded by 
demanding indemnity under an agreement dated, as of December 12, 1996, whereby  
Carlyle sold its Thread Division (the "Thread Division Agreement").             

   In a complaint filed in the United States District Court, District of New
Jersey, by Liberty Fabrics Rotterdam B.V. ("Liberty") against Barbour and       
Danfield Threads, Inc. Liberty has alleged, among other things, breaches of a   
distributorship agreement by Barbour and tortious interference by Barbour with  
Liberty's agreements with third parties (the "Liberty Claim"). The amount of the
damages sought by Liberty is not currently known, but is alleged to be in excess
of $75,000. HP and Barbour have asserted that Carlyle is obligated by the Thread
Division Agreement to indemnify them against cost and liability of the Liberty  
Claim. Carlyle has rejected the claim for indemnification.                      

Carlyle expects that if it disagreements with HP and Barbour are not  
otherwise resolved, the dispute will be resolved in an arbitration proceeding   
pursuant to the Thread Division Agreement.                                      

FERRONORTE PARTICIPACOES, S.A. (2.8%) 

Ferronorte Participacoes, S.A. ("Ferropar") is the holding company for
Ferrovia Novoeste S.A. ("Novoeste") and Ferronorte S.A. Ferrovia Norte Brasil   
("Ferronorte"). Ferronorte operates the Brazilian railroad network between Mato 
Grosso and several destinations, and a port terminal in Sao Paulo, Brazil.      
Novoeste operates the Brazilian western railroad network (SR-10).               

   In March 1996, Novoeste was the successful bidder, at approximately $63.6
million, for the concession for the operation of the Brazilian federal          
railroad's western network. The purchase of the network consisted of a 30-year  
concession and a lease of the federal railroad's equipment. The western network 
links Bauru, in Sao Paulo state, with Corumba on the Bolivian border, and covers
approximately 1,000 miles of track.                                             

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 In June 1998, the stock of Novoeste held by Noel, and each of the other
Novoeste stockholders, was acquired by Ferropar in exchange for stock in        
Ferropar. Concurrently with such exchange, Ferropar acquired all of the         
outstanding stock of Ferronorte in exchange for stock in Ferropar. After such   
exchanges, Noel owned approximately 2.8% of the outstanding stock of Ferropar.  
Ferropar is the holding company for Novoeste and Ferronorte. Novoeste operates  
the Brazilian western railroad network (SR-10), and Ferronorte operates the     
Brazilian railroad network between Mato Grosso and several destinations, and a  
port terminal in Sao Paulo, Brazil.                                             

In February 1999, Noel engaged a Brazilian investment bank to sell its
interest in Ferropar.                                                           

CAREER BLAZERS INC. (11.6%) 

    Career Blazers is the successor by merger in December 1997 of subsidiaries
of Staffing Resources, Inc., a provider of diversified temporary staffing       
services to a broad range of businesses in various industries throughout the    
Northeastern, Mid-Atlantic, Southeastern, Southwestern and Rocky Mountain       
regions of the United States, and Career Blazers Personnel Services, Inc. and   
its affiliated companies ("CBPS Inc."). At the time of the merger, CBPS Inc.    
operated primarily in the Northeastern United States and provided temporary,    
temporary to permanent and permanent placement services in the clerical, legal  
and higher-end office support areas as well as training services. Career Blazers
offers training, temporary and permanent staffing services through a network of 
approximately 184 staffing branches and 72 training locations (including        
company-owned, licensed and franchised operations) across the Northeastern,     
Mid-Atlantic, Southeastern, Southwestern and Rocky Mountain regions of the      
United States, as well as Canada and Puerto Rico.                               

 On March 17, 1999, Noel announced the distribution of trust units
representing ownership of Noel's entire holding of Career Blazers common stock  
to Noel shareholders (the "Distribution"). The Distribution will be made in     
accordance with Noel's Plan of Complete Liquidation and Dissolution. The record 
date for the Distribution was set at March 29, 1999 and the distribution date is
expected to be April 12, 1999.                                                  

   Under the terms of the Distribution, Noel shareholders will receive units
representing approximately one-tenth of a share of Career Blazers common stock  
for each share of Noel common stock held by them. The trust units will be       
recorded on the books of the trust and will not be represented by certificates  
or other documents sent to shareholders. The trust is being created in lieu of  
the outright distribution of Career Blazers stock for several principal reasons,
including the limited float of Career Blazers stock and the current lack of     
tradability of the shares of Career Blazers common stock currently held by Noel.
As conditions in the future warrant, the trust is expected to distribute the    
shares to unit owners or sell the shares in the market, in a private placement  
or in an underwritten public offering, or a combination of these options.       

    (d) Financial information about foreign and domestic operations and export
sales.                                                                          

Not material.                                                         

ITEM 2. PROPERTIES.                                                             

Noel's executive offices occupy approximately 5,100 square feet in an 
office building located in New York, New York pursuant to a sublease agreement, 
which expires in September 1999. In the event the liquidation is not complete by
September 1999, Noel may request an extension of the sublease. For descriptions 
of certain principal properties of Noel's operating companies, see "Narrative   
Description of Business" above. The managements of both Noel and Carlyle        
believe that the properties owned or leased by each such company are adequate   
for the conduct of their respective businesses for the foreseeable future.      

ITEM 3. LEGAL PROCEEDINGS.                                                      

Other than as described under "Business of the Company", there are no 
pending material legal proceedings to which Noel or any of its subsidiaries or  
principal operating companies is a party or to which any of their property is   
subject, other than ordinary routine litigation incidental to their respective  
businesses.                                                                     

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

None.                                                                 

PART II 

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

(a) Market Information.                                                         

 Noel's Common Stock trades on Nasdaq's National Market under the symbol
NOEL. The following table sets forth the range of high and low sales prices for 
shares of Common Stock for each fiscal quarter during 1998 and 1997 as reported 
by NASDAQ.                                                                      

                                                                · Download Table

      1998                  High             Low  
      ----                  ----             ---  
                                                  
First Quarter (1)         $3.250            $2.625
Second Quarter (2)         2.750             2.063
Third Quarter (3)          2.813             1.375
Fourth Quarter             1.438             0.875


     1997                   High             Low  
     ----                   ----             ---  
                                                  
First Quarter             $7.500            $6.375
Second Quarter(4)          6.625             3.125
Third Quarter(5)           4.375             3.875
Fourth Quarter(6)          4.125             3.218


(1) Reflects the distribution of $0.70 cash per share on March 27, 1998.        
(2) Reflects the distribution of $0.45 cash per share on April 30, 1998.        
(3) Reflects the distribution of $0.92 cash per share on August 14, 1998.       
(4) Reflects the distribution of shares of HealthPlan Services Corporation      
("HealthPlan") Common Stock on April 25, 1997, valued at $2.643 per share of    
Noel Common Stock.                                                              
(5) Reflects the distribution of shares of HealthPlan Common                    
Stock on October 6, 1997 (September 25, 1997, ex-dividend date), valued at      
$.4244 per share of Noel Common Stock.                                          
(6) Reflects the distribution of shares of Carlyle Common Stock on December 1,  
1997, valued at $.1501 per share of Noel Common Stock.                          

(b) Holders.                                                          

 As of March 22, 1999, 20,567,757 shares of Common Stock were issued and
outstanding and were held of record by approximately 92 persons, including      
several holders who are nominees for an undetermined number of beneficial       
owners. Noel believes that there are approximately 1,200 beneficial owners of   
Common Stock.                                                                   

(c) Dividends.                                                        

     Pursuant to the Plan, Noel's remaining assets will either be distributed in
kind to Noel's shareholders or sold; the proceeds of sale, after paying or      
providing for all claims, liabilities, expenses and other obligations of Noel,  
will be distributed to Noel's shareholders together with other available cash;  
and thereafter Noel will be dissolved. The value of any further liquidating     
distributions will depend on a variety of factors including, among others, the  
actual market prices of any securities distributed in kind, the proceeds of the 
sale of any of Noel's assets and the actual timing of distributions.            

On March 27, 1998, Noel distributed pro rata to its shareholders      
$14,397,000 in cash at the rate of $0.70 for each share of Common Stock issued  
and outstanding at the close of business on the March 20, 1998 record date.     

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     On April 30, 1998, Noel distributed pro rata to its shareholders $9,255,000
in cash at the rate of $0.45 for each share of Common Stock issued and          
outstanding at the close of business on the April 22, 1998 record date.         

On August 14, 1998, Noel distributed pro rata to its shareholders     
$18,922,000 in cash at the rate of $0.92 for each share of Common Stock issued  
and outstanding at the close of business on the July 31, 1998 record date.      

ITEM 6. SELECTED FINANCIAL DATA.                                                

 The selected historical financial information for each of the Company's
last five fiscal years and for the three months ended March 31, 1997 are derived
from the historical financial statements of Noel and should be read in          
conjunction with Noel's Financial Statements and related notes included         
elsewhere in this Form 10-K. (Dollars in thousands, except per share amounts)   

                                                        · Enlarge/Download Table

                              December 31,    March 31,        Years Ended December 31,      
                             1998      1997     1997       1996(1)      1995(1)      1994(2) 
                             ----      ----     ----       ------       ------       ------- 
                                                                                             
Revenue                       N/A       N/A  $38,473     $189,325     $181,709      $119,121 

Operating income (loss)       N/A       N/A  $(4,684)    $  9,194     $(29,451)     $(12,731)

Loss from continuing                                                                         
  operations                  N/A       N/A  $(1,309)    $ (3,105)    $(15,581)     $ (9,453)

Basic earnings per                                                                           
 share from continuing                                                                       
 operations (3)               N/A       N/A  $ (0.06)    $  (0.15)    $  (0.77)     $  (0.47)

Total assets              $37,048   $88,912      N/A     $230,521     $239,757      $313,980 

Long-term debt                $0        $0       N/A     $ 60,983     $ 69,197      $ 75,734 

Stockholders' equity          N/A       N/A      N/A     $ 97,360     $ 92,920      $100,269 

Net assets in liquidation $34,408   $83,561      N/A          N/A          N/A           N/A 

Net assets in liquidation                                                                    
 per share                  $1.67   $  4.06      N/A          N/A          N/A           N/A 


---------------                                                                 
(1)     Includes the results of Carlyle for the full period and reflects the    
     results of HealthPlan Services under the equity method of accounting.

(2)     Includes the results of HealthPlan Services from September 30, 1994,    
      the date of its acquisition.  Carlyle is included in the balance sheet
at December 31, 1994.                                           

(3)     Earnings per share amounts prior to 1997 have been restated to comply   
    with Financial Accounting Standards No. 128.  See Notes to Financial
Statements.                                                     

As a result of the adoption of the Plan, Noel has adopted the liquidation basis 
of accounting for all periods subsequent to March 31, 1997. See Note 1 of Notes 
to Financial Statements on page F-9.                                            

See Note 11 of Notes to Financial Statements on page F-17 for factors that      
affect the comparability of the information presented above.                    

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

     The following discussion and analysis of financial condition and results of
operations of Noel Group, Inc. ("Noel") and its consolidated subsidiaries       
(collectively the "Company") should be read in conjunction with the Company's   
Financial Statements and Notes to Financial Statements.                         

LIQUIDITY AND CAPITAL RESOURCES:                                                

 On December 31, 1998, Noel had cash and cash equivalents and short-term
investments of approximately $3.4 million. The future cash needs of Noel will be
dependent on the implementation of the Plan. It is management's intention that  
Noel's existing liquid assets will be available to fund Noel's working capital  
requirements and to meet its other obligations through the remainder of the     
liquidation period. Pursuant to the Plan, subject to the payment or the         
provision for payment of the Company's obligations, the cash proceeds of any    
asset sales together with other available cash will be distributed from time to 
time pro rata to the holders of the Common Stock on record dates selected by the
Board of Directors with respect to each such distribution. Noel believes that   
its cash and cash equivalents and short-term investments are sufficient to fund 
its working capital requirements through the completion of the Plan.            

  A projected tax asset will be realized at the time that the 1999 Federal
income tax return is filed by carrying back the projected taxable loss in 1999  
to 1997. The amount of the income tax refund would be subject to audit          
adjustment by the IRS.                                                          

  In February 1998, Noel received a $3.5 million refund of estimated taxes
paid during 1997. On March 27, 1998, Noel paid a liquidating distribution of    
$0.70 per outstanding share of Common Stock to shareholders of record at the    
close of business on the March 20, 1998 record date, for a total of $14.4       
million.                                                                        

    On April 1, 1998, Noel was repaid $10.5 million, the face amount of a note
from Paragon Corporate Holdings, Inc. Noel had received this note as partial    
payment for the sale of its interest in Curtis in November 1997.                

On April 30, 1998, Noel paid a liquidating distribution of $0.45 per  
outstanding share of Common Stock to shareholders of record at the close of     
business on the April 22, 1998 record date, for a total of approximately $9.3   
million.                                                                        

     On June 6, 1998, Noel received $4.5 million as partial payment for the sale
of its holding in Lincoln.                                                      

On June 23, 1998, Noel received $11.6 million from the redemption of  
9,391,929 shares of Carlyle preferred stock and $2.2 million of accrued         
dividends.                                                                      

On August 14, 1998, Noel paid a liquidating distribution of $0.92 per 
outstanding share of Common Stock to shareholders of record at the close of     
business on the July 31, 1998 record date, for a total distribution of          
approximately $18.9 million.                                                    

   Sources of potential liquidity include the sale or refinancing of current
holdings, dividends and preferred stock redemptions from current holdings.      
Noel does not currently receive, nor expect to receive in the immediate future, 
cash dividends from any of its holdings.                                        

GOING-CONCERN BASIS STATEMENTS                                                  

RESULTS OF OPERATIONS:                                                          

OVERVIEW                                                                        

   Noel's equity in HealthPlan Services', Novoeste's and Staffing Resources'
income or loss for the period ended March 31, 1997 and the year ended December  
31, 1996, is included in income or loss from equity investments. The            
consolidated selling, general, administrative and other expenses include        
salaries, employee benefits, rent and other routine overhead expenses of the    
Company, including legal, accounting and consulting fees. The following year to 
year comparisons are based on the Company's consolidated results. An analysis of
each subsidiary is included in the comparison of segments section.              

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Noel's share of the income of HealthPlan Services for the three months
ended March 31, 1997 was $1.0 million, and its share of the losses of Novoeste  
and Career Blazers was $.9 million and $.4 million, respectively.               

Noel and each of its subsidiaries file a separate federal income tax  
return. As a result, the income tax provisions recorded by certain subsidiaries 
cannot be offset by the losses reported by other entities on the Company's      
consolidated financial statements.                                              

THREE MONTHS ENDED MARCH 31, 1997 VERSUS MARCH 31, 1996                         

     Sales decreased by $4.6 million to $38.5 million primarily due to decreased
sales at Carlyle of $7.3 million, offset by increased sales at Curtis           
Industries, Inc. ("Curtis") of $2.7 million. Cost of sales decreased by $3.9    
million to $20.7 million from $24.6 million in 1996, primarily due to decreased 
cost of sales at Carlyle of $5.5 million offset by increased cost of sales at   
Curtis of $1.5 million. Selling, general, administrative and other expenses     
increased by $.5 million to $17.2 million in 1997 from $16.7 million in 1996.   
Other income increased by $8.8 million primarily due to a gain recognized by    
Noel in 1997 on the sale of 1.3 million shares of HealthPlan Common Stock,      
offset by greater losses at Carlyle and Curtis of $5.3 million and $.6 million, 
respectively. Provision for income taxes increased $9.8 million due to increased
tax provisions at Noel and Carlyle of $4.6 million and $5.2 million,            
respectively.                                                                   

COMPARISON OF SEGMENTS:                                                         

THREE MONTHS ENDED MARCH 31, 1997 VERSUS MARCH 31, 1996                         

INDUSTRIAL THREADS AND BUTTONS (CARLYLE)                                        

As a result of its sale on March 26, 1997 (see Footnote 11 to Notes to
Financial Statements on F-17), only two months of operating results from        
Carlyle's thread division are included in the first quarter of 1997 as compared 
to three full months during 1996.                                               

  Sales during the first quarter of 1997 totaled $14.7 million as compared
with $22.0 million during the first quarter of 1996. Sales in the consumer      
product segment decreased to $8.4 million as compared with $11.7 during the same
period in 1996. Sales in the industrial product segment decreased to $6.3       
million as compared with $10.3 million during the first quarter of 1996. The    
decrease in both segment's sales was attributable to the sale of Carlyle's      
thread division.                                                                

   The gross margin during the first quarter of 1997 totaled $4.2 million or
29.0% as compared with $6.1 million or 27.7% during the first quarter of 1996.  
Gross margin in the consumer product segment totaled $3.1 million or 36.9% as   
compared to $3.7 million or 31.5% in the first quarter of 1996. Gross margin in 
the industrial product segment totaled $1.2 million or 18.5% as compared with   
$2.4 million or 23.4% during the first quarter of 1996. The decrease in both    
segment's gross margin dollars was primarily attributable to the sale of the    
thread division.                                                                

Selling, general, and administrative expenses totaled $2.6 million as 
compared with $3.6 million during the same period in 1996. Selling, general, and
administrative expenses in the consumer product segment totaled $1.1 million    
during the first quarter of 1997 as compared with $1.2 million during the first 
quarter of 1996. Selling, general and administrative expenses in the industrial 
product segment totaled $1.5 million during the first quarter of 1997 as        
compared with $2.5 million during the first quarter of 1996. The decrease in    
these expenses was primarily attributable to the sale of the thread division.   

FASTENERS AND SECURITY PRODUCTS DISTRIBUTION (CURTIS)                           

 On May 13, 1996, Curtis acquired certain assets of the Mechanics Choice
business of Avnet, Inc. for $6.5 million. Mechanics Choice is a distributor,    
selling industrial maintenance and repair operations products similar to the    
existing Curtis product line offering.                                          

Sales for the first quarter of 1997 increased $2.7 million or 16.1% to
$19.5 million from $16.8 million in the first quarter of 1996. Sales from the   
Mechanics Choice division accounted for the increase.                           

    The gross margin percentage decreased to 64.6% in 1997 from 68.9% in 1996.
Lower margins incurred by the Mechanics Choice division are responsible for the 
majority of the first quarter decline.                                          

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For the first quarter of 1997, selling, general and administrative    
expenses, net of the Internal Revenue Service ("IRS") settlement discussed      
below, increased $.9 million from the comparable 1996 quarter. The majority of  
the first quarter increase is due to the added selling and distribution costs of
the Mechanics Choice division.                                                  

    Following a field examination in 1995, the IRS alleged that as a result of
certain tax law changes enacted in 1989 and 1991 Curtis' expense reimbursement  
policy for the field sales force did not meet the definition of an accountable  
plan, and thus contended all reimbursed expenses for 1993 and 1994 should be    
treated as taxable wages. In April 1997, Curtis reached a settlement with the   
IRS in connection with the expense reimbursement policy requiring the payment of
$1.0 million of taxes for 1993 through 1996. A $.9 million charge to record this
settlement, net of reserves, was recorded in the first quarter of 1997.         

SNACK FOODS (LINCOLN)                                                           

   On June 6, 1995, Lincoln entered into an exclusive distribution agreement
with Planters Company, a division of Nabisco, Inc. ("Planters"), commencing on  
July 17, 1995, for the sales and distribution of Fiddle Faddle and Screaming    
Yellow Zonkers ("the Products"). Under the agreement, Planters is required to   
purchase a minimum number of cases during each year ending on June 30. Lincoln  
sells the Products to Planters at prices which are less than historical selling 
prices. Planters in turn is responsible for the sales and distribution of the   
Products to its customers and therefore Lincoln does not have any selling,      
marketing or distribution costs on the Products. The financial impact of the    
agreement versus historical results is a reduction in revenue and gross profit  
which is offset by reduced selling, marketing and distribution costs.           

    On February 28, 1997, this agreement was amended, extending its term until
December 31, 1997, at which time the distribution arrangement terminated.       
Although the amendment and extension contained provisions designed to effect a  
smooth transfer of the distribution business back to Lincoln, there can be no   
assurance as to the long-term effects of this transition.                       

   Sales of $4.3 million for the quarter ended March 31, 1997, were equal to
sales in the corresponding period of 1996. Sales to Planters represented        
approximately 68% and 64% of sales for the quarter ended March 31, 1997, and    
1996, respectively.                                                             

   Gross profit decreased $.1 million to $.9 million for the three months of
1997 versus $1.0 million in the corresponding period of 1996 due to the mix of  
products sold.                                                                  

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK             

Noel's investment in Ferropar is denominated in Brazilian Reals and is
subject to foreign currency exchange risk. Since the merger transaction occurred
in June 1998, the Reals per Dollar exchange rate has declined by approximately  
35%. Consequently, as of March 22, 1999, the carrying value of $6.3 million     
represents an approximate discount of 38% to the Real value established in the  
merger transaction.                                                             

    Noel's investment in Carlyle preferred stock has a stated interest rate of
6% and is currently due. While the redemption value is fixed and not subject to 
changes in interest rates, the value that Noel would received in a sale         
transaction would be negatively impacted if interest rates were to rise in the  
future.                                                                         

     Following the distribution of trust units to Noel shareholders representing
Noel's interest in Career Blazers on April 12, 1999, Noel will no longer be     
subject to the market risks associated with the Career Blazers common stock     
which trades over the counter. As conditions in the future warrant, the trust is
expected to distribute the shares to the unit owners or sell the shares in the  
market, in a private placement or in an underwritten public offering, or a      
combination of these options.                                                   

See Footnote 2 of Notes to Financial Statements for a more detailed   
discussion of market risk as it relates to Noel's holdings.                     

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.                            

Certain of the information required is set forth under the captions   
"Statement of Net Assets in Liquidation", "Statement of Changes in Net Assets in
Liquidation," "Consolidated Balance Sheet," "Consolidated Statements of         

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Operations," "Consolidated Statements of Cash Flows," "Consolidated Statements  
of Changes in Stockholders' Equity" and "Notes to Consolidated Financial        
Statements" on pages F-1 through F-26 hereof. See also the Noel Group, Inc.     
Financial Statement Schedule included elsewhere herein.                         

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

None.                                                                 

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PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.                    

The information required with respect to directors and the information
required by Rule 405 of Regulation S-K is set forth under the caption "Election 
of Directors" in the Company's definitive Proxy Statement to be filed pursuant  
to Regulation 14A and is incorporated herein by reference.                      

The executive officers of the Company are as follows:                 

                                                                · Download Table

                                                                 Officer    
Name                     Position(s)                    Age      Since      
----                     ----------                     ---      -----      
                                                                            
Stanley R. Rawn, Jr.     Chief Executive Officer         71      March 1995 
Todd K. West             Vice President - Finance,       38      August 1990
                         Chief Financial Officer and                        
                         Secretary                                          

    There is no arrangement or understanding between any director or executive
officer and any other person pursuant to which he was selected as a director or 
officer. Directors hold office until the next Annual Meeting of Shareholders and
until their successors have been elected and qualified. The executive officers  
of the Company are elected at the Annual Meeting of the Board of Directors      
immediately following the Annual Meeting of Shareholders and hold office until  
their successors have been elected and qualified or their earlier resignation or
removal. No family relationship currently exists among any of the executive     
officers and directors of the Company.                                          

BIOGRAPHICAL INFORMATION

     Stanley R. Rawn, Jr. became Chief Executive Officer of Noel effective March
1995. Mr. Rawn served as a director of Noel and its predecessor company from    
1969 until January 1987 and has served as a director of Noel since June 1990.   
From November 1985 until May 1992, Mr. Rawn was Chairman and Chief Executive    
Officer and a director of Adobe Resources Corporation, an oil and gas           
exploration and production company which merged into Santa Fe Energy Resources, 
Inc. in May 1992. Mr. Rawn is a Senior Managing Director and a director of Swiss
Army'r' Brands, Inc. ("Swiss Army"), the exclusive United States and Canadian   
importer and distributor of Victorinox Original Swiss Army Officers' knives and 
professional cutlery, as well as the marketer of Swiss Army watches and other   
products. Mr. Rawn is also a director of Hudson River Capital LLC, an LBO       
partnership, a director of Victory Ventures LLC, a venture capital partnership, 
a director of Paradyme Corporation, a professional employee organization, a     
director of First International Oil Corporation and a director of Career        
Blazers. Mr. Rawn has served on the Board of The Jet Propulsion Laboratory since
1976 and has been a Trustee of the California Institute of Technology since     
1974.                                                                           

 Todd K. West has served as Vice President-Finance since August 1990, as
Secretary since November 1991 and as Chief Financial Officer since January 1993.
Mr. West also served as Treasurer and Chief Financial Officer from August 1990  
until November 1991. Mr. West joined The Prospect Group, Inc., a company which  
prior to its adoption of a Plan of Complete Liquidation and Dissolution in 1990 
and subsequent dissolution in 1997, conducted its major operations through      
subsidiaries acquired in leveraged buyout transactions, in September 1988 and   
served as Assistant Vice President-Finance, Assistant Treasurer and Assistant   
Secretary from February 1989 until November 1990, when he became Vice           
President-Finance, Chief Financial Officer, Treasurer and Secretary of Prospect.
Mr. West became a certified public accountant in 1987.                          

ITEM 11. EXECUTIVE COMPENSATION.                                                

The information required is set forth under the captions "Management  
Compensation" and "Certain Transactions" in the Company's definitive Proxy      
Statement to be filed pursuant to Regulation 14A and is incorporated herein by  
reference.                                                                      

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND                    
MANAGEMENT.                                                                     

     The information required is set forth under the caption "Security Ownership
of Certain Beneficial Owners" in the Company's definitive Proxy Statement to be 
filed pursuant to Regulation 14A and is incorporated herein by reference.       

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.                        

The information required is set forth under the caption "Certain      
Transactions" in the Company's definitive Proxy Statement to be filed pursuant  
to Regulation 14A and is incorporated herein by reference.                      

PART IV 

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

(a)                                                           
    (1) - (2)  Financial statements and financial statement schedules.

 The consolidated financial statements and financial statement schedules
listed in the accompanying Index to Financial Statements and Financial Statement
Schedules are filed as part of this annual report.                              

(b) Reports on Form 8-K.                                              

Not applicable.                                               

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SIGNATURES

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

NOEL GROUP, INC.
(Registrant)    

           By /s/ Stanley R. Rawn, Jr.
            ----------------------------
          Stanley R. Rawn, Jr.
             Chief Executive Officer

  Date: March 29, 1999

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

/s/ Stanley R. Rawn, Jr.                                   March 29, 1999       
----------------------------------                                              
Stanley R. Rawn, Jr.                                                            
Chief Executive Officer;                                                        
Director (Principal Executive Officer)                                          

/s/ Todd K. West                                           March 29, 1999       
----------------------------------                                              
Todd K. West                                                                    
Vice President-Finance, Chief Financial Officer                                 
and Secretary (Principal Financial Officer and                                  
Principal Accounting Officer)                                                   

/s/ Joseph S. DiMartino                                    March 29, 1999       
----------------------------------                                              
Joseph S. DiMartino                                                             
Director                                                                        

/s/ Herbert M. Friedman                                    March 29, 1999       
----------------------------------                                              
Herbert M. Friedman                                                             
Director                                                                        

/s/ James K. Murray, Jr.                                   March 29, 1999       
----------------------------------                                              
James K. Murray, Jr.                                                            
Director                                                                        

/s/ Samuel F. Pryor, III                                   March 29, 1999       
----------------------------------                                              
Samuel F. Pryor, III                                                            
Director                                                                        

/s/ James A. Stern                                         March 29, 1999       
----------------------------------                                              
James A. Stern                                                                  
Director                                                                        

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NOEL GROUP, INC.
 INDEX TO FINANCIAL STATEMENTS
 AND
 FINANCIAL STATEMENT SCHEDULES

 ITEM 14(a)(1) - (2)

                                                        · Enlarge/Download Table

                                                                                                   Reference
                                                                                                   ---------
                                                                                                            
Report of Independent Public Accountants ..........................................................    F-2  

NOEL GROUP, INC.:                                                                                           
        Statements of Net Assets in Liquidation                                                             
          December 31, 1998 and 1997 ..............................................................    F-3  

        Statements of Changes in Net Assets in Liquidation                                                  
          For the Year Ended December 31, 1998 and for the Nine Months Ended December 31, 1997.....    F-4  

NOEL GROUP, INC. AND SUBSIDIARIES:                                                                          
        Consolidated Statements of Operations                                                               
          For the Three Months Ended March 31, 1997 and for the Year Ended                                  
          December 31, 1996 .......................................................................    F-5  

        Consolidated Statements of Cash Flows                                                               
          For the Three Months Ended March 31, 1997 and for the Year Ended                                  
          December 31, 1996 .......................................................................    F-6  

        Consolidated Statements of Changes in Stockholders' Equity                                          
          For the Three Months Ended March 31, 1997 and for the Year Ended                                  
          December 31, 1996 .......................................................................    F-8  

        Notes to Financial Statements .............................................................    F-9  

HEALTHPLAN SERVICES CORPORATION AND SUBSIDIARIES:                                                           
        Report of Independent Certified Public Accountants ........................................   F-27  

STAFFING RESOURCES, INC.:                                                                                   
        Report of Independent Accountants .........................................................   F-28  

Schedule                                                                                                    
   No.                                                                                                      
--------                                                                                                    
II      Valuation and Qualifying Accounts                                                                   
          For the Year Ended December 31, 1996 ....................................................    S-1  

Financial statement schedules not included in this report have been omitted     
because they are not applicable or the required information is shown in the     
financial statements or the notes thereto.                                      

F-1 

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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS                                        

TO THE STOCKHOLDERS AND BOARD OF DIRECTORS OF NOEL GROUP, INC.                  

We have audited the accompanying consolidated statements of operations, changes 
in stockholders' equity and cash flows of Noel Group, Inc., a Delaware          
Corporation, and subsidiaries, for the period from January 1, 1997 to March 31, 
1997 and for the year ended December 31, 1996. We also have audited the         
statement of net assets in liquidation as of December 31, 1998 and 1997, and the
related statement of changes in net assets in liquidation for the year ended    
December 31, 1998 and for the period from April 1, 1997 to December 31, 1997.   
These financial statements are the responsibility of the Company's management.  
Our responsibility is to express an opinion on these financial statements based 
on our audits. We did not audit the consolidated financial statements of        
HealthPlan Services Corporation ("HPS") and Staffing Resources, Inc.            
("Staffing"), the investments which are reflected in the accompanying financial 
statements using the equity method of accounting in 1996. The equity in HPS's   
net loss is $.5 million for 1996. The equity in the net loss of Staffing is $1.2
million for 1996. The financial statements of HPS and Staffing were audited by  
other auditors whose reports thereon have been furnished to us and our opinion, 
insofar as it relates to the amounts included for HPS and Staffing in 1996 is   
based solely on the reports of the other auditors.                              

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

As described in Note 1 to the financial statements, the shareholders of Noel    
Group, Inc. approved a plan of complete liquidation and dissolution on March 19,
1997, and the Company commenced carrying out the plan shortly thereafter. As a  
result, the Company has changed its basis of accounting for periods subsequent  
to March 31, 1997, from the going-concern basis to the liquidation basis.       
Accordingly, the carrying values of the remaining assets as of December 31, 1998
and 1997, are presented at estimated realizable value and liabilities are       
presented at estimated settlement amounts.                                      

In our opinion, based on our audits and the reports of other auditors, the      
statements of operations, changes in stockholders' equity and cash flows        
referred to above present fairly, in all material respects, the results of      
operations and cash flows of Noel Group, Inc. and subsidiaries for the period   
from January 1, 1997 to March 31, 1997, and for the year ended December 31,     
1996, Noel Group, Inc.'s net assets in liquidation as of December 31, 1998 and  
1997, and the changes in its net assets in liquidation for the year ended       
December 31, 1998 and the period from April 1, 1997 to December 31, 1997, in    
conformity with generally accepted accounting principles applied on the basis   
described in the preceding paragraph.                                           

Our audits were made for the purpose of forming an opinion on the basic         
financial statements taken as a whole. The schedule listed in the index to      
consolidated financial statements is the responsibility of the Company's        
management and is presented for purposes of complying with the Securities and   
Exchange Commission's rules and is not part of the basic consolidated financial 
statements. This schedule has been subjected to the auditing procedures applied 
in the audits of the basic consolidated financial statements and, in our        
opinion, fairly states, in all material respects, the financial data required to
be set forth therein in relation to the basic consolidated financial statements 
taken as a whole.                                                               

                         Arthur Andersen LLP
New York, New York                                                              
March 23, 1999                                                                  

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PART 1 - FINANCIAL INFORMATION

ITEM 1. - FINANCIAL STATEMENTS                                                  
NOEL GROUP, INC.
 STATEMENTS OF NET ASSETS IN LIQUIDATION
 (Liquidation Basis)
(Dollars in thousands, except per share amounts)

                                                                · Download Table

                                                              December 31,     
                                                         1998             1997 
                                                         ----             ---- 
                                                                               
ASSETS                                                                         

Cash and cash equivalents                               $   250         $ 3,493
Short-term investments                                    3,151           9,697
                                                        -------         -------
Total cash and short-term investments                     3,401          13,190

Investments (Note 2)                                     27,826          58,183
Income taxes (Note 4)                                     5,500           5,134
Other assets (Note 2)                                       321          12,405
                                                        -------         -------
Total assets                                             37,048          88,912
                                                        -------         -------
LIABILITIES                                                                    

Accounts payable                                           --               281
Accrued expenses (Note 5)                                 2,640           5,070
                                                        -------         -------
Total liabilities                                         2,640           5,351
                                                        -------         -------
Net assets in liquidation                               $34,408         $83,561
                                                        =======         =======
Number of common shares outstanding                  20,567,757      20,567,757
                                                    ===========     ===========
Net assets in liquidation per outstanding share           $1.67           $4.06
                                                          =====           =====

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

F-3 

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NOEL GROUP, INC.
STATEMENTS OF CHANGES IN NET ASSETS IN LIQUIDATION
 (Liquidation Basis)
(Dollars in thousands)

                                                        · Enlarge/Download Table

                                                                           For the Nine   
                                                     For the Year Ended    Months Ended   
                                                     December 31, 1998   December 31, 1997
                                                     -----------------   -----------------
                                                                                          
Net assets in liquidation at January 1                   $  83,561                        

Net assets in liquidation at April 1 (Note 6)                              $ 158,353      

Changes in estimated liquidation values of assets and                                     
   liabilities (Note 3)                                     (6,579)           (9,001)     

Liquidating distributions (Note 8)                         (42,574)          (65,791)     
                                                         ---------         ---------      
Net assets in liquidation at December 31                 $  34,408         $  83,561      
                                                         =========         =========      

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

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 NOEL GROUP, INC. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (Going-Concern Basis)
(Dollars in thousands, except per share amounts)

                                                        · Enlarge/Download Table

                                                          For the Three Months  For the Year Ended
                                                          Ended March 31, 1997  December 31, 1996 
                                                          --------------------  ------------------
                                                                                                  
REVENUE:                                                                                          
     Sales                                                       $ 38,473         $189,325        

COSTS AND EXPENSES:                                                                               
     Cost of sales                                                 20,711          106,426        
     Selling, general, administrative and other expenses           17,220           69,246        
       Loss on disposal of Carlyle's thread division                4,364             --          
       Depreciation and amortization                                  862            4,459        
                                                                  -------          -------        
                                                                   43,157          180,131        
                                                                  -------          -------        
Operating income (loss)                                            (4,684)           9,194        
                                                                  -------          -------        

OTHER INCOME (EXPENSE):                                                                           
       Gain on sale of HealthPlan Services Corporation                                            
         (Note 11)                                                 15,098             --          
       Other income (Note 14)                                         237              599        
       Loss from equity investments                                  (354)          (4,707)       
       Interest expense                                            (1,670)          (7,970)       
       Minority interest                                              501           (1,363)       
                                                                  -------          -------        
                                                                   13,812          (13,441)       
                                                                  -------          -------        
Income (Loss) from continuing operations before income                                            
   taxes                                                            9,128           (4,247)       
Benefit (Provision) for income taxes (Note 15)                    (10,437)           1,142        
                                                                  -------          -------        
Loss from continuing operations                                    (1,309)          (3,105)       
Income from disposal of discontinued operations                      --                448        
                                                                  -------          -------        
            Net loss                                             $ (1,309)        $ (2,657)       
                                                                  =======          =======        

BASIC EARNINGS PER SHARE FROM:                                                                    
      Continuing operations                                        $(0.06)          $(0.15)       
      Discontinued operations                                        0.00             0.02        
                                                                   ------           ------        
            Net loss                                               $(0.06)          $(0.13)       
                                                                   ======           ======        
Weighted average shares outstanding                            20,402,891       20,189,647        
                                                               ==========       ==========        

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

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 NOEL GROUP, INC. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Going-Concern Basis)
(Dollars in thousands)

                                                        · Enlarge/Download Table

                                                          For the Three Months  For the Year Ended
                                                          Ended March 31, 1997   December 31, 1996
                                                          --------------------  ------------------
                                                                                                  
Cash Flows from Operating Activities:                                                             
       Net Loss                                                   $(1,309)           $(2,657)     

Adjustments to reconcile net loss to net cash                                                     
provided from (used for) operating activities:                                                    
       Loss from equity investments                                   354              4,707      
       Depreciation and amortization                                1,260              6,873      
       Net (gain) loss on securities                              (15,098)                85      
       Provisions for doubtful accounts and valuation of                                          
       inventories                                                    174                (40)     
       (Benefit) Provision for deferred income taxes               (2,664)             2,729      
       Gain on property and equipment                                 --                (131)     
       Minority interest, net                                        (501)             1,363      
       Loss on disposal of Carlyle's thread division                4,364                --       
       Income from disposal of discontinued operations                --                (448)     
       Other, net                                                      86                530      

Changes in certain assets and liabilities, net of                                                 
acquisitions:                                                                                     
       Accounts receivable.                                          (521)            (2,885)     
       Inventories                                                   (673)            (1,101)     
       Trade accounts payable                                         406                 53      
       Income taxes payable                                         8,493                --       
       Accrued compensation and benefits                             (430)              (209)     
       Other, net                                                   3,251             (5,534)     

          Discontinued operations                                  (3,141)            (1,331)     
                                                                   ------             ------      
                 Total adjustments                                 (4,640)             4,661      
                                                                   ------             ------      
Net cash provided from (used for) operating activities             (5,949)             2,004      
                                                                   ------             ------      

                                                                     (continued)

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

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 NOEL GROUP, INC. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Going-Concern Basis)
(Dollars in thousands)
 (continued)

                                                        · Enlarge/Download Table

                                                          For the Three Months  For the Year Ended
                                                          Ended March 31, 1997   December 31, 1996
                                                          --------------------  ------------------
                                                                                                  
Cash Flows From Investing Activities:                                                             
       Payments for companies purchased, net of cash                                              
               acquired                                               --                (6,716)   
       (Purchases) Sales of short-term investments, net             (2,752)              9,399    
       Sales (Purchases) of investments                             78,324              (8,084)   
       Sales of discontinued operations                               --                 8,190    
       Purchases of property, plant and equipment                     (787)             (4,313)   
       Sales of property, plant and equipment                         --                 2,175    
       Other, net                                                     (148)             (1,653)   
                                                                    ------              ------    
Net cash provided from (used for) investing activities              74,637              (1,002)   
                                                                   -------            --------    
Cash Flows From Financing Activities:                                                             
       Borrowings from revolving credit line and long-                                            
               term debt                                            41,121             135,441    
       Repayments of revolving credit line and long-term                                          
       debt                                                        (76,698)           (144,528)   
       Issuance of common stock, net                                   910                 --     
       Change in other long-term liabilities                            90              (1,287)   
       Other, net                                                      (19)                (95)   
                                                                   -------            --------    

Net cash used for financing activities                             (34,596)            (10,469)   
                                                                   -------            --------    
Effect of exchange rates on cash                                       (38)                138    
                                                                   -------            --------    
Net increase (decrease) in cash and cash equivalents                34,054              (9,329)   
Cash and cash equivalents at beginning of period                     1,117              10,446    
                                                                   -------            --------    
Cash and cash equivalents at end of period                         $35,171              $1,117    
                                                                   =======            ========    

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

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 NOEL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND THE YEAR ENDED DECEMBER 31, 1996
 (Going-Concern Basis)
(In thousands)

                                                        · Enlarge/Download Table

                                                              Accumulated                                                   
                         Common Stock  Capital in                Other       Treasury Stock                                 
                                       Excess of  Accumulated Comprehensive                    Stockholders'   Comprehensive
                        Shares  Amount Par Value   Deficit    Income (Loss)   Shares   Amount   Equity         Income (Loss)
                        ------  ------ ---------   -------    -------------   -----    ------   ------        --------------
                                                                                                                            
Balance, January 1,                                                                                                         
  1996 ................  20,203  $2,020  $204,466  $(112,466)      $(613)       11     $(487)    $92,920                    

Net loss...............    --      --        --       (2,657)        --         --        --      (2,657)       $(2,657)    

Cumulative translation                                                                                                      
 adjustment............    --      --        --         --           132        --        --         132            132     
                                                                                                                --------    
Comprehensive loss......                                                                                        $(2,525)    
                                                                                                                ========    
Subsidiary stock                                                                                                            
transactions (Note 11)..   --      --       7,004       --           --         --        --       7,004                    

Purchase of treasury                                                                                                        
 stock..................   --      --        --         --           --         24      (204)       (204)                   

Issuance of common                                                                                                          
 stock..................     19       2       163       --           --         --        --         165                    
                         ------  ------  --------  ----------      -----        --      -----    -------                    
Balance, December 31,                                                                                                       
 1996................... 20,222   2,022   211,633   (115,123)       (481)       35      (691)     97,360                    

Net Loss ..............    --      --        --       (1,309)        --         --        --      (1,309)       $(1,309)    

Unrealized holding                                                                                                          
 gains ................    --      --        --         --           908        --        --         908            908     

Cumulative translation                                                                                                      
 adjustment ...........    --      --        --         --           (38)       --        --         (38)           (38)    
                                                                                                                --------    
Comprehensive loss...                                                                                           $  (439)    
                                                                                                                ========    
Subsidiary stock                                                                                                            
 transactions                                                                                                               
 (Note 11).............    --      --          48       --           --         --        --          48                    

Issuance of common                                                                                                          
 stock ................     233      24     1,610       --           --         --        --       1,634                    
                         ------  ------  --------  ----------      -----        --      -----    -------                    
Balance, March 31,                                                                                                          
 1997..................  20,455  $2,046  $213,291  $(116,432)      $ 389        35     $(691)    $98,603                    
                         ======  ======  ========  ==========      =====        ==      =====    =======                    

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

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NOEL GROUP, INC.
 NOTES TO FINANCIAL STATEMENTS

   This Report on Form 10-K contains, in addition to historical information,
certain forward-looking statements, including those regarding valuation of      
assets and liabilities. Such statements, including, as more fully set forth     
below, those relating to management's estimates of the net value of the         
Company's assets in liquidation, involve certain risks and uncertainties,       
including, without limitation, those risks and uncertainties discussed below.   
Should one or more of these risks or uncertainties materialize, actual outcomes 
may vary materially from those indicated.                                       

LIQUIDATION BASIS STATEMENTS                                                    

1.   PLAN OF COMPLETE LIQUIDATION AND DISSOLUTION                               

     On March 19, 1997, the shareholders of Noel Group, Inc. ("Noel") approved a
Plan of Complete Liquidation and Dissolution (the "Plan"), which had been       
adopted by Noel's Board of Directors on May 21, 1996. Under the Plan, Noel is   
being liquidated (i) by the sale of such of its assets as are not to be         
distributed in kind to its shareholders, and (ii) after paying or providing for 
all its claims, obligations and expenses, by cash and in-kind distributions to  
its shareholders pro rata and if required by the Plan or deemed necessary by the
Board of Directors, by distributions of its assets from time to time to one or  
more liquidating trusts established for the benefit of the shareholders, or by a
final distribution of its then remaining assets to a liquidating trust          
established for the benefit of the shareholders.                                

   As a result of the adoption of the Plan by the shareholders, Noel adopted
the liquidation basis of accounting as of April 1, 1997. Under the liquidation  
basis of accounting, assets are stated at their estimated net realizable values 
and liabilities are stated at their anticipated settlement amounts. See Note 2  
for a specific discussion of the methods used to determine estimated net        
realizable values of investments.                                               

     The valuation of assets and liabilities necessarily requires many estimates
and assumptions and there are substantial uncertainties in carrying out the     
provisions of the Plan. The actual value of any liquidating distributions will  
depend upon a variety of factors including, but not limited to, the actual      
market prices of any securities distributed in-kind when they are distributed,  
the actual proceeds from the sale or other disposition of any of Noel's assets, 
the ultimate settlement amounts of Noel's liabilities and obligations, actual   
costs incurred in connection with carrying out the Plan, including              
administrative costs during the liquidation period and the actual timing of     
distributions.                                                                  

  The valuations presented in the accompanying Statements of Net Assets in
Liquidation represent management's estimates, based on present facts and        
circumstances, of the net realizable values of assets and costs associated with 
carrying out the provisions of the Plan based on the assumptions set forth in   
the accompanying notes, which assumptions management believes to be reasonable, 
based on present facts and circumstances. The actual values and costs are       
expected to differ from the amounts shown herein and could be higher or lower   
than the amounts recorded. Accordingly, it is not possible to predict the       
aggregate net values ultimately distributable to shareholders and no assurance  
can be given that the amount to be received in liquidation will equal or exceed 
the price or prices at which Noel Common Stock has generally traded or is       
expected to trade in the future.                                                

2.   INVESTMENTS AND OTHER ASSETS                                               

Investments:                                                          

Investments are recorded at their estimated net realizable values in  
liquidation. This valuation may not be reflective of actual amounts obtained    
when and if these investments are distributed or of prices that might be        
obtained in actual future transactions. Because of the inherent uncertainty of  
the valuation of securities both                                                

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where a public market exists and where it does not exist, the estimated net     
realizable values in liquidation shown may materially differ from the actual    
amounts which may be received in the future.                                    

    For investments where a public market exists, and the entity is subject to
the periodic reporting requirements of the Securities Exchange Act of 1934, as  
amended, the estimated net realizable values in liquidation are calculated by   
multiplying the market price by the number of common shares owned without       
adjustment for whether the shares owned are registered for sale, any other      
restriction on transfer, control premiums, or whether the market has sufficient 
liquidity to support the sale of the volume of securities owned at the quoted   
prices. This valuation methodology applied only to Lincoln Snacks Company       
("Lincoln") at December 31, 1997.                                               

The components of investments are as follows (dollars in thousands):  

                                                                · Download Table

                                                               December 31,      
                                                            1998         1997    
                                                            ----         ----    
                                                                                 
Career Blazers Inc. ("Career Blazers")                    $10,535(a)   $22,287   

Carlyle Industries, Inc. ("Carlyle")                       10,788(b)    21,000   

Ferronorte Participacoes, S.A. ("Ferropar")                 6,302(c)     8,000   

Lincoln                                                        --        5,890(d)

Other holdings                                                201        1,006   
                                                          -------      -------   
Total investments at estimated liquidation basis amounts  $27,826      $58,183   
                                                          =======      =======   

(a)  Noel owns 2,026,104 shares (11.6%) of Career Blazers common stock which are
recorded at $5.20 per share, the weighted average trading price of the
442,100 shares of Career Blazers common stock which traded in December
    1998. For the reasons discussed below, Noel management has determined that
   this weighted average price is the best indicator of value as of December
  31, 1998. Approximately one year has passed since the merger of Staffing
    Resources, Inc. and Career Blazers Personnel Services, Inc. occurred which
    provided the basis for the $11.00 per share valuation at December 31, 1997
 and the trading volume of 442,100 shares in December 1998 represented a
significant increase from prior months' volumes. During 1998, Career  
  Blazers financial statements have been publicly available and the Career
   Blazers common stock traded in a range of $2.00 to $7.00 and the weighted
    average trading price for the second half of 1998 was approximately $5.30.
The trading range through March of 1999 was between $4.125 and $6.375.

  The valuation at December 31, 1998, which is based on the trading market
   for Career Blazers, may not be reflective of actual amounts obtained when
   this investment is distributed, or of prices that might be obtained in an
actual future transaction. The trading market for Career Blazers is   
   limited, Career Blazers is not subject to periodic reporting requirements
     under the Securities Exchange Act of 1934, as amended, and Noel's shares of
Career Blazers are not registered to trade in this market.            

   Career Blazers recorded service revenue of approximately $427,332,000 and
$380,589,000 in 1998 and 1997, respectively.                          

On March 17, 1999, Noel announced the distribution of trust units     
     representing ownership of its entire holding of Career Blazers common stock
on April 12, 1999 to Noel shareholders of record on March 29, 1999.   

     Career Blazers, headquartered in New York and Dallas, is a leading provider
    of integrated staffing and training services, operating through 170 branch
  office in 18 states. The present company was created in December 1997 by
the merger of Career Blazers Personnel Services, Inc. and Staffing    
Resources, Inc.                                                       

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(b)  Noel's investment in Carlyle comprises 9,920,908 shares of Carlyle series B
     preferred stock with a redemption value of $9,920,908 and accrued dividends
 of approximately $2,723,000 at December 31, 1998. The shares of Carlyle
     preferred series B stock are recorded based on management's assessment of a
variety of market factors including, an evaluation of the projected   
operating results of Carlyle. As of December 31, 1998, Carlyle is in  
     default on its obligation to Noel to redeem approximately $6,059,000 of the
     liquidation preference of its preferred stock as well as accumulated unpaid
dividends of approximately $2,723,000 to the extent of its legally    
available funds.                                                      

Because of the unique characteristics of the investment in Carlyle and
 non-marketability of the Carlyle preferred stock, the valuation of this
investment is highly judgmental and subject to an unusual degree of   
   uncertainty. The eventual amount realized in an actual transaction may be
substantially less than the recorded value. Also, for various reasons,
included those stated below, there may be delays in realizing Noel's  
holding of Carlyle preferred stock.                                   

    On June 23, 1998, Carlyle redeemed 9,391,929 shares of its preferred stock
which Noel held along with accrued dividends of $2,211,521 for a total
  payment of $11,603,450. The redeemed shares were valued at approximately
$10,212,000 on the December 31, 1997, Statement of Net Assets in      
Liquidation. Carlyle financed this redemption with newly obtained bank
financing.                                                            

     Carlyle recorded net sales of approximately $23,801,000 and $19,641,000 and
net income of $2,021,000 and net loss of $7,835,000 in 1998 and 1997, 
respectively.                                                         

Noel and Carlyle are engaged in discussions with a view of satisfying 
  Carlyle's remaining obligations to the holders of the preferred stock in
     accordance with the terms of its charter and consistent with its resources.
    Discussions have dealt with the amount and timing of payments and possible
   modifications of the terms of the preferred stock. Any such modifications
 would require the agreement of Carlyle and the holders of the preferred
     stock. Carlyle has informed Noel that it intends to fulfill its obligations
 to its preferred shareholders, as required by Carlyle's charter, to the
extent that Carlyle has cash resources in excess of those required to 
operate its business. Carlyle has also informed Noel that, as Carlyle 
     believes that it does not currently have such excess resources, its ability
to make payments on account of the preferred stock in the future will 
   depend on Carlyle's future cash flow, the timing of the settlement of the
liabilities recorded on its financial statements, the outcome of its  
 discussions with Noel described above, the ability of Carlyle to obtain
additional financing and compliance with Carlyle's new credit facility
  which presently permits only specified payment amounts, including 25% of
"excess cash flow", as defined in the agreement.                      

The Carlyle board of directors is continuing its review of Carlyle's  
    strategic alternatives, including, among other things, the sale of Carlyle
through merger, sale of stock or otherwise, possible acquisitions by  
Carlyle and possible refinancing. Any such transaction and/or the     
 discussions between the companies may result in the modification of the
  terms of the preferred stock or in the acceleration of the redemption of
  the preferred stock and/or the reduction in the total amounts eventually
received by Noel for its holdings of Carlyle preferred stock.         

 In addition, Carlyle has agreed to notify the Pension Benefits Guaranty
   Corporation ("PBGC") prior to making any dividend or redemption payments.
    Carlyle's decision to make any such payments will depend on the successful
resolution of any issues which may arise with the PBGC relating to    
Carlyle's unfunded liability to its benefit plan.                     

     Carlyle is a packager and distributor of buttons, gifts and craft products.

(c)  Noel owns 10,624,886 shares of Ferropar which are recorded at a 60%        
    discount to the third party valuation, which was determined at the time of
 the reorganization of Novoeste S.A. and Ferronorte, S.A. Ferrovia Norte
Brasil to form Ferropar in June 1998. The discount percentage reflects
illiquidity and the risks of operating in Brazil, including foreign   
    currency risk. Since the merger transaction occurred, the Reals per Dollar
    exchange rate has declined by approximately 35%. Consequently, as of March
22, 1999, the                                                         

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     carrying value of $6.3 million represents an approximate discount of 38% to
  the Real value established in the merger transaction. While the level of
     uncertainty related to the Brazilian economy has increased, there have been
    no events at Ferropar, which Noel is aware of, which indicate the need for
an additional discount, however, Noel cannot predict how future       
   developments to Brazil's economy or to the exchange rate would impact the
value of this investment. At December 31, 1997, this investment was   
recorded at cost.                                                     

   Ferropar holds two concessions to operate privatized railroads in Brazil.
Realization of this investment is dependent upon a sale by Noel of its
     interest in Ferropar. In February 1999, Noel engaged a Brazilian investment
bank to sell its shares. A sale is projected for the second quarter of
1999. The actual amount realized for this investment could be lower or
higher than the amount recorded.                                      

(d)  In June 1998, Noel sold 3,769,755 shares of Lincoln common stock to        
Brynwood Partners III, LP for total proceeds of $7,540,000. The value 
recorded at December 31, 1997 is based on the closing market price of 
Lincoln common stock on that date.                                    

Other Assets:                                                         

The components of other assets are as follows (dollars in thousands): 

                                                                · Download Table

                                                                December 31,    
                                                             1998         1997  
                                                             ----         ----  
                                                                                
Note receivable for Curtis Industries, Inc. sale             $ --        $10,454

TDX distribution receivable (Note 8)                           --            892

Other                                                         321          1,059
                                                             ----        -------
                                                             $321        $12,405
                                                             ====        =======

     On November 6, 1997, an agreement was signed merging Curtis Industries,    
Inc. ("Curtis") with a subsidiary of Paragon Corporate Holdings, Inc. Under the 
agreement, Noel received $14,712,000 for its entire holding of Curtis,          
comprising $4,258,000 in cash and a note for $10,454,000, which was included in 
other assets at December 31, 1997.                                              

3.   CHANGES IN ESTIMATED LIQUIDATION VALUES OF ASSETS AND LIABILITIES          

     The changes in the estimated liquidation values of assets and liabilities  
are as follows (dollars in thousands):                                          

                                                        · Enlarge/Download Table

                                                                For the Year   For the Nine Months
                                                                    Ended             Ended       
                                                                 December 31,     December 31,    
                                                                 ------------     ------------    
                                                                     1998             1997        
                                                                     ----             ----        
                                                                                                  
Increase (decrease) in realized investment values, net             $  3,310         $ (4,963)     

(Decrease) increase in unrealized investment values, net            (13,671)           3,284      

To adjust estimated accrued expenses                                   (631)          (2,185)     

To adjust estimated income taxes                                      4,413              679      

To adjust other assets                                                   --             (364)     
                                                                   --------          -------      
Total adjustments                                                    (6,579)          (3,549)     

To reflect impact of settlement of options and warrants (Note 7)         --           (5,452)     
                                                                   --------          -------      
                                                                   $ (6,579)         $(9,001)     
                                                                   ========          =======      


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4.   INCOME TAXES                                                               

The income tax asset at December 31, 1998 and 1997, reflects the      
liquidation basis of accounting. Estimated income taxes are calculated at a 35% 
rate on the taxable income and losses which would be generated if the assets    
were realized and liabilities settled at the amounts shown on the financial     
statements. This estimate is subject to significant variation if, among other   
things, the actual values of assets distributed, sold or otherwise disposed of  
varies from current estimates. The income tax asset is projected to be realized 
through the filing of the 1998 and 1999 tax returns and assumes that Noel's     
liquidation will be completed by December 31, 1999. The bulk of the projected   
tax asset will be realized by carrying back the projected taxable loss in 1999  
to 1997. Events subsequent to December 31, 1998, may limit Noel's ability       
to carry back the projected 1999 loss due to the change in ownership provisions 
of Section 382 of the Internal Revenue Code. The amount of the income tax       
refund would be subject to audit adjustment by the IRS.                         

The components of the income tax asset are as follows (dollars in     
thousands):                                                                     

                                                                · Download Table

                                                               December 31,    
                                                            1998        1997   
                                                            ----        ----   
                                                                               
Net unrealized capital loss (gain)                          $5,002    $   (222)

Net realized capital gain                                     (139)    (16,130)

Realizable net operating loss carryforwards                    145       3,280 

Loss from the settlement of recorded liabilities               490       8,442 
                                                            ------    -------- 
Net income tax asset (liability)                             5,498      (4,630)

Estimated taxes paid and refund carryforwards                    2       9,764 
                                                            ------    -------- 
Net income tax asset                                        $5,500    $  5,134 
                                                            ======    ======== 

Noel had additional net operating loss carryforwards of approximately 
$8,133,000 at December 31, 1998, which expire from 2004 through 2012. Noel has  
undergone "ownership changes" within the meaning of Section 382 of the Internal 
Revenue Code of 1986, as amended. Consequently, future utilization of these     
Federal tax loss carryforwards is significantly limited. If Noel's assets and   
liabilities are realized at the values recorded at December 31, 1998, these     
carryforwards will not be realizable because Noel will not generate future      
taxable income.                                                                 

 In 1998, Noel received refunds of estimated Federal income tax payments
totaling $4,046,000.                                                            

5.   ACCRUED EXPENSES                                                           

    Accrued expenses include estimates of costs to be incurred in carrying out
the Plan and provisions for known liabilities. These costs include a provision  
for costs to be incurred in connection with the distribution, sale or other     
disposition of Noel's investments including legal and investment banking fees   
and salaries and related expenses of officers and employees assigned to effect  
the distribution, sale or other disposition of specific investments.            

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   The components of accrued expenses are as follows (dollars in thousands):

                                                                · Download Table

                                                              December 31,   
                                                           1998         1997 
                                                         -------      -------
                                                                             
Salaries and benefits                                     $1,063      $2,414 

Rent and other expenses                                      544       1,147 

Professional fees                                            391         823 

Other, net                                                   642         686 
                                                          ------      ------ 
                                                          $2,640      $5,070 
                                                          ======      ====== 

     The actual costs incurred could vary significantly from the related accrued
expenses due to uncertainty related to the length of time required to complete  
the Plan, the exact method by which each of Noel's assets will be realized and  
contingencies.                                                                  

For the year ended December 31, 1998, Noel's cash operating expenses  
exceeded the return on its cash and cash equivalents and short-term investments 
by $3,420,000. Cash operating expenses exclude payments made to settle          
preexisting contractual obligations which have been accrued.                    

   Noel's cash operating  expenses for the year ended  December 31, 1998 and
for the nine month period ended December 31, 1997,  were as follows (dollars    
in thousands):                                                                  

                                                                · Download Table

                                             Year Ended        Nine Months Ended
                                         December 31, 1998     December 31, 1997
                                         -----------------     -----------------
                                                                                
Salaries and benefits                            $1,952              $3,924     

Rent and other office expenses                      968               1,679     

Insurance                                           305                 499     

Professional fees                                   667                 695     
                                                 ------              ------     
                                                 $3,892              $6,797     
                                                 ======              ======     

6. ADJUSTMENTS FROM GOING-CONCERN TO LIQUIDATION BASIS OF ACCOUNTING            

     The adjustments from stockholders' equity on the going-concern basis to net
assets in liquidation on the liquidation basis of accounting at March 31, 1997, 
were as follows (dollars in thousands):                                         

                                                                · Download Table
                                                                                
Stockholders' equity at March 31, 1997, (Going-Concern Basis)          $ 98,603 
                                                                       -------- 

To increase investments to estimated net realizable values               71,307 

To increase liabilities to anticipated settlement amounts                (8,939)

To adjust other assets                                                   (2,618)
                                                                       -------- 
Total adjustments                                                        59,750 
                                                                       -------- 
Net assets in liquidation at March 31, 1997, (Liquidation Basis)       $158,353 
                                                                       ======== 

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7.   OPTIONS AND WARRANTS                                                       

On July 7, 1997, as authorized by the Stock Option and Compensation   
Committee of the Board of Directors, Noel settled 2,840,107 options and warrants
outstanding for the purchase of Noel Common Stock. As a result of the settlement
and exercise of the options and warrants, Noel issued 146,718 shares of Noel    
Common Stock, transferred 108,570 shares of HealthPlan Services Corporation     
("HPS") common stock, paid $10,537,000 in cash for payroll taxes and settlement 
amounts and received $722,000 in cash exercise proceeds. Noel's federal income  
tax benefit for the compensation expense related to the settlement was          
approximately $4,363,000.                                                       

8.   LIQUIDATING DISTRIBUTIONS                                                  

  On April 25, 1997, Noel distributed 3,754,675 shares of HPS common stock
valued at $14.375 per HPS share for a total value of $53,974,000 to Noel        
shareholders of record on April 18, 1997. The distribution rate was 0.1838631 of
a share of HPS common stock per share of Noel Common Stock and the value of the 
distribution was $2.6430 per share of Noel Common Stock.                        

 On October 6, 1997, Noel distributed 412,601 shares of HPS common stock
valued at $21.1565 per HPS share for a total value of $8,729,000 to Noel        
shareholders of record on September 29, 1997. The distribution rate was 0.02006 
of a share of HPS common stock per share of Noel Common Stock and the value of  
the distribution was $.4244 per share of Noel Common Stock.                     

  On December 1, 1997, Noel distributed 2,205,814 shares of Carlyle common
stock valued at $1.40 per Carlyle share for a total value of $3,088,000 to Noel 
shareholders of record on November 21, 1997. The distribution rate was .107246  
of a share of Carlyle common stock per share of Noel Common Stock and the value 
of the distribution was $.1501 per share of Noel Common Stock.                  

    On March 27, 1998, Noel distributed $0.70 per outstanding Noel share for a
total value of $14,397,000 to shareholders of record at the close of business on
March 20, 1998.                                                                 

    On April 30, 1998, Noel distributed $0.45 per outstanding Noel share for a
total amount of $9,255,000 to shareholders of record at the close of business on
April 22, 1998.                                                                 

     On August 14, 1998, Noel distributed $0.92 per outstanding Noel share for a
total amount of $18,922,000 to shareholders of record at the close of business  
on July 31, 1998.                                                               

On March 17, 1999, Noel announced the distribution of trust units     
representing ownership of its entire holding of 2,026,104 shares of Career      
Blazers common stock on April 12, 1999 to Noel shareholders of record on March  
29, 1999.                                                                       

9.   COMMITMENTS AND CONTINGENCIES                                              

Certain of Noel's holdings are involved in various legal proceedings  
generally incidental to their businesses. While the result of any litigation    
contains an element of uncertainty, management believes that the outcome of any 
known, pending or threatened legal proceeding or claim, or all of them combined,
will not have a material adverse effect on Noel's financial position.           

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GOING-CONCERN BASIS STATEMENTS                                                  

10.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                                 

GENERAL:                                                                        

    Prior to the approval of the Plan, Noel conducted its principal operations
through small and medium-sized companies in which Noel held controlling or other
significant equity interests.                                                   

Consolidation:                                                                  

    The consolidated financial statements include the accounts of Noel and its
subsidiaries, Carlyle, Curtis, and Lincoln, (collectively the "Company"), after 
the elimination of significant intercompany transactions. Noel's equity in HPS' 
results is included in income (loss) from equity investments on the consolidated
statements of operations.                                                       

Cash and Cash Equivalents and Short-term Investments:                           

The Company considers all highly liquid investments with a maturity of
three months or less, at the date of acquisition, to be cash equivalents.       
Carrying amounts of short-term investments approximate fair value.              

Investments in Debt and Equity Securities:                                      

 The Company's marketable securities and its other investments in equity
securities that have readily determinable fair values are classified as         
available-for-sale securities. The equity method of accounting is used for (i)  
common equity investments in which the Company's voting interest is from 20%    
through 50%, (ii) for investments where Noel's voting interest is below 20% but 
Noel has the ability to exercise significant influence over an investee and     
(iii) for limited partnership investments. The cost method of accounting is used
for common equity investments in which the Company's voting interest is less    
than 20% for which fair values are not readily determinable and for which       
significant influence cannot be exercised. A non-temporary decline in the value 
of any equity or cost basis investment is expensed at the time such decline is  
identified.                                                                     

Use of Estimates:                                                               

The preparation of financial statements in conformity with generally  
accepted accounting principles requires the Company to make estimates and       
assumptions. These estimates and assumptions affect the reported amounts of     
assets and liabilities, the disclosure of contingent assets and liabilities at  
the date of the financial statements and the reported amounts of revenue and    
expenses during the reporting period. Actual results could differ from these    
estimates.                                                                      

Property, Plant and Equipment:                                                  

    Depreciation is provided primarily using the straight-line method over the
estimated useful lives of the related assets as follows:                        

                                                                · Download Table
                                                      
Machinery and equipment                   3 - 25 years
Buildings and leasehold improvements      7 - 35 years
Furniture and fixtures                    3 - 30 years

    Leasehold improvements are depreciated using the straight-line method over
the lives of the related leases or their estimated useful lives, whichever are  
shorter. The cost of repairs and maintenance is charged to expense as incurred, 
while renewals and betterments are capitalized.                                 

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Intangible Assets:                                                              

Intangible assets, primarily costs in excess of the fair value of net 
assets acquired, are being amortized using the straight-line method over periods
ranging from 3 to 30 years.                                                     

Foreign Currency Translation:                                                   

  Revenue and expenses are translated at average exchange rates throughout
the period. Adjustments resulting from translation are recorded as a separate   
component of stockholders' equity. Gains and losses resulting from foreign      
currency transactions are recognized in the results of operations in the period 
incurred.                                                                       

Revenue:                                                                        

Revenue from product sales is recorded at the time of shipment.       

Other Income:                                                                   

   Interest income is accrued and reported as earned only to the extent that
management anticipates such amounts to be collectible. Accrued interest is      
evaluated periodically and an allowance for uncollectible interest income is    
established when necessary.                                                     

Basic Earnings per Share:                                                       

     In 1997, the Financial Accounting Standards Board issued Statement No. 128,
"Earnings per Share." SFAS No. 128 replaced the calculation of primary and fully
diluted earnings per shares with basic and diluted earnings per share. Basic    
earnings per share excludes the dilutive effects of options, warrants, and      
convertible securities. Diluted earnings per share gives effect to all dilutive 
securities that were outstanding during the period. All earnings per share      
amounts have been presented or restated to conform to the SFAS No. 128          
requirements. Diluted earnings per share have not been presented since the      
computation would be antidilutive.                                              

Comprehensive Income (Loss):                                                    

  In 1998, the Company adopted Statement of Financial Accounting Standards
No. 130, "Reporting Comprehensive Income," ("SFAS No. 130"), which requires     
companies to report all changes in equity during a period, except those         
resulting from investment by owners and distributions to owners, in a financial 
statement for the period in which they are recognized. The Company has chosen   
to disclose Comprehensive Income, which encompasses net income, foreign         
currency translation adjustments and unrealized holding gains, in the           
Consolidated Statements of Shareholders' Equity. Prior years have been          
restated to conform to the SFAS No. 130 requirements.                           

11.  INVESTMENTS AND ACQUISITIONS                                               

Ferrovia Novoeste, S.A.                                                         

On March 5, 1996, a consortium led by Noel and Chase Capital Partners,
formerly Chemical Venture Partners, purchased by auction the concession for the 
Brazilian federal railroad's western network for approximately $63.6 million.   
The purchase of the network consists of a 30-year concession and a lease of the 
federal railroad's equipment. Noel invested $8.0 million for approximately 34%  
of the concession holder, Ferrovia Novoeste, S.A., ("Novoeste"), which began    
operating the railroad on July 1, 1996.                                         

 Summarized financial information for Novoeste is as follows (dollars in
thousands):                                                                     

                                                                · Download Table

                                    Three Months Ended       Six Months Ended
                                      March 31, 1997        December 31, 1996
                                    ------------------      -----------------
                                                                             
Revenue from services                    $ 6,858                 $ 17,498    

Operating costs and expenses              $7,877                 $ 19,959    

Net loss                                 $(2,705)                $ (7,350)   

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Staffing Resources, Inc.                                                        

On July 31, 1995, Noel received 1,026,104 shares of common stock of   
Staffing Resources, Inc. ("Staffing Resources") a company which merged into     
Career Blazers in December 1997, as payment for its $8,190,000 face value       
subordinated note from Brae Group, Inc. ("Brae Note"), plus accrued interest of 
$3,097,000. Noel recognized a gain of $6,598,000 on the payment of the Brae     
Note.                                                                           

On November 15, 1995, Noel purchased an additional 1,000,000 shares of
Career Blazers common stock for $11,000,000 in a private placement offering.    

    During 1996, Noel began accounting for Staffing Resources under the equity
method of accounting and recorded an equity loss of $1,174,000 representing its 
share of Staffing Resources' losses from July 31, 1995, the date of Noel's      
acquisition of the Staffing Resources shares, through December 31, 1996.        
Staffing Resources issued additional common shares in 1996 and 1995, diluting   
Noel's common ownership percentage to approximately 16%. These share issuances  
were recorded as subsidiary stock transactions by Noel with an increase of      
$1,199,000, net of taxes of $618,000, recorded directly to capital in excess of 
par value in 1996.                                                              

    Summarized financial information for Career Blazers is as follows (dollars
in thousands):                                                                  

                                                                · Download Table

                              Three Months Ended      Year Ended    
                                March 31, 1997     December 31, 1996
                              -------------------  -----------------
                                                                    
Revenue from services               $73,711              $300,898   

Operating costs and expenses        $74,370              $297,978   

Net loss                            $(1,527)              $(2,405)  

HealthPlan Services Corporation                                                 

Pursuant to a Stock Purchase Agreement dated September 2, 1994, by and
among The Dun & Bradstreet Corporation, its wholly-owned subsidiary Dun &       
Bradstreet Plan Services, Inc., Noel, HPS, formerly GMS Acquisition Company, and
certain other investors, HPS purchased all of the outstanding stock of          
HealthPlan Services, Inc. for a cash purchase price of $19,000,000, excluding   
$1,309,000 of related expenses, and the assumption of designated liabilities.   
Noel and other investors capitalized HPS with $20,000,000 and arranged a        
$20,000,000 line of credit to support working capital requirements. The         
acquisition was accounted for as a purchase. The excess of the allocated        
purchase price over the fair value of the net tangible assets acquired,         
$30,730,000, was recorded as goodwill and is being amortized over a 25 year     
period.                                                                         

On May 19, 1995, HPS completed an initial public offering of 4,025,000
newly issued common shares, raising net proceeds of $50,806,000. Following HPS' 
initial public offering and Noel's exchange of its entire holding of HPS        
preferred stock and accrued dividends into common equity, Noel's common equity  
ownership percentage of HPS decreased from approximately 58% to approximately   
42%. The offering was recorded as a subsidiary stock transaction by Noel with an
increase of $14,421,000, net of taxes of $1,012,000, recorded directly to       
capital in excess of par value. Following Noel's exchange of its holding of HPS 
preferred stock, Noel's holding of HPS common stock increased to 5,595,846      
shares.                                                                         

During 1996, Noel's ownership percentage of HPS was further diluted to
approximately 37% when HPS issued 1,561,067 common shares related to the        
acquisition of two new operating units. These and other share issuances were    
also recorded as subsidiary stock transactions by Noel, with an increase of     
$5,792,000, net of taxes of $2,984,000, recorded directly to capital in excess  
of par value.                                                                   

  On February 7, 1997, pursuant to an agreement dated December 18, 1996 by
and among Noel, Automated Data Processing, Inc. ("ADP") and HPS, Noel sold to   
ADP 1,320,000 shares of its common stock of HPS for an                          

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aggregate purchase price of $26,400,000 in cash. Following the transaction,     
Noel's ownership percentage of HPS decreased to approximately 26%.              

Summarized financial information for HPS is as follows (dollars in
thousands):                                                       

                                                                · Download Table

                              Three Months Ended     Year Ended    
                                March 31, 1997    December 31, 1996
                                ---------------   -----------------
                                                                   
Revenue from services               $73,593            $191,493    

Operating costs and expenses        $67,355            $199,314    

Net income (loss)                    $2,799             $(6,716)   

  After performing a review for impairment of long-lived assets related to
each of HPS' acquired businesses and applying the principles of measurement     
contained in FASB 121, HPS recorded a charge against earnings of $13,700,000 in 
the third quarter of 1996, representing approximately 7.6% of HPS' pre-charge   
goodwill. This charge was attributable to impairment of goodwill recorded on the
acquisitions made in 1995. Any further significant declines in HPS' projected   
net cash flows, with respect to such acquisitions, may result in additional     
write-downs of remaining goodwill.                                              

  Starting in 1994, HPS pursued contracts with state-sponsored health care
purchasing alliances, initially in Florida, and in 1995 and 1996, in North      
Carolina, Kentucky, and Washington. HPS incurred substantial expenses in        
connection with the start-up of these contracts, and, through December 31, 1996,
the alliance business was unprofitable. HPS recorded a pre-tax charge related to
these contracts in the amount of $2,600,000 in the third quarter of 1996        
resulting from increased costs and lower than anticipated revenues in Florida   
and North Carolina.                                                             

In the third quarter of 1996, HPS recorded a charge of $1,400,000 to  
reflect the cost of exiting certain excess office space and terminating         
employees.                                                                      

Carlyle Industries, Inc.                                                        

   On July 21, 1993, BH Acquisition Corporation ("BH Acquisition"), a wholly
owned subsidiary of Noel, concluded a tender offer (the "Offer") for the        
outstanding common stock of Carlyle at $30.25 per share in cash. Following the  
Offer, on October 29, 1993, BH Acquisition owned 72.8% of the outstanding shares
and was merged with and into Carlyle (the "Merger"). The Offer and the Merger   
are referred to together as the "Acquisition".                                  

     The Acquisition was financed by a $41,500,000 equity contribution from Noel
and by borrowings from a group of banks. The total purchase price including     
banking, advisory and other fees, and shares acquired following the Offer was   
approximately $64,500,000.                                                      

The Acquisition was accounted for as a purchase. The excess of the    
allocated purchase price over the fair value of the net tangible assets         
acquired, $40,000,000, was recorded as goodwill and is being amortized over a 30
year period.                                                                    

  In February 1994, Noel spun off its entire common equity interest in the
recapitalized Carlyle to Noel stockholders at a rate of .175434 new Carlyle     
share for every Noel share held.                                                

In December 1994, Noel exchanged $18,813,000 of preferred stock and   
$3,216,000 of accrued dividends for 2,205,814 shares or 30% of Carlyle's        
outstanding common stock. Noel retained voting control through its remaining    
holding of Carlyle preferred stock. Because Noel had both a substantial common  
equity interest and voting control of Carlyle as of December 31, 1994, Carlyle  
was consolidated as of that date.                                               

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On March 26, 1997, pursuant to an asset purchase agreement dated as of
December 12, 1996, Carlyle sold its thread division to Hicking Pentecost PLC for
aggregate cash consideration of approximately $54,900,000, subject to           
adjustment, plus the assumption of certain liabilities. The estimated loss on   
disposal on the sale of this division was $11,300,000, but the actual loss      
recorded could differ significantly from this estimate depending on the         
resolution of certain contingencies. The net proceeds from this sale were used  
to pay off Carlyle's outstanding bank indebtedness. Accordingly, Carlyle        
currently has no outstanding bank indebtedness.                                 

Curtis Industries, Inc.                                                         

     On August 17, 1992, Noel purchased newly-issued equity securities of Curtis
for $15,000,000 for approximately 65% of Curtis' equity. The acquisition was    
accounted for as a purchase. The excess of the allocated purchase price over the
fair value of the net tangible assets acquired, $17,592,000, was recorded as    
goodwill and is being amortized over a 30 year period. On November 13, 1995,    
Curtis sold its retail division to SDI Operating Partners, LP, ("SDI") in order 
to focus on its automotive and industrial division.                             

In May 1996, Curtis acquired certain assets of the Mechanics Choice   
business of Avnet, Inc. for approximately $6,600,000. Mechanics choice is a     
distributor, selling industrial maintenance and repair operations products      
similar to the existing product line Curtis offers. The acquisition was         
accounted for as a purchase by Curtis. The excess of the allocated purchase     
price over the fair value of net tangible assets acquired, $2,900,000 was       
recorded as goodwill and is being amortized over a 20 year period.              

Lincoln Snacks Company                                                          

   On August 31, 1992, Lincoln purchased certain assets of the Lincoln Snack
Company, a division of Sandoz Nutrition Corporation. The purchase price, which  
was paid in cash, was $13,000,000, including expenses. The acquisition was      
accounted for as a purchase. The excess of the allocated purchase price over the
fair value of the net tangible assets acquired, $3,528,000, was recorded as     
goodwill and is being amortized over a 30 year period.                          

On January 14, 1994, Lincoln completed an initial public offering of  
2,472,500 shares of newly issued common stock which raised $9,593,000 for       
Lincoln, net of expenses. At the time of the offering, Noel converted its entire
holding of shares of Lincoln preferred stock and accrued dividends for 1,728,755
shares of Lincoln common stock.                                                 

    Noel's interest in Lincoln's common equity was approximately 58% following
the offering. The offering was recorded as a subsidiary stock transaction by    
Noel, with an increase of $2,438,000 recorded directly to capital in excess of  
par value.                                                                      

12. LEASES                                                                      

    The Company's rent expense for the period ended March 31, 1997 and for the
year ended December 31, 1996 was $486,000, and $2,438,000, respectively.        

13. STOCK BASED COMPENSATION                                                    

    In the first quarter of 1995, Noel issued a total of 1,120,000 warrants to
certain Noel officers. Each warrant represents the right to purchase one share  
of Noel Common Stock. Warrants were issued to purchase 800,000 and 320,000      
shares at $5.00 and $5.625 per share, respectively, the trading price of Noel   
Common Stock on the date that the warrants were granted. The weighted average   
grant-date fair value of these warrants was $2.01 and $2.22, respectively, using
the Black-Scholes option-pricing model with risk-free interest rates of 7.8% and
7.04%, respectively, expected lives of 3 years, expected volatility of 48%, and 
no expected dividends. The warrants vest 50% at issuance, 75% after one year and
100% after two years and expire ten years after the date of grant.              

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    Noel adopted a stock option plan in 1988 (as amended, the "1988 Plan") and
in 1995 (the "1995 Plan"; and together with the 1988 Plan, the "Employee Plans",
each being an Employee Plan), providing for the grant of options to purchase up 
to an aggregate of 2,000,000 shares and 1,000,000 shares, respectively, of      
Noel's Common Stock. Options under the Employee Plans may be granted to         
employees of Noel and its subsidiaries, including officers who are directors,   
and any other persons who perform substantial services for or on behalf of Noel,
or any of its subsidiaries, affiliates or any entity in which Noel has an       
interest. Each option granted under either Employee Plan terminates no later    
than ten years from the date of grant. Options issued under either Employee Plan
may be either incentive options or non-incentive options.                       

 Non-incentive options have been granted under the 1988 Plan at the fair
market value on the date of grant. No options have been granted under the 1995  
Plan. Non-incentive options previously granted to employees under the 1988 Plan 
generally vest over a four-year period, so that 20% of the option is exercisable
immediately and an additional 20% of the option becomes exercisable on each of  
the first four anniversaries of the date of grant. Non-incentive options        
previously granted to non-employees under the 1988 Plan generally vest          
immediately. Non-incentive options previously granted under the 1988 Plan       
generally terminate ten years after the date of grant or, in the case of        
employees, one year after the termination of the status with Noel which         
qualified the option holder to receive such option, if earlier.                 

    Incentive options granted under either Employee Plan may only be exercised
while an option holder is employed by Noel or one of its subsidiaries or within 
three months after the termination of employment, to the extent that the right  
to exercise such incentive option had accrued at the time of termination. The   
terms of incentive options, none of which has been granted under either Employee
Plan, are subject to additional restrictions.                                   

In 1995, Noel adopted a non-employee directors' stock option plan (the
"Directors' Plan"), providing for the grant of non-incentive options to purchase
an aggregate of 50,000 shares of Noel Common Stock to directors who are not     
employees of Noel. Under the Directors' Plan each non-employee director serving 
as a director immediately following the 1995 Annual Meeting of Shareholders, who
had not previously been granted an option to purchase Noel Common Stock under   
any of Noel's stock option plans, was granted a fully vested option to purchase 
8,334 shares of Common Stock at an exercise price per share equal to the fair   
market value on the date of shareholder approval of the plan (the "Plan Approval
Date"). Every individual who becomes a director after the Plan Approval Date,   
who has not previously been granted options to purchase shares of Common Stock  
under any of Noel's stock option plans and who is not an employee of Noel, shall
be granted a vested option to purchase 8,334 shares of Noel Common Stock, to    
have an exercise price equal to the fair market value on the date of grant. Each
option granted under the Directors' Plan terminates no later than 10 years from 
the date of grant.                                                              

Share and price information for the 1988 Plan, the 1995 Plan and the  
Directors' Plan is as follows:                                                  

                                                                · Download Table

                                                               Weighted Average
                                     Number of   Option Price      Exercise    
                                      Shares       per Share        Price      
                                      ------       ---------        -----      
                                                                               
Outstanding, January 1, 1996         1,977,793   5.25 - 45.00       8.289      

Exercised                              (24,352)         8.355       8.355      

Outstanding, December 31, 1996       1,953,441   5.25 - 45.00       8.289      

Exercised                             (233,334)         8.355       8.355      

Outstanding, March 31, 1997          1,720,107   5.25 - 45.00       8.279      

Available for grant, March 31, 1997  1,072,207                                 

   See Note 7 for a description of the settlement of the outstanding options
and warrants.                                                                   

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   Noel applies APB Opinion No. 25 and related Interpretations in accounting
for its plans. Had compensation expense for the three months ended March 31,    
1997, and for the year ended December 31, 1996 option and warrant grants of Noel
been determined consistent with FASB Statement No. 123 "Accounting for Stock    
Based Compensation"("SFAS 123"), net loss and basic net loss per share for the  
three months ended March 31, 1997, and for the year ended December 31, 1996     
would approximate the pro forma amounts below (dollars in thousands, except per 
share amounts):                                                                 

                                                                · Download Table

                                     1997                        1996         
                                     ----                        ----         
                          As Reported    Pro Forma  As Reported      Pro Forma
                          -----------    ---------  -----------      ---------
                                                                              
Net loss                    $(1,309)      $(1,405)   $(2,657)         $(3,040)
                            =======       =======   ========          ======= 

Basic net loss per share     $(0.06)       $(0.07)    $(0.13)          $(0.15)
                             ======        ======     ======           ====== 

The effects of applying SFAS 123 in this pro forma disclosure are not 
indicative of future amounts. SFAS 123 does not apply to awards prior to 1995.  

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14.  OTHER INCOME (EXPENSE)                                                     

Other income consists of the following (dollars in thousands):        

                                                        · Enlarge/Download Table

                                                  Three Months Ended      Year Ended   
                                                   March 31, 1997     December 31, 1996
                                                   ---------------    -----------------
                                                                                       
Interest income                                        $ 308                 $ 856     

Gain (Loss) on sale of non-marketable securities          (7)                  (85)    

Other                                                    (64)                 (172)    
                                                       -----                 -----     
                                                       $ 237                 $ 599     
                                                       =====                 =====     

     Income (Loss) from equity investments consists of the following (dollars in
thousands):                                                                     

                                                                · Download Table

                Three Months Ended     Year Ended    
                  March 31, 1997    December 31, 1996
                  --------------    -----------------
                                                     
HPS                    $ 964             $ (500)     

Novoeste                (927)            (3,066)     

Career Blazers          (356)            (1,174)     

Other                    (35)                33      
                       -----            -------      
                       $(354)           $(4,707)     
                       =====            =======      

15. INCOME TAXES                                                                

   The components of the benefit (provision) for income taxes are as follows
(dollars in thousands):                                                         

                                                                · Download Table

                                 Three Months Ended      Year Ended   
                                   March 31, 1997    December 31, 1996
                                   ---------------   -----------------
                                                                      
Current tax benefit (expense):                                        

 Federal                            $ (8,780)            $ 4,063      

 State                                  (717)               (195)     

 Foreign                                  (6)                (63)     
                                    --------             -------      
                                    $ (9,503)            $ 3,805      
                                    ========             =======      

Deferred tax benefit (expense):                                       

Federal                               $ (516)            $(2,484)     

State                                   (418)               (179)     
                                     -------             -------      
                                      $ (934)            $(2,663)     
                                     =======             =======      

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  A reconciliation of the Company's income tax benefit (provision) and the
amount computed by applying the statutory tax rate of 34% to loss before income 
taxes is as follows (dollars in thousands):                                     

                                                                · Download Table

                                            Three Months Ended      Year Ended     
                                              March 31, 1997     December 31, 1996 
                                              --------------     ----------------- 
                                                                                   
Tax benefit (provision) at statutory rates            $ (3,104)            $ 1,444 

State and local, net of Federal benefit                   (742)               (231)

Minority interest                                          170                (463)

Losses generating no current benefit                      (324)                --  

Amortization and write-off of excess                                               
   purchase costs                                       (6,349)               (485)

Benefit from book loss carryforward                         --                 879 

Other                                                      (88)                 (2)
                                                      --------             ------- 
Benefit (Provision) for income taxes                  $(10,437)            $ 1,142 
                                                      ========             ======= 

16. RETIREMENT PLANS                                                            

 The Company sponsors a number of defined contribution retirement plans.
Participation in these plans is available to substantially all employees. The   
Company's contributions to these plans are based on a percentage of employee    
contributions. The expense of these plans for the year ended December 31, 1996  
totaled $763,000.                                                               

  Carlyle and Curtis sponsor defined benefit pension plans. Carlyle's plan
covers substantially all of its employees and requires no contributions from    
employees. Benefits are based on years of service and compensation levels within
these years. Carlyle's plan was frozen as of December 31, 1994, after which no  
new employees were eligible to join the plan. Additionally, employees covered   
under Carlyle's plan will not receive any additional accruals for service       
rendered after December 31, 1994. Curtis' plan covers former manufacturing      
employees who were members of UAW Local 70, based on years of service. Both     
plans fund pension costs as required by ERISA. The projected unit cost method is
used to determine both pension costs and funding requirements for the plans. The
net periodic pension costs included in the statement of operations for the year 
ended December 31, 1996 was a benefit of $109,000.                              

17. POSTRETIREMENT BENEFITS                                                     

  Carlyle provides certain health and life insurance benefits for eligible
retirees and their dependents. Curtis provides health care benefits for retired 
members of UAW Local 70. Both plans are not funded and pay the costs of benefits
as incurred. The net periodic postretirement benefit costs included in the      
statements of operations for the years ended December 31, 1996 is not material. 

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18. SUPPLEMENTAL CASH FLOWS INFORMATION                                         

Non-cash investing and financing activities are as follows (dollars in
thousands):                                                                     

                                                        · Enlarge/Download Table

                                                                     Three Months Ended     Year Ended    
                                                                       March 31, 1997    December 31, 1996
                                                                     ------------------  -----------------
                                                                                                          
Increase in investment in HPS related to share issuances                    $   74           $  8,776     
                                                                            ======           ========     

Increase in investment in Career Blazers related to share issuances         $  --            $  1,817     
                                                                            ======           ========     

Interest paid                                                               $2,003           $  7,883     
                                                                            ======           ========     

Income taxes paid                                                           $   41           $    784     
                                                                            ======           ========     

19. INDUSTRY SEGMENT INFORMATION                                                

The Company is classified into three business segments. Summarized    
financial information by business segment for the periods of Noel's consolidated
control is as follows (dollars in thousands):                                   

                                                        · Enlarge/Download Table

-------------------------------------------------------------------------------------------------------------------
                                                Operating       Identifiable      Depreciation and        Capital  
1997                            Sales        income (loss)         assets           amortization       expenditures
-------------------------------------------------------------------------------------------------------------------
                                                                                                                   
Fasteners & Security                                                                                               
Products Distribution         $19,513           $  (73)                N/A              $  565               $589  

Snack Foods                     4,310               43                 N/A                 188                 55  

Industrial Threads &                                                                                               
Buttons                        14,650           (2,763)                N/A                 489                143  

Noel - Investments                 --               --                 N/A                  --                 --  

Noel - Corporate                   --           (1,891)                N/A                  18                 --  
                              -------          --------                                 ------               ----  
                              $38,473          $(4,684)                                 $1,260               $787  
                              =======          ========                                 ======               ====  

                                                        · Enlarge/Download Table

-------------------------------------------------------------------------------------------------------------------
                                               Operating        Identifiable      Depreciation and        Capital  
1996                            Sales        income (loss)         assets           amortization       expenditures
-------------------------------------------------------------------------------------------------------------------
                                                                                                                   
Fasteners & Security                                                                                               
Products Distribution        $ 77,072           $ 4,331            $49,806              $2,537             $3,120  

Snack Foods                    23,648             1,471             13,158                 796                164  

Industrial Threads &                                                                                               
Buttons                        88,605            11,131             85,160               3,462              1,003  

Noel - Investments                 --                --             68,026                  --                 --  

Noel - Corporate                   --            (7,739)            14,371                  78                 26  
                             --------            ------           --------              ------             ------  
                             $189,325            $9,194           $230,521              $6,873(1)          $4,313  
                             ========            ======           ========              ======             ======  

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     (1)Amounts include $398,000 and $2,414,000 which were included in cost of
       sales for the period ended March 31, 1997 and the year ended December
31, 1996.                                                     

   The snack foods segment had one customer that accounted for approximately
68% and 49% of sales in 1997 and 1996, respectively. The Company's revenue and  
assets attributable to operations outside of the United States are not          
significant.                                                                    

20. QUARTERLY FINANCIAL DATA                                                    
(Unaudited, dollars in thousands, except per share amounts)           

                                                        · Enlarge/Download Table

---------------------------------------------------------------------------------------------------------------
Quarters Ended                                March 31,           June 30,      September 30,      December 31,

1996                                                                                                           
---------------------------------------------------------------------------------------------------------------
                                                                                                               
Revenue                                      $  43,119          $  47,139        $  50,266           $  48,801 

Operating Income                                   824              1,862            3,372               3,136 

Income (Loss) from continuing operations          (297)               717           (3,016)               (509)

Income from discontinued operations                 42                 --              290                 116 

Net income (loss)                                 (255)               717           (2,726)               (393)

Basic earnings per share from:                                                                                 

  Continuing operations                          (0.01)              0.03            (0.15)              (0.02)

  Discontinued operations                           --                 --             0.02                 --  

  Net income (loss)                              (0.01)              0.03            (0.13)              (0.02)

Diluted earnings per share from:                                                                               

   Continuing operations                           N/A               0.03              N/A                 N/A 

   Discontinued operations                         N/A                 --              N/A                 N/A 

   Net income (loss)                               N/A               0.03              N/A                 N/A 

    All earnings per share amounts have been restated to comply with Statement
of Financial Accounting Standards No. 128, "Earnings per Share".                

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REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors                                                       
and Stockholders of                                                             
HealthPlan Services Corporation                                                 

In our opinion, the consolidated statement of operations and cash flows of      
HealthPlan Services Corporation and its subsidiaries (the "Company") (not       
presented separately herein) present fairly, in all material respects,          
the results of their operations and their cash flows for the year in the        
period ended December 31, 1996, in conformity with generally accepted           
accounting principles. These financial statements are the responsibility of the 
Company's management; our responsibility is to express an opinion on these      
financial statements based on our audit. We conducted our audit in accordance   
with generally accepted auditing standards which require that we plan and       
perform the audit to obtain reasonable assurance about whether the financial    
statements are free of material misstatement. An audit includes examining,      
on a test basis, evidence supporting the amounts and disclosures in the         
financial statements, assessing the accounting principles used and significant  
estimates made by management, and evaluating the overall financial statement    
presentation. We believe that our audit provides a reasonable basis for the     
opinion expressed above.                                                        

/s/ PricewaterhouseCoopers LLP                                                  

Price Waterhouse LLP                                                            
Tampa, Florida                                                                  
March 14, 1997                                                                  

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 REPORT OF INDEPENDENT ACCOUNTANTS

To the Shareholders and Board                                                   
of Directors of Staffing Resources, Inc.:                                       

 We have audited the accompanying consolidated balance sheet of Staffing
Resources, Inc. as of December 31, 1996, and the related consolidated statements
of operations, changes in shareholders' equity and cash flows for the year then 
ended. These consolidated financial statements are the responsibility of the    
Company's management. Our responsibility is to express an opinion on these      
consolidated statements based on our audit.                                     

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

     In our report dated March 31, 1997, we expressed a qualified opinion on the
1996 consolidated financial statements because of a scope limitation related to 
December 31, 1996 accounts receivable from one customer, the uncollected balance
of which was approximately $1,209,000 at March 28, 1997. As described in Note   
20, the Company has obtained previously unavailable financial information on    
this customer as of December 31, 1996 and March 29, 1997, and based on this     
information has provided an additional $600,000 allowance for this accounts     
receivable as of December 31, 1996 and has restated its 1996 consolidated       
financial statements to reflect this provision. Accordingly, our present opinion
on the 1996 consolidated financial statements, as present herein is different   
from that expressed in our previous report.                                     

 In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Staffing Resources, Inc. as of December 31, 1996 and the consolidated results of
its operations and its cash flows for the year then ended, in conformity with   
generally accepted accounting principles.                                       

  As discussed in Note 17 to the consolidated financial statements, during
the year ended December 31, 1996, the Company changed its method of accounting  
for staff employees' vacation accruals and adjusted its previously reported     
December 31, 1995 retained earnings for this change in accounting and for       
understatements of its workers' compensation claim accrual and its accounts     
payable.                                                                        

/s/ PricewaterhouseCoopers LLP                                                  

Dallas, Texas                                                                   
[MARCH 31, 1997, EXCEPT FOR NOTE 20                                             
AS TO WHICH THE DATE IS JULY 3, 1997]                                           

F-28

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                                                                   SCHEDULE II

Noel Group, Inc. and Subsidiaries 
Valuation and Qualifying Accounts 
For the Year Ended December 31, 1996
(Dollars in thousands)

                                                        · Enlarge/Download Table

Column A                             Column B                     Column C                         Column D        Column E 
                                                                 Additions                                                  
                                                -------------------------------------------------                           
                                                   (1)              (2)                 (3)                                 
                                                                                      Acquisition                           
                                      Balance    Charged to                       Cost Allocated    Payments                
                                     Beginning    Costs and   Charged to Other       to Assets        and         Balance at
             Description             of Period    Expenses        Accounts           Purchased      Charges    End of Period
             -----------             ---------    --------        --------           ---------      ---------  ------------ 
                                                                                                                            
Year Ended December 31, 1996                                                                                                
Allowance for doubtful accounts       $ 2,013      $   724          $    -            $     -       $   907(a)    $ 1,830   
Allowance for returns and discounts   $   854      $ 1,181          $    -            $     -       $   147(a)    $ 1,888   
Inventory reserve                                                                                   $   641(a)              
                                      $ 3,113      $   274          $  135            $ 1,800       $   974(b)    $ 3,707   


----------------                                                      
(a) Write-offs                                                        
(b) Dispositions                                                      

   S-1

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 INDEX OF EXHIBITS

                                                                · Download Table

Item No. Item Title                                      Exhibit No.
                                                                    
(2)      Plan of acquisition, reorganization,                       
         liquidation or succession:                                 
         (A)    Stock Purchase Agreement dated as of                
                December 18, 1996 by and among Noel                 
                Group, Inc., Automatic Data Processing,             
                Inc. and HealthPlan  Services                       
                Corporation.                                 (a)    
         (B)    Plan of Complete Liquidation and                    
                Dissolution of Noel Group, Inc.              (b)    
(3)      Articles of Incorporation and By-Laws.                     
         (A)    Certificate of Incorporation, as                    
                amended.                                     (c)    
         (B)    Composite copy of the Certificate of                
                Incorporation, as amended.                   (d)    
         (C)    By-Laws, as amended and restated.            (e)    
(4)      Instruments defining the rights of security                
         holders, including indentures:                             
         (A)    Excerpts from Certificate of                        
                Incorporation, as amended.                   (c)    
         (B)    Excerpts from By-Laws, as amended and               
                restated.                                    (e)    
(9)      Voting Trust Agreements:  None                             
(10)     Material Contracts:                                        
         (A) Stock Purchase Agreement dated June 8,                 
         1998 by and among Brynwood Partners III L.P.               
         and Noel Group, Inc.                                (k)    
         (B) Letter Agreement dated March 1,  1996, as              
         amended, by and between  Noel Group, Inc. and              
         Karen Brenner  with respect to Ms. Brenner's               
         employment by Noel                                  (f)    
         (C) Letter Agreements dated March 9, 1995 by               
         and between Noel Group, Inc. and William L.                
         Bennett.                                            (e)    
         (D) Sublease Agreement dated January 1, 1995               
         by and between The Prospect Group, Inc. and                
         Noel Group, Inc.                                    (f)    
         (E) Life Insurance Agreement dated July 27,                
         1995 between Noel Group, Inc. and Howard M.                
         Stein as Trustee u/a dated June 10, 1993                   
         between Joseph  S. DiMartino, Grantor and                  
         Howard M. Stein, Trustee.                           (f)    
         (F) Assignment of Life Insurance Policy as                 
         Collateral dated as of July 27, 1995 by Howard             
         M. Stein as Trustee u/a dated June 10, 1993                
         between Joseph S. DiMartino, Grantor and                   
         Howard M. Stein, Trustee, to Noel Group, Inc.       (f)    
         (G) Life Insurance Agreement dated as of May               
         17, 1995 between Noel Group, Inc. and Karen                
         Brenner.                                            (g)    
         (H) Assignment of Life Insurance Policy as                 

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                                                                · Download Table
                                                          

      Collateral dated as of May 17, 1995 by Karen        
      Brenner to Noel Group, Inc.                      (g)
      (I) Tax Allocation Agreement dated as of            
      January 20, 1995 by and between Noel Group,         
      Inc. and Carlyle Industries, Inc.                (f)
      (J) Tender and Option Agreement dated November      
      13, 1995 by and among Blount, Inc., S.O.C.          
      Corporation, Noel Group, Inc. and The               
      Forschner Group, Inc.                            (h)
      (K) Asset Purchase Agreement dated as of            
      December 12, 1996 among Carlyle Industries,         
      Inc., certain of its subsidiaries, Hicking          
      Pentecost PLC and its subsidiary HP                 
      Belt-Acquisition Corporation.                    (i)
      (L)Agreement and Plan of Merger dated November      
      6, 1997 among Paragon Corporate Holdings,           
      Inc., Curtis Acquisition Corp. and Curtis           
      Industries, Inc.                                 (j)
(11)  Statement re computation of per share earnings      
      is not required because the relevant                
      computations can be clearly determined from         
      the material contained in the financial             
      statements included herein.                         
(12)  Statements re Computation of Ratios: Not            
      Applicable.                                         
(13)  Annual Report to security holders: Not              
      Applicable.                                         
(16)  Letter re Change in Certifying Accountant: Not      
      Applicable.                                         
(18)   Letter re Change in Accounting Principles:         
      Not Applicable.                                     
(21)  Subsidiaries of the registrant.                 (21)
(22)  Published Report re Matters Submitted to Vote       
      of Security Holders: Not Applicable.                
(23)  Consents: None                                      
(24)  Power of Attorney: Not Applicable.                  
(27)  Financial Data Schedule                         (27)
(99)  Additional Exhibits: None                           

-------------------------                                                       
(a)      This exhibit was filed as an exhibit to the Company's Current Report on
Form 8-K dated February 7, 1997 and is incorporated herein by 
reference.                                                    
(b)      This exhibit was filed as an exhibit to the Company's Proxy Statement  
       for the Special Meeting of Shareholders held on March 19, 1997 and is
incorporated herein by reference.                             
(c)      These exhibits were filed as exhibits to the Company's Registration    
         Statement on Form S-1, Registration No. 33-44178, effective January 29,
1992, and are incorporated herein by reference.               
(d)      These exhibits were filed as exhibits to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1992, and are
incorporated herein by reference.                             
(e)      These exhibits were filed as exhibits to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1994, and are
incorporated herein by reference.                             
(f)      These exhibits were filed as exhibits to the Company's Annual Report on
   Form 10-K dated December 31, 1995, and are incorporated herein by
reference.                                                    
(g)      These exhibits were filed as exhibits to the Company's Quarterly Report
        on Form 10-Q for the quarter ended September 30, 1995 are incorporated
herein by reference.                                          
(h)      This exhibit was filed as an exhibit to the Company's Current Report on
 Form 8-K dated December 29, 1995, and is incorporated herein by
reference.                                                    
(i)      This exhibit was filed as an exhibit to the Proxy Statement for the    
Special Meeting of Stockholders of Carlyle                    

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 Industries, Inc. (f/k/a Belding Heminway Company, Inc.) held on
March 26, 1997, and is incorporated herein by reference.      
(j)      This exhibit was filed as an exhibit to Company's Current Report on    
Form 8-K dated December 1, 1997 and is incorporated herein by 
reference.                                                    
(k)      This exhibit was filed as an exhibit to the Company's Current Report on
      Form 8-K dated June 8, 1998 and is incorporated herein by reference.

STATEMENT OF DIFFERENCES

The registered trademark symbol shall be expressed as..................'r'    

Dates Referenced Herein   and   Documents Incorporated By Reference

				Referenced-On Page
This 10-K405 Filing		Date		First		Last			Other Filings
		1/29/92		57
		8/17/92		46
		8/31/92		46
		12/31/92		57
		6/10/93		56
		7/21/93		45
		10/29/93		12		45
		1/14/94		46
		1/21/94		14
		9/2/94		44
		9/30/94		19
		12/31/94		19		57
		1/1/95		12		56
		1/20/95		57
		3/9/95		56
		3/15/95		5
		5/17/95		56		57
		5/19/95		44
		6/6/95		22
		7/17/95		22
		7/27/95		56
		7/31/95		44
		9/30/95		57
		11/13/95		46		57
		11/15/95		44
		12/29/95		57
		12/31/95		54		57
		1/1/96		34
		3/1/96		56
		3/5/96		43
		3/31/96		21		22			10-Q
		5/13/96		21
		5/21/96		3		35			8-K
		7/1/96		43
		8/15/96		16
		9/3/96		14
		12/12/96		16		57
		12/18/96		44		56
		12/31/96		20		55			NT 10-K, 10-K
		1/1/97		28
		2/7/97		44		57			8-K
		2/28/97		22
		3/14/97		53
		3/19/97		3		57			DEFS14A
		3/26/97		12		58
		3/27/97		5
		3/28/97		54
		3/29/97		54
		3/31/97		19		54			NT 10-K, 10-Q
		4/1/97		28		35
		4/18/97		41
		4/25/97		18		41			8-K
		7/3/97		54
		7/7/97		41
		9/25/97		18					SC 13D/A
		9/29/97		41
		10/6/97		18		41
		11/6/97		38		57
		11/21/97		41
		12/1/97		18		58			8-K
		12/31/97		12		40			10-K405/A, 10-K405
		3/20/98		3		41
		3/27/98		3		41			8-K
		4/1/98		20
		4/22/98		3		41
		4/30/98		3		41			8-K
		6/6/98		20
		6/8/98		3		58			8-K
		6/22/98		5					8-K
		6/23/98		5		37
		6/30/98		12					10-Q
		7/31/98		3		41
		8/14/98		3		41			10-Q
		12/16/98		12
For The Period Ended		12/31/98		1		40			10-K405/A
		2/8/99		16
		2/9/99		16
		2/24/99		16
		3/1/99		16
		3/15/99		5
		3/17/99		3		41
		3/22/99		1		37
		3/23/99		28
		3/29/99		3		41
Filed On / Filed As Of		3/31/99							10-Q
		4/12/99		3		41
		12/31/99		39
		3/19/0		6		9
		12/31/0		12
		3/31/2		15
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