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                       SECURITIES AND EXCHANGE COMMISSION
                          WASHINGTON, D.C. 20549-1004
                            ------------------------

                                   FORM 10-K

(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
   For the fiscal year ended June 30, 2000

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
   For the transition period from                to

                        Commission File Number: 0-23335
                      MPW INDUSTRIAL SERVICES GROUP, INC.
             (Exact Name of Registrant as Specified in Its Charter)

                                      OHIO
                          (State or other jurisdiction
                       of incorporation or organization)
                    9711 LANCASTER ROAD, S.E., HEBRON, OHIO
                    (Address of principal executive offices)
                                   31-1567260
                                (I.R.S. Employer
                              Identification No.)
                                     43025
                                   (Zip Code)

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (740) 927-8790

          SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
                                      None

          SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
                        COMMON STOCK, WITHOUT PAR VALUE
                                (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. [ ]

     As of September 27, 2000, the aggregate market value of the voting stock
held by non-affiliates of the registrant (based on the closing sale price of
such stock on such date) was approximately $29,210,921.*

     The number of shares of Common Stock outstanding on September 27, 2000, was
10,939,957 shares.

     The Registrant's Definitive Proxy Statement for the Annual Meeting of
Shareholders to be held on December 13, 2000 is incorporated by reference in
Part III of this Form 10-K to the extent stated herein.

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

     * Calculated by excluding all shares that may be deemed to be beneficially
       owned by executive officers and directors of the registrant, without
       conceding that all such persons are "affiliates" of the registrant for
       purposes of the federal securities laws.
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<TABLE>
<S>       <C>                                                           <C>
PART I
Item 1.   Business....................................................    3
Item 2.   Properties..................................................   10
Item 3.   Legal Proceedings...........................................   11
Item 4.   Submission of Matters to a Vote of Security Holders.........   11

PART II
Item 5.   Market for Common Equity and Related Stockholder Matters....   13
Item 6.   Selected Consolidated Financial Data........................   13
Item 7.   Management's Discussion and Analysis of Financial
          Condition and Results of Operations.........................   15
Item 7A.  Quantitative and Qualitative Disclosures About Market
          Risk........................................................   21
Item 8.   Financial Statements and Supplementary Data.................   22
Item 9.   Changes and Disagreements with Accountants on Accounting and
          Financial Disclosure........................................   43

PART III
Item 10.  Directors and Executive Officers............................   44
Item 11.  Executive Compensation......................................   44
Item 12.  Security Ownership of Certain Beneficial Owners and
          Management..................................................   44
Item 13.  Certain Relationships and Related Transactions..............   44

PART IV
Item 14.  Exhibits, Financial Statement Schedules and Reports on Form
          8-K.........................................................   45
SIGNATURES............................................................   47
EXHIBIT INDEX.........................................................   48
</TABLE>

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                                     PART I

     All statements, other than statements of historical facts, included in this
Form 10-K, including, without limitation, statements made in "Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations" that address activities, events or developments that the Company
expects, believes or anticipates will or may occur in the future, including such
matters as future capital expenditures, including the amount and nature thereof,
potential acquisitions by the Company, trends affecting the Company's financial
condition or results of operations, and the Company's business and growth
strategies are forward-looking statements. Such statements are subject to a
number of risks and uncertainties, including risks and uncertainties identified
in "Item 1. Business -- Investment Considerations" and other general economic
and business conditions, the business opportunities (or lack thereof) that may
be presented to and pursued by the Company, changes in laws or regulations
affecting the Company's operations and other factors, many of which are beyond
the control of the Company. Also, there is always risk and uncertainty in
pursuing and defending litigation and other disputes in the course of the
Company's business. All of these risks and uncertainties could cause actual
results to differ materially from those assumed in the forward-looking
statements. These forward-looking statements reflect management's analysis,
judgment, belief or expectation only as of the date of this Form 10-K. The
Company undertakes no obligation to revise publicly these forward-looking
statements to reflect events or circumstances that arise after the date hereof.
In addition to the disclosure contained herein, readers should carefully review
risks and uncertainties contained in other documents the Company files or has
filed from time to time with the Securities and Exchange Commission pursuant to
the Securities Exchange Act of 1934, as amended, that are incorporated by
reference herein or are otherwise publicly available at the offices of the
Securities and Exchange Commission or at its website (http://www.sec.gov).

ITEM 1. BUSINESS

BUSINESS

     MPW is a leading provider of integrated, technically-based industrial
cleaning and related facilities support services to a broad array of industries,
primarily in North America. We divide our business into two business segments:
Industrial Facility Support Services and Industrial Filtration Products and
Services. Our Industrial Facilities Support Services segment provides a broad
range of services, including industrial cleaning and facility maintenance,
industrial container cleaning and industrial process water purification. It
serves customers in manufacturing, utilities and other industries. Our
Industrial Filtration Products and Services segment provides air and liquid
filtration devices, filtration media and consumable products, as well as
engineering analysis to support comprehensive contamination control programs. It
serves primarily the automotive industry and other industrial customers.

RECENT DEVELOPMENTS

     Privatization of Company. On August 22, 2000, we announced that a Special
Committee of our Board of Directors had reached an agreement in principle with
the Company's Chairman and Chief Executive Officer, Monte R. Black, to acquire
the Company in a cash merger at $8.25 per share plus an additional amount if the
sale of our filtration services group (as hereinafter defined) generated
proceeds in excess of targeted amounts. Our filtration services group is
comprised of our Industrial Filtration Products and Services segment along with
the labor support business of our Industrial Cleaning and Facility Maintenance
service line (collectively, "Filtration Services"). On September 27, 2000, we
announced that Mr. Black had withdrawn his previously announced proposal to
acquire the Company. Mr. Black advised the Company's Special Committee, which
had been evaluating the proposal, that he withdrew the proposal primarily
because he perceived uncertainty in the Company's core businesses due to
sluggish customer demand from certain industries. Mr. Black also expected that
the higher than anticipated level of current Company indebtedness, when added to
the debt to be incurred to finance the privatization transaction, would
adversely impact the Company if the privatization transaction were completed. In
addition, Mr. Black advised the Special Committee that he is not considering a
new proposal to acquire the Company. See Note 4 to the Consolidated Financial
Statements included elsewhere in this Form 10-K.

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     In connection with the proposed privatization transaction, Daniel P.
Buettin resigned as Vice President and Chief Financial Officer, Robert J. Gilker
resigned as Vice President, Law and Administration, and Secretary and Brad A.
Martyn resigned as Vice President, Operations.

     Proposed Sale of Filtration Services. In connection with the proposed
privatization transaction, we also announced our plan to sell Filtration
Services. Even though Mr. Black's proposal to acquire the Company has been
withdrawn, we still intend to sell Filtration Services. Filtration Services
provides air and liquid filtration devices, filtration media and consumable
products, engineering analysis and industrial cleaning and facility maintenance
primarily to the automotive industry. Filtration Services accounted for 40.3% of
our fiscal 2000 revenues. The Consolidated Financial Statements have been
restated to account for Filtration Services as a discontinued operation for all
periods presented therein. We expect the sale of Filtration Services to be
completed in the third quarter of fiscal 2001. See Note 5 to the Consolidated
Financial Statements included elsewhere in this Form 10-K.

     Recapitalization of Pentagon. In late 1998 and 1999, we entered the
technical services and cleaning to cleanroom environments service line through
the acquisitions of seven companies, which were combined into a single
subsidiary, Pentagon Technologies Group, Inc. ("Pentagon"). Pentagon provides
cleanroom cleaning, both during construction and on an ongoing basis, testing
and certification of cleanroom environments, cleaning of critical operating
equipment and equipment parts for use in these environments and sells related
equipment and products used in cleanroom environments. The industries Pentagon
primarily serves are the semiconductor, microelectronics, pharmaceutical,
biotechnology and healthcare industries. Pentagon's cleanroom cleaning and
related services accounted for 16.0% of our fiscal 2000 revenues.

     On July 18, 2000, we closed a transaction related to Pentagon pursuant to a
Recapitalization Agreement, dated as of April 25, 2000, by and among Pentagon,
the Company, MPW Management Services Corp., Pentagon Merger Sub, Inc., Baird
Capital Partners III Limited Partnership, BCP III Special Affiliates Limited
Partnership and BCP III Affiliates Fund Limited Partnership, as amended (the
"Recapitalization Agreement"). Pursuant to the Recapitalization Agreement, Baird
Capital Partners and certain of its affiliates ("BCP") invested in Pentagon, we
sold a majority of our equity interest in Pentagon to BCP and Pentagon
indebtedness to us was repaid. We retained a 22.3% interest in the capital stock
of Pentagon. See Note 6 to the Consolidated Financial Statements included
elsewhere in this Form 10-K.

INDUSTRIAL FACILITIES SUPPORT SERVICES SEGMENT

     Industrial Cleaning and Facility Maintenance. We believe that we are a
leading provider of industrial cleaning and facility maintenance in the
midwestern and southeastern United States. We provide industrial cleaning of,
and facility maintenance services to, critical operating equipment for
industrial customers primarily at their facilities. The typical industries
served by this service line include the automotive, utility, chemical, pulp and
paper and steel industries. We provide our industrial cleaning and facility
maintenance services on both a daily recurring basis and a project-by-project
basis, as well as pursuant to longer-term arrangements. Our services principally
include: dry vacuuming; wet vacuuming; industrial power washing; water blasting;
ultra-high pressure water blasting; cryojetic cleaning; and chemical cleaning.
These services, which we have provided for over 28 years, accounted for 33.5% of
our fiscal 2000 revenues.

     The labor support business of our industrial cleaning and facility
maintenance service line provides support to our customers' ongoing maintenance
of their facilities as well as cleaning services that help our customers to
maximize the performance of their production processes through effective
cleaning, which leads to increased efficiency and productivity in their
facilities. Our labor support business, included in discontinued operations for
all periods presented, accounted for 10.0% of our fiscal 2000 revenues. As
discussed above, we have announced plans to sell Filtration Services, which
includes the labor support business of our industrial cleaning and facility
maintenance service line. See Note 5 to the Consolidated Financial Statements
included elsewhere in this Form 10-K.

     Industrial Container Cleaning. We believe that we are the leading container
cleaner for automotive paint manufacturers in North America. The automotive
industry uses paint resin containers (called "totes") in the vehicle painting
process. Totes are large portable stainless steel or aluminum containers that
are filled with paint
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resin and are refilled after our cleaning services are provided. We also provide
container cleaning services to various other industrial customers. This service
line uses our patented cleaning systems to perform services from two primary
processing facilities located in Detroit, Michigan and Cleveland, Ohio. Our
industrial container cleaning services accounted for 6.5% of our fiscal 2000
revenues.

     Industrial Process Water Purification. We believe that we are a leading
provider of industrial process water purification services in the midwestern
United States on both a scheduled and emergency basis. We provide pure feed
water to customers primarily in the utility, steel and automotive industries. We
process pure feed water for our customers through a mobile fleet of equipment
that allows us to perform temporary and permanent on-site servicing. We can also
provide water purification services on an emergency response basis when our
customers' existing water purification systems are temporarily out of service or
cannot meet the existing demand. We also offer purified water service exchange
services that involve the delivery and pickup of smaller tanks of purification
media and are an economical solution for small quantity requirements. Our
industrial process water purification services accounted for 3.7% of our fiscal
2000 revenues.

INDUSTRIAL FILTRATION PRODUCTS AND SERVICES SEGMENT

     We believe that we are a leading provider of filtration products and
related services to paint systems in automotive assembly plants and to other
industrial facilities in North America. We are a major authorized distributor of
filters and filtration media and ancillary products used in the production
setting. We also provide engineering and consulting services through the
identification of various contaminant sources and the management of air and
liquid flow. Our Industrial Filtration Products and Services segment, included
in discontinued operations for all periods presented, accounted for 30.3% of our
fiscal 2000 revenues. As discussed above, we have announced plans to sell
Filtration Services, which includes our Industrial Filtration Products and
Services segment. See Note 5 to the Consolidated Financial Statements included
elsewhere in this Form 10-K.

MARKETING

     Our marketing and sales efforts focus on increasing the volume of current
services provided to existing customers, actively cross-marketing additional
services to our existing customer base and developing new customer
relationships.

     Increasing the Volume of Services Provided. We have full-time account
managers assigned to and stationed in our customers' facilities where we perform
work on an on-going basis. We also have division managers that serve in a
similar capacity in geographic areas in which we serve several customers. In
each case, these account and division managers are responsible for the
maintenance of our existing customer relationships and are in a position to
actively identify new opportunities within these facilities for additional
business. Monte R. Black, Ira O. Kane and each of the leaders of our service
lines are actively involved in supporting the efforts of these managers and
regularly attend meetings at customer facilities and visit our work-sites within
these facilities. Account managers and division managers are provided
incentives, both short and long-term, to continue to grow their businesses and
to seek cross-marketing opportunities within the facilities they serve.

     Cross-Marketing. Each of our service lines has a strong management team
that is responsible for ensuring that we build our customer relationships on a
foundation of high-quality, responsive service. Our senior management teams
actively develop a thorough understanding of our customers' outsourcing needs
and make every effort to present innovative solutions to meet these needs. Once
a cross-marketing opportunity has been identified, the technical and sales
leadership of the service line being marketed takes the lead in supporting the
sales effort to the customer. In order to coordinate and increase the focus on
our cross-selling effort, in fiscal 1999, we hired C. Douglas Rockwell as Vice
President, New Business Strategies.

     Developing New Customer Relationships. We attempt to visit and communicate
with facilities that we do not actively serve on a recurring basis. We presently
have sales managers located in our offices throughout the United States and we
use these individuals to manage the majority of these efforts. We support the
efforts of this sales force by involving our account, division and business unit
managers in circumstances where we have identified a strong opportunity to
provide services. We also market MPW's reputation and capabilities to plant

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management within these facilities and to the corporate management of these
companies. In these cases, either Monte R. Black, Ira O. Kane or members of our
senior management team may participate in sales presentations.

CUSTOMERS

     During fiscal 2000, we had sales to more than 1,200 customers and our ten
largest customers represented 46.2% of our revenues. General Motors Corporation
represented 13.0% of our fiscal 2000 revenues.

     A substantial portion of our business operations are performed within our
customers' facilities utilizing our personnel and equipment to clean or maintain
their critical operating equipment. From these customers, we typically receive
most orders for our services on a job-by-job basis. In some instances we
maintain equipment at the locations of our customers that have issued to us
blanket purchase orders for the provision of services over an extended period.
These blanket orders do not obligate the customer to purchase a specified dollar
amount of services. Blanket orders permit us to be contracted to perform
services when needed. These blanket orders, in combination with the location of
our personnel and equipment, allow us to expedite our response to a particular
customer's needs and may constitute a competitive advantage versus service
providers without on-site equipment. We provide our services primarily at
prescribed rates or based upon competitive bidding and in some cases through
direct negotiation with the customer. In certain instances, we have developed an
ongoing daily or weekly presence within our customers' facilities that results
in a consistent level of service revenues. However, we generally do not have any
meaningful backlog of service orders and do not consider backlog to be an
important indicator of future performance.

     In certain of our fixed-base facilities, we clean industrial paint
containers used by automobile paint manufacturers and critical equipment and
equipment parts utilized in the semiconductor manufacturing process. The
customers for whom we do this cleaning typically execute long-term agreements or
blanket orders that provide for consistent levels of business. In these
circumstances, we regularly communicate with such customers to identify and plan
for expected turnaround times and delivery schedules.

     Our Industrial Filtration Products and Services segment receives a
substantial number of orders on a daily basis for the delivery of filtration
media and ancillary products used in their customers' automobile paint systems
and production environments. We maintain warehouses near significant customers
and maintain delivery programs from these warehouses to meet customer demands.
Certain customers have awarded us blanket purchase orders which do not obligate
them to purchase specified dollar amounts of our products. The blanket purchase
orders do provide specified unit pricing which allows customers to efficiently
place orders when such products are needed.

EMPLOYEES

     As of June 30, 2000, we employed over 2,100 full-time employees,
approximately 600 of which were employed by Pentagon. Our union subsidiary based
in Detroit, Michigan employed approximately 75 of these employees. Our other
employees do not belong to unions. We have not experienced any work stoppages
and we believe that our relations with our employees are good.

SAFETY, TRAINING AND QUALITY ASSURANCE

     Performance of many of our services requires the use of equipment and
exposure to conditions that can be dangerous. Although we are committed to a
policy of operating safely and prudently, we have been and are subject to claims
by employees, customers and third parties for property damage and personal
injuries resulting from the performance of our services. To minimize these
risks, we have adopted broad training and educational programs and comprehensive
safety policies and regulations. We require that all operational personnel
complete applicable safety courses mandated by the Occupational Safety and
Health Administration, Environmental Protection Agency, Department of
Transportation and Mine Safety and Health Administration in areas including
hazard communication, protective equipment, confined space entry, first aid,
decontamination procedures and emergency response. In addition to these mandated
training courses, we require that water blast, dry and wet vacuum and power wash
operations personnel complete an MPW-designed hands-on skill training program
prior to commencing these activities. Our management regularly monitors
compliance with regulations promulgated by
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the Occupational Safety and Health Administration and the other regulatory
authorities and is responsible for directing our overall safety, training,
quality assurance and environmental compliance programs. In addition, most of
our service facilities have a designated safety/training manager who has
responsibility for overseeing our safety policies and procedures at the
facility.

COMPETITION

     In each of our business segments, we believe that the principal competitive
factors are experience, capability, customer responsiveness and price
competitiveness. We believe that our principal competitive advantages are our
technically-based services, ongoing customer relationships, responsiveness to
customers and our quality of operational personnel. We position ourselves
competitively as a value leader and not a price leader, though it remains
necessary for us to price our services at levels where our customers will
achieve cost savings versus performing the same services themselves.

     The market for industrial services is highly fragmented. There are many
competitors in each of our service lines, but we do not believe that there is
any competitor that offers all of the services we offer. Each of our business
segments compete with a number of companies in substantially all of the regions
in which they operate.

     In the Industrial Facilities Support Services segment, our industrial
cleaning and maintenance service line competes with large national or regional
firms that are typically divisions or subsidiaries of engineering, construction
or other service firms and a large number of private firms with relatively few
customer relationships, and our industrial water purification service line
competes with large national water purification firms in its midwestern market
and also with smaller regional competitors. We believe we are the leading
provider of container cleaning services to the automotive paint manufacturers in
North America, but compete with smaller private companies in this market. In the
Industrial Filtration Products and Services segment, we compete with large
manufacturers and national distributors of filtration media and with smaller,
generally private firms that provide services on a regional basis similar to
ours.

REGULATION

     Our operations are subject to numerous rules and regulations at the
federal, state and local levels. All of our operations are subject to
regulations issued by the United States Department of Labor under the
Occupational Safety and Health Act. These regulations have strict requirements
for protecting employees involved with any materials that are classified as
hazardous.

     As part of our industrial cleaning services, we provide support to our
customers for the management of their hazardous materials and other contaminants
generally in the form of assisting in the movement of these materials within
customers' facilities and, occasionally, assisting our customers in the
logistics of transporting hazardous materials, including advising customers on
the completion of waste manifests and providing customers with information
regarding permitted disposal facilities. We do not transport or dispose of these
hazardous materials, and we attempt to not take regulatory responsibility for
hazardous materials. We attempt to avoid any regulatory responsibility by not
taking title to any wastes as defined in the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, the Resource Conservation and
Recovery Act of 1976 and the Superfund Amendments and Reauthorization Act.

     As part of our industrial container cleaning operations, we manage some
solvents used in the cleaning process. Once they are used, these solvents are
sent by licensed transporters to licensed recycling facilities. We do not
believe that our current activities are subject to the regulations pertaining to
hazardous waste treatment, storage or disposal facilities or transporters of
these wastes.

     Our employees typically work within the customer's operating facilities.
These work environments generally do not expose the customer's employees or our
employees to hazardous materials beyond levels allowed by applicable
regulations. Our employees also generally do not perform work that requires any
direct contact with harmful materials. Occasionally, as part of our support
services, our employees may, at a customer's request, move hazardous materials
within the customer's facility. In addition, some of our more specialized
cleaning procedures may require our employees to work near hazardous materials.
Before any of this type of work is commenced, however, a complete survey of the
material is performed and a health and safety plan with respect to
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the material is developed and implemented. Our employees are required to perform
this type of work only with the proper protective equipment and training.

     We maintain a full-time staff of safety and environmental specialists to
ensure that our personnel operate in safe conditions and are properly protected
against harmful exposure. The staff of specialists design training materials,
develop safety and environmental policies and materials, conduct training
classes for employees regarding compliance with governmental regulations and our
procedures, conduct environmental and safety audits at our work sites and
monitor safety and environmental compliance at onsite customer locations.

     We believe that we have obtained the permits and licenses required to
perform our business and believe that we are in substantial compliance with all
federal, state and local laws and regulations governing our business. To date,
we have not been subject to any significant fines, penalties or other
liabilities under these laws and regulations. However, no assurance can be given
that future changes in these law and regulations, or interpretations thereof,
will not have an adverse impact on our operations.

INSURANCE

     Much of the work we perform is pursuant to contracts that require us to
indemnify the customer for injury or damage occurring on the work site. The
terms of these indemnity agreements vary, but generally they provide that we are
required to indemnify the customer for losses resulting from or incurred in
connection with actions in providing our services whether or not we have been
negligent. Liability for these indemnification claims is covered primarily by
our insurance policies.

     Although we believe that our insurance coverage is consistent with industry
practice, there are exclusions for matters of environmental pollution and other
types of environmental damage claims. An uninsured or partially insured claim,
if successful and of sufficient magnitude, could have a material adverse effect
on us or our financial condition.

INVESTMENT CONSIDERATIONS

     We Face the Competitive Pressures of a Highly Fragmented Industry. The
industrial services industry is highly competitive and fragmented. Companies
compete on the basis of the quality of services provided, responsiveness to
customers, ability to provide services, range of services offered and price. One
or more of the larger national or regional industrial services companies, as
well as numerous local industrial services companies of varying sizes and
resources, serve each of the geographic markets in which we compete or will
likely compete. The larger industrial services companies may have significantly
greater financial and other resources than us. In addition, many smaller
industrial services companies exist or are formed to serve only one or
relatively few customers. From time to time, these or other competitors may
reduce the price of their services in an effort to expand market share or
protect existing business. These practices may either require us to reduce the
pricing of our services or lose business. We expect that competition will remain
high or increase in the future, and we cannot be certain that we will continue
to compete successfully.

     We May Be Adversely Affected if Customers Reduce Their Outsourcing or Use
of Preferred Vendors. Our business and growth strategies depend in large part on
the continuation of a trend toward outsourcing industrial services. The decision
to outsource depends upon customer perceptions that outsourcing may provide
higher quality services at a lower overall cost and permit customers to focus on
core business activities. We cannot be certain that this trend will continue or
not be reversed or that customers that have outsourced functions will not decide
to perform these functions themselves. In addition, labor unions representing
employees of some of our current and prospective customers have generally
opposed the outsourcing trend and sought to direct to union employees the
performance of the types of services we offer. In addition, management has
identified a trend among some of our customers toward the retention of a limited
number of preferred vendors to provide all or a large part of their required
facility services. We cannot be certain that this trend will continue or not be
reversed or, if it does continue, that we will be selected and retained as a
preferred vendor to provide these services. Adverse developments with respect to
either of these trends would have a material adverse effect on our business,
results of operations and financial condition.

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     We Would Be Adversely Affected If We Lose Key Customers. In fiscal 2000,
our ten largest customers represented 46.2% of our revenues. General Motors
Corporation represented 13.0% of our revenues. Our customers may terminate or
modify substantially all of our arrangements to perform services for them at
will and without penalty. Our loss of, and failure to replace the revenues from,
one or more large customers or the loss of a significant number of customers
could have a material adverse effect on our business, results of operations and
financial condition.

     The Business Cycles of Our Customers Could Adversely Affect Our
Revenues. Many of our significant customers operate in industries, such as the
automotive, steel, semiconductor, pulp and paper and utilities industries, which
are subject to work stoppages and slowdowns and have historically shown
sensitivity to recessions and other adverse conditions in the general economy.
In fiscal 2000 we generated 36.8% of our revenues from automotive manufacturers.
A general or regional economic downturn or a work stoppage at one of our
significant customers could have a material adverse effect on our business,
results of operations and financial condition.

     We May Be Adversely Affected If We Are Unable To Maintain An Adequate
Workforce. Our business is labor intensive and we could be adversely affected if
we fail to maintain an adequate workforce. A large majority of our workforce is
comprised of hourly workers and we incur substantial expenses for recruiting and
training new personnel. The current low unemployment rate in some geographic
areas in which we operate has contracted the labor pool available to us in those
areas. We have historically experienced a high level of turnover, and there can
be no assurance that we will be able to successfully attract and retain
employees. As a result of a shortage in the supply of hourly workers, we may not
be able to maintain a labor force adequate to operate efficiently, our labor
expenses may increase or we may have to curtail our growth strategy.

     We May Not Be Able To Manage Our Growth. We have experienced rapid growth
in recent periods, both through internal expansion of products and services and
acquisitions. We cannot be certain that our systems, procedures and controls
will be adequate to support our operations as they expand. Our growth to date
has placed, and could continue to place, significant demands on our
administrative and operational resources. We may not be able to grow effectively
or manage any growth successfully, and the failure to do so could have a
material adverse effect on our business, financial condition and results of
operations.

     We May Not Be Able To Successfully Manage Our Acquisitions. We cannot be
sure that we can add new businesses to our existing operations without
substantial costs, delays or other operational or financial problems.
Acquisitions involve a number of special risks that could materially and
adversely affect our business, financial condition and results of operations.
For example, these risks include a failure to maintain customer relationships
and the diversion of our management's attention from operational matters. We
also could be affected by our inability to retain key personnel of the acquired
businesses and risks associated with unanticipated events or liabilities.

     Customer dissatisfaction or performance problems at one of our acquired
businesses could materially and adversely affect the reputation of our entire
company.

     Our Quarterly Results Fluctuate Which May Impact Our Stock Price. Our
quarterly results of operations may fluctuate as a result of a number of factors
over which we have no control, including our customers' budgetary constraints,
the timing and duration of our customers' planned maintenance activities and
shutdowns and changes in our competitors' pricing policies. Also, some operating
and fixed costs remain relatively constant throughout the fiscal year, which
when offset by differing levels of revenues, may result in fluctuations in
quarterly operating results. Our results of operations tend to vary seasonally,
with the third quarter generating the least amount of revenues, higher revenues
in the second quarter and the greatest amount of revenues in the first and
fourth quarters. As a result, our financial performance can vary significantly
from quarter to quarter, which could have an impact on our stock price.

     A Failure to Retain Our Senior Management Could Have An Adverse Effect On
Our Business. Our business is largely dependent upon the efforts of the members
of our senior management team, particularly Monte R. Black, Chairman of the
Board and Chief Executive Officer and Ira O. Kane, President and Chief Operating

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<PAGE>   10

Officer. If these executive officers or other officers of MPW do not continue in
their present positions, or if a material number of other managers fail to
continue with MPW, our business could be adversely affected.

     Our Concentration of Voting Power and Legal Barriers May Limit Takeover
Opportunities. Effective control of MPW by Monte R. Black, Chairman and Chief
Executive Officer, as well as statutory provisions of Ohio law and our Articles
of Incorporation and Code of Regulations, may have the effect of deterring
hostile takeovers or delaying or preventing changes in control or changes in
management of MPW, including transactions in which our shareholders might
otherwise receive a premium over the then current market price for their shares.

     Voting Control

          Mr. Black owns beneficially, directly and indirectly, approximately
     56.8% of the outstanding common stock. Accordingly, Mr. Black will be able
     to exercise effective control over MPW's affairs, the election of
     individuals to the Board of Directors and the outcome of other matters
     submitted to a vote of shareholders.

     Articles of Incorporation and Code of Regulations

          Our Articles of Incorporation and Code of Regulations include the
     requirement of certain supermajority votes and the establishment of certain
     advance notice procedures for nomination of candidates for election as
     directors and for shareholder proposals to be considered at shareholders'
     meetings. Our Board of Directors also has authority to issue one or more
     series of preferred stock without further shareholder approval and upon
     terms it determines. Issuance of preferred stock could adversely affect
     holders of the common stock in the event of liquidation or delay, defer or
     prevent an attempt to obtain control of MPW by means of a tender offer,
     merger, proxy contest or otherwise.

     Ohio Law

          Section 1701.831 of the Ohio General Corporation Law contains
     provisions that require shareholder approval of any proposed "control share
     acquisition" of any Ohio corporation. Furthermore, Chapter 1704 of the Ohio
     General Corporation Law contains provisions that restrict some business
     combinations and other transactions between an Ohio corporation and
     interested shareholders.

     Environmental Risks Could Adversely Affect Our Business. Although we
attempt not to take responsibility for, nor transport or dispose of, hazardous
materials generated by our customers in the normal course of our business, we do
provide support to our customers for the management of their hazardous
materials. This support includes some on-site movement and packaging of our
customers' hazardous materials and logistical support for our customers'
transportation and disposal of hazardous materials. In addition, some of our
more specialized cleaning procedures may require our employees to work near
hazardous materials. In performing these services, we could potentially be
liable to third parties or their employees for various claims for property
damage or personal injury stemming from a release of hazardous substances or
otherwise. Personal injury claims could arise contemporaneously with performance
of the work or long after completion of the project as a result of alleged
exposure to toxic substances. A large number of these claims or one or more
claims that results in a significant liability to us could have a material
adverse effect on our business, results of operations and financial condition.

     We May Be Adversely Affected if We Expand Our International Operations. We
generate a portion of our revenues from services we provide outside of the
United States. We may increase our presence outside of the United States.
Conducting business outside of the United States is subject to various risks,
including longer payment cycles, unexpected changes in regulatory requirements
and tariffs, difficulties in staffing and managing foreign operations and
greater difficulty in accounts receivable collection.

ITEM 2. PROPERTIES

FACILITIES

     The Company currently services customers through its Hebron, Ohio
headquarters and over 40 branch locations in 19 states plus Canada and Mexico.
The Company owns a 22,000 square foot building in Hebron, Ohio, which serves as
its principal executive offices, an industrial container cleaning facility in
Cleveland, Ohio

                                       10
<PAGE>   11

and a facility in Nashville, Tennessee, which is used in its filtration
management business. Many of the Company's locations are leased facilities
ranging from 3,000 to 37,400 square feet at which the Company houses equipment
and maintains a small sales and administrative staff. Each industrial cleaning
branch location is equipped to perform minor equipment maintenance. The Company
leases office space and its main fabrication, maintenance and training facility
in Hebron, Ohio, consisting of approximately 67,000 square feet, its industrial
water facilities located in Newark, Ohio, consisting of approximately 32,000
square feet, and its industrial container cleaning facility located in
Chesterfield, Michigan, consisting of approximately 36,000 square feet, from
related parties. See "Item 13. Certain Relationships and Related Transactions."

ITEM 3. LEGAL PROCEEDINGS

     On May 1, 2000, a purported shareholder class action lawsuit was filed
against the Company and Monte R. Black, Ira O. Kane and the other members of the
Company's Board of Directors (collectively, the "Defendants") in the Court of
Common Pleas for Licking County, Ohio on behalf of the plaintiff and the
Company's other shareholders not affiliated with Monte R. Black and certain
members of his immediate family. The lawsuit alleges, among other things, that
each of the Defendants has breached his fiduciary duties to the Company's public
shareholders. The plaintiff seeks, among other things, an injunction prohibiting
the consummation of the privatization transaction and monetary damages. The
Defendants believe that this lawsuit is without merit and the Company does not
expect this lawsuit to have a material adverse effect on the Company.

     Various other legal actions arising in the ordinary course of business are
pending against the Company. None of the other litigation pending against the
Company, individually or collectively, is expected to have a material adverse
effect on the Company.

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

     None.

EXECUTIVE OFFICERS OF THE COMPANY

     The Company furnishes the following information concerning the executive
officers of the Company. Executive officers are elected annually by, and serve
at the pleasure of, the Board of Directors.

     Monte R. Black (age 50). Mr. Black originally founded the Company in 1972
and has served as Chief Executive Officer and Chairman of the Board of Directors
since that time.

     Ira O. Kane (age 53). Mr. Kane has served as President, Chief Operating
Officer, Secretary and Director of the Company since March 1994. Prior to
joining the Company, Mr. Kane served as chairman of the board of directors,
senior executive vice president and director of NSC Corporation, an asbestos
abatement company, and president and chief operating officer of NSC Industrial
Services Corp., an industrial services company, from June 1993 until February
1994. Prior to joining NSC Corporation, Mr. Kane served as director and
executive vice president of OHM Corporation, an environmental services company,
from January 1984 until June 1993. Prior to joining OHM Corporation, Mr. Kane
was a partner with Crabbe, Brown, Jones, Potts & Schmidt, a law firm.

     C. Douglas Rockwell (age 48). Mr. Rockwell joined the Company in March 1999
and was appointed Vice President, New Business Strategies in July 1999. Prior to
joining the Company, Mr. Rockwell served as Manager, Global Service Business
Development from 1996 until 1999 and Manager, LMS-Leasing from 1994 to 1996 for
GE Transportation Systems, a subsidiary of General Electric Corporation, a
diversified industrial corporation, and before 1994 served in various capacities
for Southern Pacific Lines, a railway company.

                                       11
<PAGE>   12

     Richard R. Kahle (age 36). Mr. Kahle joined the Company in September 2000
and was appointed Vice President, Chief Financial Officer and Treasurer. Prior
to joining the Company, Mr. Kahle served in the following capacities for Banc
One Corporation, a bank holding company, from January 1997 until September 2000:
(i) senior vice president -- finance, consumer lending division; (ii) manager of
financial planning and analysis -- consumer lending division; (iii) national
accounting director; (iv) director of financial reporting; and (v) corporate
accounting manager. Before joining Banc One Corporation, from December 1994
until December 1996, Mr. Kahle was the manager of financial accounting for
Clopay Corporation, a manufacturing company, and from August 1990 until December
1994, Mr. Kahle was the supervisor of financial reporting for Borden,
Incorporated, a manufacturer of chemicals, packaged foods, housewares and
consumer adhesives. Prior to joining Borden, Incorporated, Mr. Kahle was
employed by Deloitte & Touche, a public accounting firm.

                                       12
<PAGE>   13

                                    PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     Our Common Stock has been traded on the Nasdaq National Market ("NASDAQ")
under the symbol "MPWG" since our initial public offering on December 2, 1997.
As of September 27, 2000, we had approximately 90 shareholders of record. The
following table sets forth, for the periods indicated, the range of high and low
closing prices for our Common Stock as reported on NASDAQ:

<TABLE>
<CAPTION>
                                                               PRICE RANGE
                                                              -------------
                                                              HIGH      LOW
                                                              ----      ---
<S>                                                           <C>       <C>
FISCAL 2000
------------
First Quarter...............................................   11        7 1/8
Second Quarter..............................................    9 5/16   7
Third Quarter...............................................    8 1/8    5 1/2
Fourth Quarter..............................................    8 1/4    4 15/16
FISCAL 1999
------------
First Quarter...............................................   13 1/4    8 1/4
Second Quarter..............................................   12        8 1/8
Third Quarter...............................................   12 1/2    8 1/4
Fourth Quarter..............................................   10 7/8    6 1/4
FISCAL 1998
------------
Second Quarter (from December 2, 1997)......................    9 5/16   9
Third Quarter...............................................   11 1/2    7 1/4
Fourth Quarter..............................................   13 7/8   10 1/2
</TABLE>

     We anticipate that all future earnings will be retained to finance our
operations and for the growth and development of our business. Accordingly, we
do not currently anticipate paying cash dividends on our Common Stock. The
payment of any future dividends will be subject to the discretion of our Board
of Directors and will depend on our results of operations, financial condition,
contractual restrictions, restrictions imposed by applicable law and other
factors that the Board of Directors deem relevant. Our credit facilities contain
covenants that prohibit the payment of cash dividends.

ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA

     The following selected consolidated financial data as of and for the years
ended June 30, 1996 through 2000 have been derived from the Consolidated
Financial Statements of MPW, which have been audited by Ernst & Young LLP,
independent auditors. The selected consolidated financial data below has been
adjusted to reflect Filtration Services as a discontinued operation for all
periods presented as a result of the Company's decision to sell Filtration
Services (see Note 5 to the Consolidated Financial Statements contained
elsewhere in this Form 10-K). The following information should be read in
conjunction with the Consolidated Financial Statements and notes thereto and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere in this Form 10-K.

                                       13
<PAGE>   14

<TABLE>
<CAPTION>
                                                                                                      PRO FORMA
                                                              YEAR ENDED JUNE 30,                    YEAR ENDED
                                             -----------------------------------------------------    JUNE 30,
                                               1996       1997       1998       1999       2000       2000 (5)
                                             --------   --------   --------   --------   ---------   -----------
                                                                                                     (UNAUDITED)
<S>                                          <C>        <C>        <C>        <C>        <C>         <C>
STATEMENT OF INCOME DATA:
Revenues...................................  $ 42,570   $ 47,120   $ 55,645   $ 87,579   $ 115,607    $ 84,686
Costs and expenses:
  Cost of services.........................    26,230     29,431     34,382     54,350      71,455      52,299
  Selling, general and administrative
    expenses...............................    10,441     11,266     13,097     19,134      25,137      18,074
  Depreciation and amortization (1)........     4,755      3,449      3,107      6,056       8,724       7,087
  Deferred stock option compensation (2)...        --      2,764      3,415         --          --          --
                                             --------   --------   --------   --------   ---------    --------
  Total costs and expenses.................    41,426     46,910     54,001     79,540     105,316      77,460
                                             --------   --------   --------   --------   ---------    --------
Income from operations.....................     1,144        210      1,644      8,039      10,291       7,226
Interest expense, net......................       540        939        628      2,568       4,797       2,772
Loss on sale of subsidiary.................        --         --         --         --       7,247          --
Minority earnings..........................       172        207        119         --          --          --
                                             --------   --------   --------   --------   ---------    --------
Income (loss) from continuing operations
  before income taxes......................       432       (936)       897      5,471      (1,753)      4,454
Provision (benefit) for income taxes (3)...    (1,160)      (588)    (1,597)     2,189        (702)      1,781
                                             --------   --------   --------   --------   ---------    --------
Income (loss) from continuing operations...     1,592       (348)     2,494      3,282      (1,051)      2,673
Income (loss) from subsidiary held for
  sale, net of income taxes:
    Income from results of operations......        --         --         --         --          --         624
    Loss on sale...........................        --         --         --         --          --      (4,348)
Discontinued operations, net of income
  taxes....................................     2,443      2,508      2,899      3,610       3,604       3,604
                                             --------   --------   --------   --------   ---------    --------
Net income.................................  $  4,035   $  2,160   $  5,393   $  6,892   $   2,553    $  2,553
                                             ========   ========   ========   ========   =========    ========
Net income (loss) per share:
  Continuing operations....................                                   $   0.31   $   (0.10)
                                                                              ========   =========
  Discontinued operations..................                                   $   0.34   $    0.33
                                                                              ========   =========
Net income (loss) per share, assuming
  dilution:
  Continuing operations....................                                   $   0.28   $   (0.09)
                                                                              ========   =========
  Discontinued operations..................                                   $   0.31   $    0.31
                                                                              ========   =========
Weighted average shares outstanding........                                     10,734      10,890
Weighted average shares outstanding,
  assuming dilution........................                                     11,521      11,476
PRO FORMA INFORMATION (4):
  Income (loss) from continuing operations
    before income taxes as reported........             $   (936)  $    897
  Pro forma taxes (benefit) on income......                 (374)       359
                                                        --------   --------
  Pro forma income (loss) from continuing
    operations.............................                 (562)       538
  Discontinued operations, net of income
    taxes..................................                2,508      2,899
                                                        --------   --------
  Pro forma net income.....................             $  1,946   $  3,437
                                                        ========   ========
  Pro forma net income (loss) per share:
    Continuing operations..................             $  (0.09)  $   0.06
                                                        ========   ========
    Discontinued operations................             $   0.40   $   0.34
                                                        ========   ========
  Pro forma net income (loss) per share,
    assuming dilution:
    Continuing operations..................             $  (0.08)  $   0.06
                                                        ========   ========
    Discontinued operations................             $   0.37   $   0.31
                                                        ========   ========
  Pro forma weighted average shares
    outstanding............................                6,200      8,604
  Pro forma weighted average shares
    outstanding, assuming dilution.........                6,765      9,290
</TABLE>

                                       14
<PAGE>   15

<TABLE>
<CAPTION>
                                                                   JUNE 30,                          PRO FORMA
                                              ---------------------------------------------------    JUNE 30,
                                                1996       1997      1998       1999       2000      2000 (5)
                                              --------   --------   -------   --------   --------   -----------
                                                                (IN THOUSANDS)                      (UNAUDITED)
<S>                                           <C>        <C>        <C>       <C>        <C>        <C>
Balance Sheet Data:
Working capital.............................  $  2,521   $  7,069   $11,429   $ 28,273   $ 33,076    $ 14,488
Net property and equipment..................    21,258     23,400    28,593     41,429     49,841      40,592
Investment in subsidiary....................        --         --        --         --         --       6,870
Net assets held for sale....................        --         --        --         --         --      57,457
Total assets................................    39,468     45,285    72,367    142,250    172,161     150,127
Total debt and capital leases, including
  current maturities........................    12,471     14,732    16,991     66,189     84,284      84,016
Total shareholders' equity..................    16,067     16,478    39,721     49,566     53,069      53,069
</TABLE>

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

(1) Effective July 1, 1996, we changed our useful life assumptions for some
    categories of property and equipment, resulting in a $1,620,000 reduction in
    depreciation and amortization expense in fiscal 1997.

(2) Represents compensation expense related to our obligation to repurchase
    securities issued under some of our stock option plans. This obligation
    terminated with our initial public offering.

(3) The provision for income taxes prior to our initial public offering reflects
    the treatment of a subsidiary of MPW as an S Corporation.

(4) Represents historical information adjusted only to reflect the recording of
    income taxes as if all subsidiaries of MPW had been taxed as a C Corporation
    prior to our initial public offering. See the Consolidated Financial
    Statements and notes thereto included elsewhere in this Form 10-K.

(5) The Pro Forma Balance Sheet at June 30, 2000 and the Pro Forma Statement of
    Income for the year ended June 30, 2000 have been provided as supplemental
    financial information to disclose the Company's balance sheet and statement
    of income related to continuing operations.

    As further described in Note 5 to the Consolidated Financial Statements
    contained elsewhere in this Form 10-K, Filtration Services is for sale and
    has been reflected as discontinued operations in the Company's statements of
    income for all periods presented. The Pro Forma Balance Sheet at June 30,
    2000 reflects the assets and liabilities of Filtration Services as Net
    Assets Held for Sale.

    As further described in Note 6 to the Consolidated Financial Statements
    contained elsewhere in this Form 10-K, on July 18, 2000 the Company
    completed a recapitalization transaction of Pentagon that resulted in the
    Company's sale of its majority interest in the capital stock of Pentagon and
    resulted in a retained interest in Pentagon of 22.3%. The Proforma Balance
    Sheet at June 30, 2000 reflects the amount of the Company's remaining
    investment in Pentagon after completion of the recapitalization transaction
    as Investment in Subsidiary. The remaining assets and liabilities of
    Pentagon net of the accrued loss on the sale of subsidiary included in the
    historical balance sheet at June 30, 2000 have been classified as Net Assets
    Held for Sale in the Pro Forma Balance Sheet at June 30, 2000. The Pro Forma
    Statement of Income reflects the revenues and expenses of Pentagon included
    in the historical statement of income for the year ended June 30, 2000 in
    the Income (loss) from subsidiary held for sale, net of income taxes
    classification. For purposes of allocation interest expense to the
    operations of Pentagon for fiscal 2000, interest has been allocated
    commensurate with the $22.8 million in proceeds that the Company received
    from the transaction in July 2000 that was utilized to reduce long term debt
    at the Company's effective June 30, 2000 borrowing rate of 8.88%.

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

     The following discussion should be read in conjunction with our
Consolidated Financial Statements and related notes included elsewhere in this
Form 10-K.

                                       15
<PAGE>   16

OVERVIEW

  CURRENT EVENTS

     Privatization of Company. On August 22, 2000, we announced that a Special
Committee of our Board of Directors had reached an agreement in principle with
the Company's Chairman and Chief Executive Officer, Monte R. Black, to acquire
the Company in a cash merger at $8.25 per share plus an additional amount if the
sale of Filtration Services generated proceeds in excess of targeted amounts. On
September 27, 2000, we announced that Mr. Black had withdrawn his previously
announced proposal to acquire the Company. Mr. Black advised the Company's
Special Committee, which had been evaluating the proposal, that he withdrew the
proposal primarily because he perceived uncertainty in the Company's core
businesses due to sluggish customer demand from certain industries. Mr. Black
also expected that the higher than anticipated level of current Company
indebtedness, when added to the debt to be incurred to finance the privatization
transaction, would adversely impact the Company if the privatization transaction
were completed. In addition, Mr. Black advised the Special Committee that he is
not considering a new proposal to acquire the Company. See Note 4 to the
Consolidated Financial Statements included elsewhere in this Form 10-K.

     Operating results for fiscal 2001 will be negatively impacted by charges
for severance costs related to the resignation of certain officers. The nature
and amount of transaction costs, if any, related to the proposed privatization
transaction have not yet been determined.

     Proposed Sale of Filtration Services. In connection with the proposed
privatization transaction, we also announced our plan to sell Filtration
Services. Even though Mr. Black's proposal to acquire the Company has been
withdrawn, we still intend to sell Filtration Services. Filtration Services
provides air and liquid filtration devices, filtration media and consumable
products, engineering analysis and industrial cleaning and facility maintenance
primarily to the automotive industry. The Consolidated Financial Statements have
been restated to account for Filtration Services as a discontinued operation for
all periods presented therein. Discontinued operations include Filtration
Services net sales that totaled $37.8 million, $59.6 million, and $77.9 million
for fiscal years 1998, 1999 and 2000, respectively. We expect the sale of
Filtration Services to be completed in the third quarter of fiscal 2001. See
Note 5 to the Consolidated Financial Statements included elsewhere in this Form
10-K.

     Recapitalization of Pentagon. On July 18, 2000, we closed a transaction
related to Pentagon pursuant to the Recapitalization Agreement. Pursuant to the
Recapitalization Agreement, BCP invested in Pentagon, we sold a majority of our
equity interest in Pentagon to BCP and Pentagon indebtedness to us was repaid.
We retained a 22.3% interest in the capital stock of Pentagon. See Note 6 to the
Consolidated Financial Statements included elsewhere in this Form 10-K.

     In connection with this transaction, we received payments totaling $22.8
million, which were used to repay debt. Our fiscal 2000 statement of income and
the June 30, 2000 balance sheet include a $4.3 million accrued loss on sale of
subsidiary, net of related tax benefits, to reduce our investment in Pentagon to
22.3% of Pentagon's equity upon finalization of the recapitalization
transaction. The loss on sale of subsidiary recorded at June 30, 2000 is subject
to final due diligence. As a result of the reduction in our ownership of
Pentagon's capital stock to 22.3%, beginning in the first quarter of fiscal
2001, we will record our remaining investment in Pentagon under the equity
method of accounting.

     Unusual Events in Fiscal 1999. In late June 1998 through July 1998, General
Motors experienced a strike, which affected our operations primarily at our
industrial container cleaning service line.

     In March 1999, we experienced a fire at our Austin, Texas facility. This
facility provided critical parts cleaning within Pentagon. The fire caused the
facility, and most equipment within the facility, to be unusable. A portion of
the business from this facility was temporarily transferred to our Hopewell
Junction, New York facility and the remainder was temporarily lost to other
service providers. We obtained a new site in Austin to replace the damaged
facility and completed construction in August 1999. The new facility was ramped
up to pre-fire business levels during the second quarter of fiscal 2000.

                                       16
<PAGE>   17

     Acquisitions. Since June 1998, we have acquired 12 businesses that
represent an aggregate increase in our revenues of approximately $61.0 million.
We agreed to pay an aggregate consideration for these businesses of
approximately $50.9 million, which included cash, common stock, preferred stock
of Pentagon and contingent consideration for future performance. We accounted
for each of these acquisitions using the purchase method of accounting and each
are included in our results of operations only from the effective date of
acquisition. Certain of the acquisitions related to our entry in late 1998 into
a new service line that provides contamination control services for critical
cleanroom environments. These companies were combined into a single subsidiary
of the Company, Pentagon. In July 2000, we sold a majority of our equity
interest in Pentagon and retained a 22.3% interest in the capital stock of
Pentagon. See Note 6 to the Consolidated Financial Statements included elsewhere
in this Form 10-K.

     As a result of these acquisitions, we do not believe that our results of
operations are necessarily comparable on a period to period basis. Our
discussion of results of operations below should be read in conjunction with the
Consolidated Financial Statements and related notes included herein where each
of these acquisitions has been described in more detail.

     Initial Public Offering. On December 2, 1997, we completed our initial
public offering. We issued 3,987,500 shares of our common stock in this
offering, including the over-allotment option, at $9.00 per share. The net
proceeds to us were $32.1 million.

     During the period in fiscal 1998 leading up to our initial public offering
and at the time of our initial public offering, numerous events occurred and we
recorded certain transactions as described below:

     - We terminated the S Corporation election for tax purposes of a subsidiary
       of MPW and paid a distribution of $21.2 million. As a result of this
       termination, we recorded a net non-recurring tax benefit of $702,000 and
       a related current deferred tax asset and noncurrent deferred tax
       liability of $2.1 million and $1.4 million, respectively.

     - We recorded a non-cash, non-recurring charge of $1.9 million, net of tax,
       associated with some of our stock option plans. We also eliminated the
       related deferred stock option compensation liability previously recorded
       because our repurchase obligation for stock options exercised under these
       stock option plans was eliminated with our initial public offering.

     - We adjusted the historical lease costs for some facilities leased by us
       from related parties and recharacterized these leases from capital to
       operating because of restructured lease agreements.

     - We purchased the remaining minority stock ownership interests in one of
       our subsidiaries.

     - We repaid $15.9 million of our outstanding liabilities to our principal
       banks using some of the net proceeds from our initial public offering.

GENERAL

     We primarily derive our revenues from services under time and materials,
fixed price and unit price contracts. We recognize revenues from time and
materials type contracts based on performance and efforts expended. We record
revenues from non-contract activities as we perform services or sell goods.

     Cost of services includes all direct labor, materials, subcontractor and
other costs related to the performance of our services. Cost of services also
includes all costs associated with our operating equipment, excluding
depreciation and amortization.

     Selling, general and administrative expenses include management salaries,
clerical and administrative overhead, professional services, costs associated
with marketing and sales efforts and costs associated with our information
systems.

     Depreciation and amortization consists of depreciation of operating
equipment and amortization of capital leases and intangibles. Depreciation is
calculated using the straight-line method over the estimated useful lives of
property and equipment. We amortize capital leases on a straight-line basis over
the lease term and goodwill and other intangibles on a straight-line basis over
periods not exceeding 25 years.
                                       17
<PAGE>   18

RESULTS OF OPERATIONS

     The following table sets forth selected pro forma statement of income data
for fiscal 1998 and actual statement of income data for fiscal 1999 and 2000 as
a percentage of revenues adjusted to reflect discontinued operations:

<TABLE>
<CAPTION>
                                                               YEAR ENDED JUNE 30,
                                                             -----------------------
                                                             1998     1999     2000
                                                             ----     ----     ----
<S>                                                          <C>      <C>      <C>
Revenues...................................................  100.0%   100.0%   100.0%
Costs and expenses:
  Cost of services.........................................   61.8     62.1     61.8
  Selling, general and administrative expenses.............   23.5     21.8     21.7
  Depreciation and amortization............................    5.6      6.9      7.5
  Deferred stock option compensation.......................    6.1       --       --
                                                             -----    -----    -----
  Total costs and expenses.................................   97.0     90.8     91.1
                                                             -----    -----    -----
Income from operations.....................................    3.0      9.2      8.9
  Interest expense, net....................................    1.1      2.9      4.1
  Loss on sale of subsidiary...............................     --       --      6.3
  Minority earnings........................................    0.2       --       --
                                                             -----    -----    -----
Income (loss) from continuing operations before income
  taxes....................................................    1.6      6.2     (1.5)
Provision (benefit) for income taxes.......................    0.6      2.5     (0.6)
                                                             -----    -----    -----
Income (loss) from continuing operations...................    1.0%     3.7%    (0.9)%
                                                             =====    =====    =====
</TABLE>

FISCAL 2000 COMPARED TO FISCAL 1999

     Basis of Presentation. Our analysis of fiscal 2000 compared to fiscal 1999
utilizes actual information as presented above that has been adjusted to reflect
Filtration Services as a discontinued operation. The information presented above
includes the operating results of Pentagon from the effective acquisition date
through June 30, 2000. In July 2000, we sold a majority of our equity interest
in Pentagon and retained a 22.3% interest in the capital stock of Pentagon.
Pentagon accounted for $30.9 million and $13.0 million of our revenues and $3.1
million and $31,000 of our income from operations for fiscal 2000 and fiscal
1999, respectively.

     Revenues. Revenues increased by $28.0 million, or 32.0%, to $115.6 million
in fiscal 2000 from $87.6 million in fiscal 1999. This increase is the result of
internal growth of 13.7%, but is also due to acquisitions that have not been
reported in our results of operations for a full fiscal year, which contributed
an aggregate of $16.1 million of incremental growth in revenues.

     Cost of Services. Cost of services increased by $17.1 million, or 31.5%, to
$71.5 million in fiscal 2000 from $54.4 million in fiscal 1999. Cost of services
as a percentage of revenues decreased to 61.8% in fiscal 2000 from 62.1% in
fiscal 1999. The slight increase in margin as compared to prior year is the
result of operating improvements in our cleanroom cleaning and related services
and industrial container cleaning service lines, offset by lower margins in our
industrial cleaning and facility maintenance service line.

     Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased by $6.0 million, or 31.4%, to $25.1 million in
fiscal 2000 from $19.1 million in fiscal 1999. As a percentage of revenues,
selling, general and administrative expenses decreased to 21.7% in fiscal 2000
from 21.8% in fiscal 1999. The increase in selling, general and administrative
expenses is primarily due to the overhead costs assumed in acquisitions
completed since the year earlier period and other investments in our
infrastructure to support overall growth.

     Depreciation and Amortization. Depreciation and amortization increased by
$2.7 million, or 44.1%, to $8.7 million in fiscal 2000 from $6.1 million in
fiscal 1999. Depreciation and amortization increased as a percentage of revenues
to 7.5% in fiscal 2000 from 6.9% in fiscal 1999. This increase is a result of
additional goodwill and other intangible assets arising out of acquisitions
noted above and additional capital expenditures related to our growth.

                                       18
<PAGE>   19

     Income from Operations. Income from operations increased by $2.3 million,
or 28.0%, to $10.3 million in fiscal 2000 from $8.0 million in fiscal 1999.
Income from operations decreased as a percentage of revenues to 8.9% in fiscal
2000 from 9.2% in fiscal 1999. The increase in income from operations and
decrease in operating margin is due to the factors discussed above and is also
due to the effect of the General Motors strike and the fire at our Austin, Texas
facility on the income from operations in fiscal 1999. See discussion above
under the heading Unusual Events in Fiscal 1999.

     Interest Expense, Net. Interest expense increased $2.2 million, or 86.8%,
to $4.8 million in fiscal 2000 from $2.6 million in fiscal 1999. This increase
is the result of new borrowings primarily related to acquisitions.

     Provision (Benefit) for Income Taxes. The provision (benefit) for income
taxes in fiscal 2000 and fiscal 1999 reflects an effective rate of 40%.

FISCAL 1999 COMPARED TO FISCAL 1998

     Basis of Presentation. Our analysis of fiscal 1999 compared to fiscal 1998
utilizes actual information for fiscal 1999 and pro forma information for fiscal
1998 as provided in the tables above that has been adjusted to reflect
Filtration Services as a discontinued operation.

     Revenues. Revenues increased by $31.9 million, or 57.4%, to $87.6 million
in fiscal 1999 from $55.6 million in fiscal 1998. This increase is primarily due
to the acquisitions that have not been reported in our results of operations for
a full fiscal year, which contributed an aggregate of $25.2 million of
incremental growth in revenues. Despite the impact of the General Motors strike,
the internal rate of growth in revenues in fiscal 1999 was 12.1%.

     Cost of Services. Cost of services increased by $20.0 million, or 58.1%, to
$54.4 million in fiscal 1999 from $34.4 million in fiscal 1998. Cost of services
as a percentage of revenues increased to 62.1% in fiscal 1999 from 61.8% in
fiscal 1998. The slight increase in cost of services as a percentage of revenues
is the result of the loss of revenues related to the General Motors strike and
the fire at our Austin facility. See discussion under the heading Unusual Events
in Fiscal 1999.

     Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased by $6.0 million, or 46.1%, to $19.1 million in
fiscal 1999 from $13.1 million in fiscal 1998. As a percentage of revenues,
selling, general and administrative expenses decreased to 21.8% in fiscal 1999
from 23.5% in fiscal 1998. The increase in selling, general and administrative
expenses is primarily due to the overhead costs assumed in the acquisitions
noted above, costs associated with our status as a public company and other
investments in our infrastructure to support overall growth.

     Depreciation and Amortization. Depreciation and amortization increased by
$2.9 million, or 94.9%, to $6.1 million in fiscal 1999 from $3.1 million in
fiscal 1998. Depreciation and amortization increased as a percentage of revenues
to 6.9% in fiscal 1999 from 5.6% in fiscal 1998. This increase is a result of
additional goodwill and other intangible assets arising out of the acquisitions
noted above and additional capital expenditures related to our growth.

     Income from Operations. Income from operations increased by $6.4 million,
or 389.0%, to $8.0 million in fiscal 1999 from $1.6 million in fiscal 1998.
Income from operations increased as a percentage of revenues to 9.2% in fiscal
1999 from 3.0% in fiscal 1998. However, income from operations in fiscal 1998
included $3.4 million of deferred stock option compensation expense as discussed
above under the heading Initial Public Offering. Excluding this expense from
this analysis, income from operations increased $3.0 million, or 58.9%, to $8.0
million in fiscal 1999 from $5.1 million in fiscal 1998 and income from
operations increased as a percentage of revenues to 9.2% in fiscal 1999 from
9.1% in fiscal 1998. The increase in income from operations and operating margin
is due to the factors discussed above offset by the impact of the General Motors
strike and the fire at our Austin facility. See discussion above under the
heading Unusual Events in Fiscal 1999.

     Interest Expense, net. Interest expense increased $1.9 million, or 308.9%,
to $2.6 million in fiscal 1999 from $628,000 in fiscal 1998. Immediately
following our initial public offering, we had no borrowings under our

                                       19
<PAGE>   20

previous credit facility with our banks. Interest expense in fiscal 1999 is the
result of new borrowings subsequent to our initial public offering, primarily
resulting from the acquisitions noted above.

     Provisions for Income Taxes. Prior to October 31, 1997, MPW Industrial
Services, Inc. was an S Corporation for income tax purposes and did not record a
provision for federal and some state income taxes. The provision for income
taxes in fiscal 1999 and in the pro forma information for fiscal 1998 reflects
an effective rate of 40%.

QUARTERLY RESULTS AND SEASONALITY

     Our results of operations tend to vary seasonally, with the least amount of
revenues generated in the third quarter, higher revenues in the second quarter
and the greatest amount of revenues in the first and fourth quarters. Our
quarterly results of operations may fluctuate significantly as a result of a
number of factors over which we have no control, including our customers'
budgetary constraints, the timing and duration of our customers' planned
maintenance activities and shutdowns, changes in our competitors pricing
policies and general economic conditions. Also, some operating and fixed costs
remain relatively constant throughout the fiscal year that, when offset by
differing levels of revenues, may result in fluctuations in quarterly results.

LIQUIDITY AND CAPITAL RESOURCES

     As of June 30, 2000, we had cash and cash equivalents of $236,000 and
working capital of $33.1 million. During fiscal 2000, we had $7.1 million
provided by operating activities and made capital investments of $14.6 million.

     During fiscal 2000, we completed two acquisitions that required an
aggregate of $6.2 million in cash, net of cash received, and the issuance of an
unsecured convertible subordinated promissory note with a principal amount of
$1.0 million, which was convertible into shares of common stock of MPW. In
connection with the recapitalization of Pentagon noted above, this note was paid
off in full, with accrued interest, in July 2000. In addition, we paid
additional consideration of $3.0 million in cash and issued 54,484 shares of our
common stock in connection with several of our acquisition agreements that
provide for additional consideration to be paid based on achievement of certain
objectives. The borrowings under our revolving credit facility reached $82.4
million as of June 30, 2000.

     During October 1999, we entered into our current credit facility with our
principal banks and two additional banks. The current credit facility, as
amended, provides us with up to $100.0 million of revolving credit availability
for a three-year period, subject to extension by the banks each year on the
anniversary of the agreement. Under the terms of our current credit facility,
the entire $100.0 million is available for general corporate purposes, including
working capital, capital expenditures and acquisitions. Borrowings under our
current credit facility is at rates, based on the prime or Eurodollar rate, that
we believe to be very favorable. Availability of borrowings is subject to the
maintenance of a minimum level of net worth, certain levels of interest coverage
and maintenance of a specific ratio of funded debt to earnings before interest,
taxes, depreciation and amortization that we believe will not affect the
availability of borrowings under our current credit facility. The current credit
facility is secured by substantially all of our assets. The terms of the current
credit facility include a mechanism that allows us, with the approval of the
banks, to increase the capacity under the credit agreement up to $150.0 million.

     Subsequent to June 30, 2000, we received $22.8 million in conjunction with
the recapitalization of Pentagon noted above and used those proceeds to repay
debt. After this repayment, our cost of borrowing under the credit facility was
reduced by approximately fifty basis points. We also paid additional
consideration of $1.4 million in cash in connection with several of our
acquisition agreements that provide for additional consideration to be paid
based on achievement of certain objectives. Our current borrowings under our
revolving credit facility are approximately $62.5 million.

                                       20
<PAGE>   21

INFLATION

     The effects of inflation on our operations were not significant during the
periods presented in the Consolidated Financial Statements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     We are exposed to certain market risks from transactions that are entered
into during the normal course of business. We have not entered into derivative
financial instruments for trading purposes. Our primary market risk exposure
relates to interest rate risk. We had a balance of $82.4 million on our
revolving credit facility at June 30, 2000, which is subject to a variable rate
of interest based on the prime or Eurodollar rate. Assuming borrowings at June
30, 2000, a one hundred basis point change in interest rates would impact net
interest expense by approximately $824,000 per year.

                                       21
<PAGE>   22

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                         REPORT OF INDEPENDENT AUDITORS

The Board of Directors
MPW Industrial Services Group, Inc.

     We have audited the accompanying consolidated balance sheets of MPW
Industrial Services Group, Inc. and subsidiaries as of June 30, 1999 and 2000,
and the related consolidated statements of income, changes in shareholders'
equity, and cash flows for each of the three years in the period ended June 30,
2000. 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 conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosure in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of MPW Industrial
Services Group, Inc. and subsidiaries at June 30, 1999 and 2000, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended June 30, 2000, in conformity with accounting
principles generally accepted in the United States.

                                                  /s/ ERNST & YOUNG LLP

Columbus, Ohio
September 27, 2000

                                       22
<PAGE>   23

                      MPW INDUSTRIAL SERVICES GROUP, INC.

                          CONSOLIDATED BALANCE SHEETS

                       (IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
                                                                 JUNE 30,            PRO FORMA
                                                           --------------------    JUNE 30, 2000
                                                             1999        2000        (NOTE 2)
                                                           --------    --------    -------------
                                                                                    (UNAUDITED)
<S>                                                        <C>         <C>         <C>
ASSETS
Current assets:
  Cash and cash equivalents..............................  $    318    $    236      $    161
  Accounts receivable, net...............................    35,744      38,718        16,030
  Inventories............................................     9,044      14,414         2,293
  Deferred income taxes..................................     1,492       4,104           959
  Prepaid expenses.......................................     1,868       1,927         1,657
  Other current assets...................................       973       1,268         1,238
                                                           --------    --------      --------
                                                             49,439      60,667        22,338
Property and equipment, net..............................    41,429      49,841        40,592
Noncurrent assets:
  Intangibles, net.......................................    50,946      61,099        22,423
  Investment in subsidiary...............................        --          --         6,870
  Other assets...........................................       436         554           447
  Net assets held for sale...............................        --          --        57,457
                                                           --------    --------      --------
       Total assets......................................  $142,250    $172,161      $150,127
                                                           ========    ========      ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Accounts payable.......................................  $  9,968    $ 11,591      $  3,069
  Accrued compensation and related taxes.................     4,638       2,420           458
  Current maturities of noncurrent liabilities...........       714         310           224
  Accrued loss on sale of subsidiary.....................        --       7,247            --
  Other accrued liabilities..............................     5,846       6,023         4,099
                                                           --------    --------      --------
                                                             21,166      27,591         7,850
Noncurrent liabilities:
  Long-term debt.........................................    65,475      83,974        83,792
  Deferred income taxes..................................     4,456       6,143         5,416
  Other..................................................       312         184            --
                                                           --------    --------      --------
                                                             70,243      90,301        89,208
Minority interest........................................     1,275       1,200            --
Shareholders' equity:
  Preferred stock, $0.01 par value; 5,000,000 shares
     authorized; no shares issued and outstanding........        --          --            --
  Common stock, no par value; 30,000,000 shares
     authorized; 10,784,945 and 10,929,257 shares issued
     and outstanding at June 30, 1999 and 2000,
     respectively........................................       108         109           109
  Additional paid-in capital.............................    40,531      41,461        41,461
  Retained earnings......................................     8,927      11,499        11,499
                                                           --------    --------      --------
                                                             49,566      53,069        53,069
                                                           --------    --------      --------
          Total liabilities and shareholders' equity.....  $142,250    $172,161      $150,127
                                                           ========    ========      ========
</TABLE>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                       23
<PAGE>   24

                      MPW INDUSTRIAL SERVICES GROUP, INC.

                       CONSOLIDATED STATEMENTS OF INCOME

                     (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                                     PRO FORMA
                                                      YEAR ENDED JUNE 30,           YEAR ENDED
                                                 ------------------------------    JUNE 30, 2000
                                                  1998       1999        2000        (NOTE 2)
                                                 -------    -------    --------    -------------
                                                                                    (UNAUDITED)
<S>                                              <C>        <C>        <C>         <C>
Revenues.......................................  $55,645    $87,579    $115,607       $84,686
Costs and expenses:
  Cost of services.............................   34,382     54,350      71,455        52,299
  Selling, general and administrative
     expenses..................................   13,097     19,134      25,137        18,074
  Depreciation and amortization................    3,107      6,056       8,724         7,087
  Deferred stock option compensation...........    3,415         --          --            --
                                                 -------    -------    --------       -------
  Total costs and expenses.....................   54,001     79,540     105,316        77,460
                                                 -------    -------    --------       -------
Income from operations.........................    1,644      8,039      10,291         7,226
Interest expense, net..........................      628      2,568       4,797         2,772
Loss on sale of subsidiary.....................       --         --       7,247            --
Minority earnings..............................      119         --          --            --
                                                 -------    -------    --------       -------
Income (loss) from continuing operations before
  income taxes.................................      897      5,471      (1,753)        4,454
Provision (benefit) for income taxes...........   (1,597)     2,189        (702)        1,781
                                                 -------    -------    --------       -------
Income (loss) from continuing operations.......    2,494      3,282      (1,051)        2,673
Income (loss) from subsidiary held for sale,
  net of income taxes:
     Income from results of operations.........       --         --          --           624
     Loss on sale..............................       --         --          --        (4,348)
Discontinued operations, net of income taxes...    2,899      3,610       3,604         3,604
                                                 -------    -------    --------       -------
Net income.....................................  $ 5,393    $ 6,892    $  2,553       $ 2,553
                                                 =======    =======    ========       =======
Net income (loss) per share:
  Continuing operations........................             $  0.31    $  (0.10)
                                                            =======    ========
  Discontinued operations......................             $  0.34    $   0.33
                                                            =======    ========
Net income (loss) per share, assuming dilution:
  Continuing operations........................             $  0.28    $  (0.09)
                                                            =======    ========
  Discontinued operations......................             $  0.31    $   0.31
                                                            =======    ========
Weighted average shares outstanding............              10,734      10,890
Weighted average shares outstanding, assuming
  dilution.....................................              11,521      11,476

Pro forma information (see Note 12):
  Income from continuing operations before
     income taxes as reported..................  $   897
  Pro forma taxes on income....................      359
                                                 -------
  Pro forma income from continuing
     operations................................      538
  Discontinued operations, net of income
     taxes.....................................    2,899
                                                 -------
  Pro forma net income.........................  $ 3,437
                                                 =======
  Pro forma net income per share:
     Continuing operations.....................  $  0.06
                                                 =======
     Discontinued operations...................  $  0.34
                                                 =======
  Pro forma net income per share, assuming
     dilution:
     Continuing operations.....................  $  0.06
                                                 =======
     Discontinued operations...................  $  0.31
                                                 =======
  Pro forma weighted average shares
     outstanding...............................    8,604
  Pro forma weighted average shares
     outstanding, assuming dilution............    9,290
</TABLE>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                       24
<PAGE>   25

                      MPW INDUSTRIAL SERVICES GROUP, INC.

           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                        COMMON STOCK      ADDITIONAL
                                                      ----------------     PAID-IN      RETAINED
                                                      SHARES    AMOUNT     CAPITAL      EARNINGS
                                                      ------    ------    ----------    --------
<S>                                                   <C>       <C>       <C>           <C>
Balance at July 1, 1997.............................   6,200     $ 62      $   837      $15,579
  Net income........................................      --       --           --        5,393
  Distributions.....................................      --       --           --      (22,442)
  Capital contributions.............................      --       --          233           --
  Reclassification of retained earnings.............      --       --       (3,495)       3,495
  Issuance of common stock:
     Initial public offering, net of related
       expenses.....................................   3,988       40       32,053           --
     Acquisitions...................................     293        3        2,946           --
     Stock plans....................................      16       --          112           --
  Elimination of deferred stock option compensation
     liability, net of taxes........................      --       --        4,905           --
                                                      ------     ----      -------      -------
Balance at June 30, 1998............................  10,497      105       37,591        2,025
  Net income........................................      --       --           --        6,892
  Issuance of common stock:
     Acquisitions...................................     272        3        2,847           --
     Stock plans....................................      16       --           93           --
  Deferred translation adjustment...................      --       --           --           10
                                                      ------     ----      -------      -------
Balance at June 30, 1999............................  10,785      108       40,531        8,927
  Net income........................................      --       --           --        2,553
  Issuance of common stock:
     Acquisitions...................................      86        1          827           --
     Stock plans....................................      58       --          103           --
  Deferred translation adjustment...................      --       --           --           19
                                                      ------     ----      -------      -------
Balance at June 30, 2000............................  10,929     $109      $41,461      $11,499
                                                      ======     ====      =======      =======
</TABLE>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                       25
<PAGE>   26

                      MPW INDUSTRIAL SERVICES GROUP, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                    YEAR ENDED JUNE 30,
                                                              --------------------------------
                                                                1998        1999        2000
                                                              --------    --------    --------
<S>                                                           <C>         <C>         <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net income..................................................  $  5,393    $  6,892    $  2,553
Adjustments to reconcile net income to net cash provided by
  operating activities:
  Depreciation..............................................     3,384       5,008       7,047
  Amortization..............................................       226       1,838       2,781
  Loss on sale of subsidiary................................        --          --       7,247
  (Gain) loss on disposals of assets........................       (12)         70         277
  Minority interest.........................................       119          --          --
  Deferred stock option compensation........................     3,415          --          --
  Change in deferred income taxes...........................      (247)      2,771        (925)
  Changes in operating assets and liabilities:
     Accounts receivable....................................    (4,098)    (11,328)     (2,404)
     Inventories............................................    (1,008)     (1,692)     (5,831)
     Prepaid expenses and other assets......................       128      (2,554)       (382)
     Accounts payable.......................................     1,987       1,797       1,469
     Other accrued liabilities..............................    (3,395)     (4,154)     (4,770)
                                                              --------    --------    --------
Net cash provided by (used in) operating activities.........     5,892      (1,352)      7,062
CASH FLOW FROM INVESTING ACTIVITIES:
Purchases of property and equipment.........................    (8,373)    (16,214)    (14,613)
Purchase of businesses, net of acquired cash................   (12,303)    (29,246)     (9,690)
Proceeds from the disposal of property and equipment........       113       2,623          53
                                                              --------    --------    --------
Net cash used in investing activities.......................   (20,563)    (42,837)    (24,250)
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock, net.................    32,146          62          29
Proceeds from revolving credit facility.....................    26,361     115,356      67,217
Payments on revolving credit facility.......................   (28,513)    (55,108)    (49,400)
Proceeds from notes payable.................................    14,500       6,804          --
Payments on notes payable...................................   (11,169)    (23,006)       (673)
Payments on AAA Notes.......................................   (17,600)         --          --
Payments on capital lease obligations.......................       (27)       (108)        (67)
Proceeds from capital contributions.........................       233          --          --
Distributions to shareholders...............................    (1,242)         --          --
                                                              --------    --------    --------
Net cash provided by financing activities...................    14,689      44,000      17,106
                                                              --------    --------    --------
Increase (decrease) in cash and cash equivalents............        18        (189)        (82)
Cash and cash equivalents at beginning of year..............       489         507         318
                                                              --------    --------    --------
Cash and cash equivalents at end of year....................  $    507    $    318    $    236
                                                              ========    ========    ========
</TABLE>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                       26
<PAGE>   27

                      MPW INDUSTRIAL SERVICES GROUP, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

               (FOR THE YEARS ENDED JUNE 30, 1998, 1999 AND 2000)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     BASIS OF PRESENTATION AND DESCRIPTION OF BUSINESS MPW Industrial Services
Group, Inc. and its subsidiaries (the "Company") provide technically-based
services, including industrial cleaning and facility maintenance, industrial
filtration management, cleanroom cleaning and related services, industrial
container cleaning and industrial process water purification. Such services are
primarily provided at customer facilities. The Company serves customers in
numerous industries including automotive, electric power, pulp and paper,
chemical, steel, transportation, semiconductor, microelectronics and
pharmaceutical. The Company provides services primarily throughout the United
States, Mexico and Canada.

     On August 22, 2000, the Company announced that a Special Committee of its
Board of Directors had reached an agreement in principle with the Company's
Chairman and Chief Executive Officer, Monte R. Black, to acquire the Company in
a cash merger at $8.25 per share plus an additional amount if the sale of its
filtration services group (as hereinafter defined) generated proceeds in excess
of targeted amounts. The Company's filtration services group is comprised of its
Industrial Filtration Products and Services segment along with the labor support
business of its Industrial Cleaning and Facility Maintenance service line
(collectively, "Filtration Services"). On September 27, 2000, the Company
announced that Mr. Black had withdrawn his previously announced proposal to
acquire the Company. Mr. Black advised the Company's Special Committee, which
had been evaluating the proposal, that he withdrew the proposal primarily
because he perceived uncertainty in the Company's core businesses due to
sluggish customer demand from certain industries. Mr. Black also expected that
the higher than anticipated level of current Company indebtedness, when added to
the debt to be incurred to finance the privatization transaction, would
adversely impact the Company if the privatization transaction were completed. In
addition, Mr. Black advised the Special Committee that he is not considering a
new proposal to acquire the Company. See Note 4.

     In connection with the proposed privatization transaction, the Company also
announced its plan to sell Filtration Services. Filtration Services provides air
and liquid filtration devices, filtration media and consumable products,
engineering analysis and industrial cleaning and facility maintenance primarily
to the automotive industry. Even though Mr. Black's proposal to acquire the
Company has been withdrawn, the Company still intends to sell Filtration
Services. See Note 5.

     As a result of the Company's plans to sell Filtration Services, the
financial data related to Filtration Services is accounted for as a discontinued
operation for all periods presented. See Note 5.

     Beginning in November 1998, the Company entered into a new service line
effective with the acquisition of technical cleanroom cleaning and related
services companies. See Note 7 for further information about the individual
acquisitions. These acquisitions were made by a newly created, wholly-owned
subsidiary of the Company, Pentagon Technologies Group, Inc. ("Pentagon").
Effective July 18, 2000, the Company completed a recapitalization transaction
that resulted in the recapitalization of Pentagon and reduced the Company's
retained interest in the capital stock of Pentagon to 22.3%. See Note 6.

     The accompanying consolidated financial statements include the accounts of
the Company and all of its wholly-owned subsidiaries, including Aquatech
Environmental, Inc. ("Aquatech"), which was 70% owned by the Company until
December 5, 1997, at which time the Company purchased the remaining minority
shareholders' interests of Aquatech, and it became wholly-owned. The minority
shareholders' interests in the equity and net income of Aquatech are presented
separately in the accompanying consolidated financial statements for the periods
through December 4, 1997. All material intercompany transactions and balances
have been eliminated in consolidation.

     REVENUES AND COST RECOGNITION The Company primarily derives its revenues
from services under time and materials, fixed price and unit price contracts.
Revenues from time and materials type contracts are recorded

                                       27
<PAGE>   28
                      MPW INDUSTRIAL SERVICES GROUP, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

based on performance and efforts expended. Contract costs include all direct
labor, material, per diem, subcontract and other direct and indirect project
costs related to contract performance. Revenues derived from non-contract
activities are recorded as services are performed or goods are sold.

     INVENTORIES Inventories, primarily consisting of products purchased for
resale and operating supplies, are stated at the lower of cost or market. Cost
is determined using the first-in, first-out (FIFO) method.

     PROPERTY AND EQUIPMENT Property and equipment, including assets under
capital leases, are recorded at cost and include expenditures which
substantially increase the useful lives of the assets. Maintenance and repairs
that do not improve or extend the life of the respective assets are expensed as
incurred. Depreciation is provided over the estimated useful lives of the
respective assets using the straight-line method. Amortization of capital leases
is provided over the lease terms using the straight-line method.

     Depreciation and amortization on the Company's property and equipment has
been computed based on the following useful lives:

<TABLE>
<CAPTION>
                                                                 YEARS
                                                                -------
<S>                                                             <C>
Buildings and improvements..................................    5 to 30
Motor vehicles and transportation equipment.................    3 to 10
Machinery and equipment.....................................     3 to 8
Furniture and fixtures......................................     5 to 7
</TABLE>

     INTANGIBLES Intangibles include costs in excess of net assets of acquired
businesses ("goodwill") of $42,318,000 and $52,351,000 and other intangible
assets of $8,628,000 and $8,748,000 as of June 30, 1999 and 2000, respectively.
Goodwill, resulting primarily from certain acquisitions accounted for using the
purchase method of accounting, is amortized on a straight-line basis over
periods not exceeding 25 years. Other intangible assets include patents,
covenants not-to-compete and customer lists and are amortized on a straight-line
basis over periods ranging from 5 to 20 years. Accumulated amortization of
intangibles as of June 30, 1999 and 2000 was $2,418,000 and $5,160,000,
respectively.

     The recoverability of intangibles and other long-lived assets is evaluated
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable, and if future undiscounted cash flows are
believed insufficient to recover the remaining carrying value of the asset, the
carrying value is written down to fair value in the period the impairment is
identified.

     MINORITY INTEREST Minority interest as of June 30, 2000 represents certain
equity interests in Pentagon that were issued in connection with certain of its
acquisitions. These equity interests are in the form of a preferred stock of
Pentagon. The amount presented in the balance sheet as of June 30, 2000
represents the estimated value of the preferred stock based on 17% of the
underlying equity of Pentagon. See Note 6.

     FINANCIAL INSTRUMENTS Financial instruments consist primarily of cash,
accounts receivable, accounts payable and long-term debt. The carrying value of
all financial instruments at June 30, 1999 and 2000 approximated their fair
value.

     INCOME TAXES The Company follows Statement of Financial Accounting
Standards No. 109, Accounting for Income Taxes. This accounting standard
requires that the liability method be used in accounting for income taxes. Under
this accounting method, deferred tax assets and liabilities are determined based
on the differences between the financial reporting basis and the tax basis of
assets and liabilities and are measured using the enacted tax rates and laws
that apply in the periods in which the deferred tax asset or liability is
expected to be realized or settled.

     COMPREHENSIVE INCOME Statement of Financial Accounting Standards No. 130,
Reporting Comprehensive Income, requires that an enterprise report the change in
its equity during the period from non-owner sources as

                                       28
<PAGE>   29
                      MPW INDUSTRIAL SERVICES GROUP, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

other comprehensive income. The Company has evaluated the statement and
determined that the only item in addition to net income that would be included
in comprehensive income is the foreign currency deferred translation adjustment.
Comprehensive income for the years ended June 30, 1998, 1999 and 2000 was
$3,437,000, $6,902,000 and $2,572,000, respectively.

     STATEMENT OF CASH FLOWS The Company considers all short-term deposits and
highly liquid investments purchased with an original maturity of three months or
less to be cash equivalents. Cash paid for income taxes for fiscal 1998, 1999
and 2000 was $2,074,000, $1,884,000 and $2,775,000, respectively. Cash paid for
interest was $921,000, $2,820,000 and $6,825,000 for fiscal 1998, 1999 and 2000,
respectively. During fiscal 1998, the Company redeemed $3,600,000 of the AAA
Notes (as hereinafter defined) as consideration for the sale of a corporate
aircraft to an entity controlled by its principal shareholder.

     USE OF ESTIMATES The preparation of the financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the accompanying
consolidated financial statements. Actual results could differ from those
estimates.

     RECLASSIFICATIONS Certain amounts presented as of June 30, 1999 have been
reclassified to conform to the June 30, 2000 presentation.

     EFFECT OF RECENT ACCOUNTING PRONOUNCEMENTS In June 1998, Statement of
Financial Accounting Standards ("SFAS") No. 133, Accounting for Derivative
Instruments and Hedging Activities, was issued, which will require recognition
of all derivatives as either assets or liabilities on the balance sheet at fair
value. The Company will adopt SFAS No. 133, as amended by SFAS No. 137 and SFAS
No. 138, in the first quarter of its fiscal year ending June 30, 2001.
Management does not anticipate that the adoption of SFAS No. 133 will have a
material impact on the Company's consolidated financial statements.

     In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin ("SAB") No. 101, Revenue Recognition in Financial
Statements. The objective of SAB No. 101 is to provide further guidance on
revenue recognition issues in the absence of authoritative literature addressing
a specific arrangement or a specific industry. The Company is required to follow
the guidance in SAB No. 101 no later than the fourth quarter of fiscal 2001. The
SEC has recently indicated that it intends to issue further guidance with
respect to adoption of specific issues addressed by SAB No. 101. Based on the
guidance currently issued, management anticipates that the adoption of SAB No.
101 will not have a material impact on the Company's consolidated financial
statements.

NOTE 2. PRO FORMA FINANCIAL INFORMATION

     The Pro Forma Balance Sheet at June 30, 2000 and the Pro Forma Statement of
Income for the year ended June 30, 2000 have been provided as supplemental
financial information to disclose the Company's balance sheet and statement of
income related to continuing operations.

     As further described in Note 5, Filtration Services is for sale and has
been reflected as discontinued operations in the Company's statements of income
for all periods presented. The Pro Forma Balance Sheet at June 30, 2000 reflects
the assets and liabilities of Filtration Services as Net Assets Held for Sale.

     As further described in Note 6, on July 18, 2000 the Company completed a
recapitalization transaction of Pentagon that resulted in the Company's sale of
its majority interest in the capital stock of Pentagon and resulted in a
retained interest in Pentagon of 22.3%. The Proforma Balance Sheet at June 30,
2000 reflects the amount of the Company's remaining investment in Pentagon after
completion of the recapitalization transaction as Investment in Subsidiary. The
remaining assets and liabilities of Pentagon net of the accrued loss on the sale
of subsidiary included in the historical balance sheet at June 30, 2000 have
been classified as Net Assets Held for Sale in the Pro Forma Balance Sheet at
June 30, 2000. The Pro Forma Statement of Income reflects the revenues and
expenses of Pentagon included in the historical statement of income for the year
ended June 30, 2000 in the

                                       29
<PAGE>   30
                      MPW INDUSTRIAL SERVICES GROUP, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

Income (loss) from subsidiary held for sale, net of income taxes classification.
For purposes of allocation interest expense to the operations of Pentagon for
fiscal 2000, interest has been allocated commensurate with the $22.8 million in
proceeds that the Company received from the transaction in July 2000 that was
utilized to reduce long term debt at the Company's effective June 30, 2000
borrowing rate of 8.88%.

NOTE 3. INITIAL PUBLIC OFFERING OF COMMON STOCK

     On December 1, 1997, the registration statement related to the Company's
initial public offering of its common stock (the "Offering") was declared
effective by the Securities and Exchange Commission and its stock began trading
on the Nasdaq National Market on December 2, 1997. Pursuant to the terms of the
Offering, on December 5, 1997, the Company issued 3,750,000 shares of its common
stock that were sold at $9.00 per share. On January 2, 1998, the over-allotment
option in connection with the Offering was partially exercised and on January 6,
1998, the Company issued an additional 237,500 shares of its common stock at
$9.00 per share. The total net proceeds to the Company in connection with the
Offering, including the partial exercise of the over-allotment option, were
$33,375,000 before deducting expenses of $1,282,000. The following is a summary
of transactions related to the Offering:

     Restructuring of the Company and Termination of Industrial's S Corporation
Status

          In connection with the Offering, effective October 31, 1997, MPW
     Industrial Services, Inc. ("Industrial") and its subsidiaries were
     restructured resulting in the creation of the Company. In connection with
     this restructuring, Industrial's S Corporation status was terminated. Prior
     to this termination, Industrial made a distribution to the S Corporation
     shareholders in the amount of $21,200,000 for undistributed earnings
     associated with Industrial's S Corporation status. These distributions were
     made through Industrial's issuance of promissory notes to such shareholders
     (the "AAA Notes"), of which $13,400,000 was subsequently paid off with the
     Offering proceeds. The remaining $7,800,000 was paid as follows: (i)
     $4,200,000 in cash on April 15, 1998 and (ii) $3,600,000 redeemed in
     connection with the sale of a corporate aircraft to an entity controlled by
     the Company's principal shareholder.

          Also in connection with this restructuring, the outstanding shares of
     Industrial were exchanged for common shares of the Company, and
     subsequently subject to a 4 for 1 stock split. The authorized capital stock
     of the Company consists of 5,000,000 preferred shares, $0.01 par, and
     30,000,000 common shares, no par value. These changes have been reflected
     in the accompanying financial statements.

     Deferred Stock Option Compensation Expense

          In connection with the Offering, the Company recorded a non-cash,
     non-recurring charge of $1,869,000, net of tax, associated with certain of
     its stock option plans. This charge resulted in a concurrent increase in
     paid-in capital. The Company also eliminated the related deferred stock
     option compensation liabilities previously recorded because, effective with
     the Offering, the Company's repurchase obligations for stock options
     exercised under these stock option plans were eliminated.

     Related Party Lease Agreements

          In connection with the Offering, the Company restructured certain
     lease agreements with its principal shareholder for facilities that the
     Company uses in its business operations. Additionally, the Company redeemed
     $3,600,000 of the AAA Notes as consideration for the sale of a corporate
     aircraft at its fair market value to an entity controlled by the Company's
     principal shareholder. In connection with this transaction, the Company
     entered into a lease agreement with this entity for the lease of this
     corporate aircraft.

                                       30
<PAGE>   31
                      MPW INDUSTRIAL SERVICES GROUP, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

     Purchase of Remaining Minority Shareholders' Interests

          In connection with the Offering, on December 5, 1997, the Company
     purchased the remaining minority shareholders' interests in the equity and
     net income of Aquatech for an aggregate purchase price of $678,000, at
     which time Aquatech became a wholly-owned subsidiary of the Company. The
     purchase price included the issuance of 37,667 shares of common stock of
     the Company, representing an aggregate value of $339,000.

NOTE 4. PRIVATIZATION OF COMPANY

     On August 22, 2000, the Company announced that a Special Committee of its
Board of Directors had reached an agreement in principle with the Company's
Chairman and Chief Executive Officer, Monte R. Black, to acquire the Company in
a cash merger at $8.25 per share plus an additional amount if the sale of
Filtration Services generated proceeds in excess of targeted amounts. On
September 27, 2000, the Company announced that Mr. Black had withdrawn his
previously announced proposal to acquire the Company. Mr. Black advised the
Company's Special Committee, which had been evaluating the proposal, that he
withdrew the proposal primarily because he perceived uncertainty in the
Company's core businesses due to sluggish customer demand from certain
industries. Mr. Black also expected that the higher than anticipated level of
current Company indebtedness, when added to the debt to be incurred to finance
the privatization transaction, would adversely impact the Company if the
privatization transaction were completed. In addition, Mr. Black advised the
Special Committee that he is not considering a new proposal to acquire the
Company.

NOTE 5. DISCONTINUED OPERATIONS

     In connection with the proposed privatization transaction described in Note
4, the Company announced its plan to sell Filtration Services. Even though Mr.
Black's proposal to acquire the Company has been withdrawn, the Company still
intends to sell Filtration Services. Filtration Services provides air and liquid
filtration devices, filtration media and consumable products, engineering
analysis and industrial cleaning and facility maintenance primarily to the
automotive industry. The Consolidated Financial Statements have been restated to
account for Filtration Services as a discontinued operation for all periods
presented therein. The Company expects the sale of Filtration Services to be
completed in the third quarter of fiscal 2001.

     Discontinued operations include Filtration Services' net sales that totaled
$37,771,000, $59,618,000 and $77,942,000 for fiscal years 1998, 1999 and 2000,
respectively. Interest expense is charged to discontinued operations based on
intercompany account balances at the Company's effective external borrowing
rate. Interest expense included in discontinued operations was $246,000,
$880,000 and $1,642,000 for fiscal 1998, 1999 and 2000, respectively. Net income
from discontinued operations was reported net of income tax expense of
$1,933,000, $2,406,000 and $2,403,000 for the fiscal years 1998, 1999 and 2000,
respectively.

NOTE 6. RECAPITALIZATION OF PENTAGON

     On July 18, 2000, the Company closed a transaction related to Pentagon
pursuant to a Recapitalization Agreement, dated as of April 25, 2000, by and
among Pentagon, the Company, MPW Management Services Corp., Pentagon Merger Sub,
Inc., Baird Capital Partners III Limited Partnership, BCP III Special Affiliates
Limited Partnership and BCP III Affiliates Fund Limited Partnership, as amended
(the "Recapitalization Agreement"). Pursuant to the Recapitalization Agreement,
Baird Capital Partners and certain of its affiliates ("BCP") invested in
Pentagon, the Company sold a majority of its equity interest in Pentagon to BCP
and Pentagon indebtedness to the Company was repaid. The Company retained a
22.3% interest in the capital stock of Pentagon.

     In connection with this transaction, the Company received $22,788,000,
which was used to repay debt. The Company's fiscal 2000 statement of income and
the June 30, 2000 balance sheet includes a $7,247,000

                                       31
<PAGE>   32
                      MPW INDUSTRIAL SERVICES GROUP, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

($4,348,000 net of tax) accrued loss on sale of subsidiary to reduce the
Company's investment in Pentagon to 22.3% of Pentagon's equity upon finalization
of the recapitalization transaction. The loss on sale of subsidiary recorded at
June 30, 2000 is subject to final due diligence. As a result of the reduction in
the Company's ownership of Pentagon's capital stock to 22.3%, beginning in the
first quarter of fiscal 2001, the Company will record its remaining investment
in Pentagon under the equity method of accounting.

     The preferred stock of Pentagon recorded in the Company's balance sheet as
of June 30, 2000 and prior periods as minority interest and common stock options
issued by Pentagon to certain of its executive officers were cancelled in the
recapitalization transaction.

NOTE 7. ACQUISITIONS

     INDUSTRIAL SERVICES On January 4, 2000, the Company purchased substantially
all of the assets of Industrial Services, Inc. ("Industrial Services") for an
aggregate cash consideration of $4,500,000. The acquisition has been accounted
for using the purchase method of accounting. The accompanying financial
statements include the results of operations of Industrial Services from the
acquisition date through June 30, 2000

     THERMAL COATING On August 10, 1999, effective April 1, 1999, the Company
purchased substantially all of the assets of Thermal Coating, Inc. ("Thermal
Coating") for an aggregate consideration of $3,434,000. The consideration
included the issuance of preferred stock of Pentagon, representing 1% of the
equity in Pentagon. Also included in the consideration is the issuance of an
unsecured convertible subordinated promissory note with a principal amount of
$1,000,000 and accruing interest at 10%, which is convertible into shares of
common stock of the Company. This note was subsequently paid off in full, with
accrued interest, in connection with the recapitalization of Pentagon as
described in Note 6 above. The acquisition has been accounted for using the
purchase method of accounting. The accompanying financial statements include the
results of operations of Thermal Coating from the effective acquisition date
through June 30, 2000.

     MID-OHIO INDUSTRIAL Effective February 1, 1999, the Company purchased
substantially all of the assets of Mid-Ohio industrial Services, Inc. ("Mid-Ohio
Industrial") for an aggregate cash consideration of $2,550,000. The acquisition
has been accounted for using the purchase method of accounting. The accompanying
financial statements include the results of operations of Mid-Ohio Industrial
from the effective acquisition date through June 30, 2000.

     BIOCON Effective January 1, 1999, the Company purchased substantially all
of the assets of Biocon, a division of Performance Solutions-Biocon, LLC for an
aggregate consideration of $2,366,000. The consideration included the issuance
of preferred stock of Pentagon, representing 1% of the equity of Pentagon. The
acquisition has been accounted for using the purchase method of accounting. The
accompanying financial statements include the results of operations of Biocon
from the effective acquisition date through June 30, 2000.

     WTW SYSTEMS Effective December 31, 1998, the Company purchased
substantially all of the assets of WTW Systems, Inc. ("WTW Systems") for an
aggregate cash consideration of $1,283,000. The acquisition has been accounted
for using the purchase method of accounting. The accompanying financial
statements include the results of operations of WTW Systems from the effective
acquisition date through June 30, 2000.

     DRYDEN ENGINEERING Effective December 31, 1998, the Company acquired all of
the outstanding stock of Dryden Engineering, Inc., a California corporation
("Dryden Engineering"), for an aggregate consideration of $3,325,000. The
consideration included the issuance of preferred stock of Pentagon, representing
4% of the equity of Pentagon. The acquisition has been accounted for using the
purchase method of accounting. The accompanying financial statements include the
results of operations of Dryden Engineering from the effective acquisition date
through June 30, 2000.

     SUPPORT SYSTEMS Effective November 1, 1998, the Company acquired all of the
outstanding stock of Support Systems, Inc., a New York corporation ("Support
Systems"), for an aggregate consideration of

                                       32
<PAGE>   33
                      MPW INDUSTRIAL SERVICES GROUP, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

$6,011,000. The consideration included the issuance of preferred stock of
Pentagon, representing 2% of the equity of Pentagon. The purchase price may be
increased by $3,000,000, or more or less, contingent upon the achievement of
certain revenue and operating objectives over the three-year period following
the date of acquisition. The acquisition has been accounted for using the
purchase method of accounting. The accompanying financial statements include the
results of operations of Support Systems from the effective acquisition date
through June 30, 2000.

     ENVIROSAFE Effective November 1, 1998, the Company acquired all of the
outstanding stock of Envirosafe Technical Cleaning, Inc., an Arizona corporation
("Envirosafe"), for an aggregate consideration of $2,500,000. The consideration
included the issuance of 57,266 shares of common stock of the Company,
representing an aggregate value of $500,000. The acquisition has been accounted
for using the purchase method of accounting. The accompanying financial
statements include the results of operations of Envirosafe from the effective
acquisition date through June 30, 2000.

     TEC INTERNATIONAL Effective November 1, 1998, the Company purchased
substantially all of the assets of Technological Environment Cleaning
International Company ("TEC International") for an aggregate consideration of
$6,000,000. The consideration included the issuance of preferred stock of
Pentagon, representing 8% of the equity of Pentagon. The acquisition has been
accounted for using the purchase method of accounting. The accompanying
financial statements include the results of operations of TEC International from
the effective acquisition date through June 30, 2000.

     SURESCO Effective November 1, 1998, the Company purchased substantially all
of the assets of Suresco, Inc. ("Suresco") for an aggregate consideration of
$1,375,000. The consideration included the issuance of 11,478 shares of common
stock of the Company, representing an aggregate value of $100,000. The
consideration also included the issuance of preferred stock of Pentagon,
representing 2% of the equity of Pentagon. The acquisition has been accounted
for using the purchase method of accounting. The accompanying financial
statements include the results of operations of Suresco from the effective
acquisition date through June 30, 2000.

     TANK MANAGEMENT Effective August 1, 1998, the Company purchased
substantially all of the assets of Tank Management, Inc. ("Tank Management") for
an aggregate consideration of $5,750,000. The consideration included the
issuance of 114,318 shares of common stock of the Company, representing an
aggregate value of $1,250,000. The purchase price may be increased upon the
achievement of certain new customer sales objectives for the Tank Management
facility over the three-year period following the date of acquisition. The
acquisition has been accounted for using the purchase method of accounting. The
accompanying financial statements include the results of operations of Tank
Management from the effective acquisition date through June 30, 2000.

     GAUTHIER ENTERPRISES Effective August 1, 1998, the Company acquired all of
the outstanding stock of Gauthier Enterprises, Inc., a Michigan corporation
("Gauthier Enterprises"), for an aggregate consideration of $3,000,000. The
consideration included the issuance of 89,236 shares of common stock of the
Company, representing an aggregate value of $1,000,000. The purchase price may
be increased by $3,000,000, or more or less, contingent upon the achievement of
certain revenue and operating objectives over the three-year period following
the date of acquisition. The acquisition has been accounted for using the
purchase method of accounting. The accompanying financial statements include the
results of operations of Gauthier Enterprises from the effective acquisition
date through June 30, 2000.

     MAINTENANCE CONCEPTS Effective June 1, 1998, the Company acquired all of
the outstanding stock of Maintenance Concepts, Inc., an Ohio corporation
("Maintenance Concepts"), for aggregate consideration of $2,435,000 and
$2,181,000 of assumed liabilities. The consideration included the issuance of
39,216 shares of common stock of the Company, representing an aggregate value of
$500,000. The acquisition has been accounted for using the purchase method of
accounting. The accompanying consolidated financial statements include the
results of operations of Maintenance Concepts from the effective acquisition
date through June 30, 2000.

                                       33
<PAGE>   34
                      MPW INDUSTRIAL SERVICES GROUP, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

     STRAIGHTLINE OPTICAL SERVICE Effective April 21, 1998, the Company
purchased substantially all of the assets of Straightline Optical Service, Inc.
("SOS") for aggregate consideration of $1,110,000 and approximately $120,000 of
assumed liabilities. The consideration included the issuance of 50,808 shares of
common stock of the Company, representing an aggregate value of $550,000. The
acquisition has been accounted for using the purchase method of accounting. The
accompanying financial statements include the results of operations of SOS from
the effective acquisition date through June 30, 2000.

     THE VINEWOOD COMPANIES Effective April 7, 1998, the Company purchased
substantially all of the assets of Vinewood Corp., Vinewood of Ohio, Inc.,
D.R.C. Enterprises, Inc. and R.C.R. Leasing Company (collectively the "Vinewood
Companies") for aggregate consideration of $8,490,000. The consideration
included the issuance of 55,427 shares of common stock of the Company,
representing an aggregate value of $600,000. The acquisition has been accounted
for using the purchase method of accounting. The accompanying financial
statements include the results of operations of the Vinewood Companies from the
effective acquisition date through June 30, 2000.

     ESI INTERNATIONAL Effective October 1, 1997, the Company acquired all of
the outstanding stock of ESI International, Inc., a Tennessee corporation, and
purchased all of the members' interests in ESI North, Limited, an Ohio limited
liability company (collectively "ESI International"), for aggregate
consideration of $4,903,000 and $1,043,000 of assumed liabilities. The
consideration included the issuance of 110,029 shares of common stock of the
Company, representing an aggregate value of $960,000. The acquisition has been
accounted for using the purchase method of accounting. The accompanying
consolidated financial statements include the results of operations of ESI
International from the effective acquisition date through June 30, 2000.

     The terms of certain of the Company's acquisition agreements provide for
additional consideration to be paid based on the achievement of certain
objectives. Such additional consideration is paid in cash, common stock of the
Company, or a combination thereof, and is capitalized as an intangible asset.
During the fiscal years ended June 30, 1999 and 2000, respectively, the Company
paid additional consideration of $958,000 and $3,559,000, of which $250,000 and
$520,000 related to the issuance of 29,347 and 54,484 of the Company's common
stock. At June 30, 2000, the Company accrued for additional contingent payments
of $1,575,000.

     The following table sets forth the unaudited consolidated pro forma results
of operations for fiscal 1998, 1999 and 2000 giving effect to the acquisitions
noted above as if such acquisitions had occurred on July 1, 1997 and based on an
effective tax rate of 40%:

<TABLE>
<CAPTION>
                                                              YEAR ENDED JUNE 30,
                                                     --------------------------------------
                                                        1998          1999          2000
                                                     ----------    ----------    ----------
                                                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
        <S>                                          <C>           <C>           <C>
        Revenues...................................   $164,863      $169,044      $196,049
        Net income.................................      2,902         6,443         2,437
        Net income per common share, assuming
          dilution.................................       0.30          0.56          0.21
</TABLE>

NOTE 8. ACCOUNTS RECEIVABLE

     Accounts receivable is summarized as follows:

<TABLE>
<CAPTION>
                                                                        JUNE 30,
                                                                   ------------------
                                                                    1999       2000
                                                                   -------    -------
                                                                     (IN THOUSANDS)
        <S>                                                        <C>        <C>
        Accounts receivable......................................  $37,901    $41,456
        Less allowance for doubtful accounts.....................    2,157      2,738
                                                                   -------    -------
                                                                   $35,744    $38,718
                                                                   =======    =======
</TABLE>

                                       34
<PAGE>   35
                      MPW INDUSTRIAL SERVICES GROUP, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

     The following is a summary of activity in the allowance for doubtful
accounts:

<TABLE>
<CAPTION>
                                                               YEAR ENDED JUNE 30,
                                                             ------------------------
                                                             1998     1999      2000
                                                             ----    ------    ------
                                                                  (IN THOUSANDS)
        <S>                                                  <C>     <C>       <C>
        Beginning balance..................................  $714    $  958    $2,157
        Allowance for receivables acquired.................   190       730        25
        Provision for bad debts............................   227       489     2,125
        Account write-offs, net............................  (173)      (20)   (1,569)
                                                             ----    ------    ------
        Ending balance.....................................  $958    $2,157    $2,738
                                                             ====    ======    ======
</TABLE>

NOTE 9. PROPERTY AND EQUIPMENT

     Property and equipment is summarized as follows:

<TABLE>
<CAPTION>
                                                                        JUNE 30,
                                                                   ------------------
                                                                    1999       2000
                                                                   -------    -------
                                                                     (IN THOUSANDS)
        <S>                                                        <C>        <C>
        Land and buildings.......................................  $ 3,116    $ 6,794
        Motor vehicles and transportation equipment..............   36,250     40,544
        Machinery and equipment..................................   20,501     26,608
        Leasehold improvements...................................    3,549      4,945
        Furniture and fixtures...................................    5,890      7,449
        Construction in progress.................................    5,718      3,616
                                                                   -------    -------
                                                                    75,024     89,956
        Less accumulated depreciation and amortization...........   33,595     40,115
                                                                   -------    -------
                                                                   $41,429    $49,841
                                                                   =======    =======
</TABLE>

NOTE 10. LONG TERM DEBT

     Long-term debt is summarized as follows:

<TABLE>
<CAPTION>
                                                                        JUNE 30,
                                                                   ------------------
                                                                    1999       2000
                                                                   -------    -------
                                                                     (IN THOUSANDS)
        <S>                                                        <C>        <C>
        Revolving credit facility................................  $64,625    $82,442
        Other....................................................    1,564      1,842
                                                                   -------    -------
                                                                    66,189     84,284
        Less current maturities..................................      714        310
                                                                   -------    -------
                                                                   $65,475    $83,974
                                                                   =======    =======
</TABLE>

     Effective October 20, 1999, the Company entered into a new credit agreement
with its principal banks and two additional banks (the "Credit Facility"). The
Credit Facility, as amended, provides the Company with $100,000,000 of revolving
credit availability for a three-year period, subject to extension by the banks
each year on the anniversary of the agreement. Under the terms of the Credit
Facility, the entire $100,000,000 is available for general corporate purposes,
including working capital, capital expenditures and acquisitions. Borrowing
under the Credit Facility currently bears interest at the prime rate or, at the
Company's option, the Eurodollar market rate plus 1.875%. The interest rate is
subject to change based on interest rate formulas tied to the ratio of
consolidated funded debt to earnings before interest, taxes, depreciation and
amortization. Availability of
                                       35
<PAGE>   36
                      MPW INDUSTRIAL SERVICES GROUP, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

borrowing is subject to the maintenance of a minimum level of net worth, certain
levels of interest coverage and maintenance of a certain ratio of funded debt to
earnings before interest, taxes, depreciation and amortization. The Credit
Facility is secured by substantially all of the Company's assets. The Company
also pays a commitment fee for unused portions of the Credit Facility of 0.40%.

     The revolving credit facility expires on October 31, 2002, at which time
the principal balance outstanding, together with all accrued interest, will
become immediately due and payable. There were $1,562,000 and $1,682,000 of
letters of credit outstanding under the Credit Facility at June 30, 1999 and
2000, respectively. The weighted average interest rate for the revolving credit
facility was 8.88% at June 30, 2000.

     In connection with acquisitions made during fiscal 1998, the Company issued
unsecured promissory notes in the aggregate of $1,119,000. These notes are
payable to the former owners of the acquired companies and have principal
payments of $56,000 due quarterly through October 31, 2002. The outstanding
balance of these notes at June 30, 2000 was $560,000.

     The aggregate maturities of long-term debt for the five years ending June
30 are: 2001, $310,000; 2002, $291,000; 2003, $83,614,000; 2004, $69,000; 2005
and thereafter, $0.

NOTE 11. LEASE COMMITMENTS

     The Company leases certain land and buildings under noncancelable operating
leases with entities controlled by its principal shareholder. Prior to the
restructuring of these leases in connection with the Offering, these leases had
been treated as capital leases in the accompanying consolidated financial
statements.

     The aggregate minimum rent commitment under noncancelable operating leases
for the five years ending June 30 are: 2001, $1,817,000; 2002, $1,769,000; 2003,
$1,693,000; 2004, $1,486,000; 2005, $747,000; 2006 and thereafter, $60,000.

     Rental expense related to all operating leases, including short-term
rentals, was approximately $1,850,000, $3,637,000 and $4,935,000 for fiscal
1998, 1999 and 2000, respectively.

NOTE 12. INCOME TAXES

     Prior to October 31, 1997, Industrial's income was taxed under the
provisions of Subchapter S of the Internal Revenue Code of 1986, as amended,
which provides that in lieu of corporate income taxes, the shareholders of the S
Corporation were taxed on their proportionate share of Industrial's taxable
income. Therefore, no provision or liability for federal income tax has been
included in historical financial statements related to Industrial prior to
October 31, 1997. The accompanying financial statements do, however, include
provisions for income taxes for federal, state, provincial and local tax
purposes for the other subsidiaries of the Company that were subject to
corporate income taxes prior to October 31, 1997.

     Effective October 31, 1997, Industrial terminated its S Corporation status
and became subject to corporate income taxes. The Company recorded a current
deferred tax asset and a noncurrent deferred tax liability of $2,111,000 and
$1,409,000, respectively, to recognize the cumulative deferred income taxes
attributable to Industrial's change in tax status (from an S Corporation to a C
Corporation). Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes.

                                       36
<PAGE>   37
                      MPW INDUSTRIAL SERVICES GROUP, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

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

<TABLE>
<CAPTION>
                                                               YEAR ENDED JUNE 30,
                                                             ------------------------
                                                             1998     1999      2000
                                                             ----    ------    ------
                                                                  (IN THOUSANDS)
        <S>                                                  <C>     <C>       <C>
        Current:
          Federal..........................................  $384    $1,433    $2,433
          International....................................   131       101        40
          State and local..................................    68       448       600
                                                             ----    ------    ------
                                                              583     1,982     3,073
        Deferred:
          Federal..........................................  (210)    2,221    (1,166)
          International....................................    --        --        --
          State and local..................................   (37)      392      (206)
                                                             ----    ------    ------
                                                             (247)    2,613    (1,372)
                                                             ----    ------    ------
                                                             $336    $4,595    $1,701
                                                             ====    ======    ======
</TABLE>

     The provision (benefit) for income taxes is recorded in the statements of
income as follows:

<TABLE>
<CAPTION>
                                                               YEAR ENDED JUNE 30,
                                                           ---------------------------
                                                            1998       1999      2000
                                                           -------    ------    ------
                                                                 (IN THOUSANDS)
        <S>                                                <C>        <C>       <C>
        Continuing operations............................  $(1,597)   $2,189    $ (702)
        Discontinued operations..........................    1,933     2,406     2,403
                                                           -------    ------    ------
        Total income tax expense.........................  $   336    $4,595    $1,701
                                                           =======    ======    ======
</TABLE>

     The significant components of the Company's deferred tax asset and
liability are as follows:

<TABLE>
<CAPTION>
                                                                         JUNE 30,
                                                                     ----------------
                                                                      1999      2000
                                                                     ------    ------
                                                                      (IN THOUSANDS)
        <S>                                                          <C>       <C>
        Current deferred tax asset:
          Bad debt reserves........................................  $  863    $1,095
          Workers compensation reserves............................     490       480
          IRC Section 481 adjustment...............................     408        --
          Prepaid expenses.........................................    (496)     (648)
          Loss on sale of subsidiary...............................      --     2,899
          Other....................................................     227       278
                                                                     ------    ------
                                                                     $1,492    $4,104
                                                                     ======    ======
        Long-term deferred tax liability:
          Property and equipment...................................  $3,108    $4,789
          IRC Section 481 adjustment...............................      --       110
          Intangible assets........................................   1,406     1,309
          Other....................................................     (58)      (65)
                                                                     ------    ------
                                                                     $4,456    $6,143
                                                                     ======    ======
</TABLE>

                                       37
<PAGE>   38
                      MPW INDUSTRIAL SERVICES GROUP, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

     Differences arising between the provision for income taxes and the amount
computed by applying the statutory federal income tax rate to income before
income taxes are as follows:

<TABLE>
<CAPTION>
                                                                  YEAR ENDED JUNE 30,
                                                                 ---------------------
                                                                 1998     1999    2000
                                                                 -----    ----    ----
        <S>                                                      <C>      <C>     <C>
        Federal tax at statutory rate..........................   34.0%   34.0%   34.0%
        State and local taxes (net of federal benefit).........    4.5     4.5     3.4
        Effect of S Corporation status.........................  (21.4)     --      --
        Cumulative effect of deferred tax recorded.............  (12.3)     --      --
        Nondeductible goodwill relating to acquisitions........     --     2.0     3.1
        Other..................................................    1.1    (0.5)   (0.5)
                                                                 -----    ----    ----
                                                                   5.9%   40.0%   40.0%
                                                                 =====    ====    ====
</TABLE>

     The pro forma income taxes presented in the Consolidated Statements of
Income for the year ended June 30, 1998 represent the estimated income taxes
that would have been reported had Industrial been subject to federal and state
income taxes for the full fiscal 1998 period presented.

NOTE 13. EMPLOYEE BENEFITS

     The Company sponsors a Savings Plan, which qualifies for tax-deferred
contributions under Section 401(k) of the Internal Revenue Code (the "401(k)
Plan"), that covers substantially all employees of the Company who are over 21
years of age with at least one year of continuous service. Employees covered by
collective bargaining agreements are excluded from the 401(k) Plan.
Contributions by eligible employees are matched at a rate of 50% of the first 6%
of the employee's earnings contributed. Additional discretionary contributions
may be made to the 401(k) Plan by the Company. Matching contributions
approximated $190,000, $353,000 and $527,000 for fiscal 1998, 1999 and 2000,
respectively.

NOTE 14. STOCK OPTION PLANS

     1991 STOCK OPTION PLAN The Company's 1991 Stock Option Plan (the "1991
Plan") provided for the granting of up to 200,000 stock options to key
management personnel. Effective with the Offering, no additional options will be
granted under the 1991 Plan and the Company's repurchase obligation upon
exercise of stock options was terminated. As of June 30, 2000, 40,000 options
are outstanding at an exercise price of $3.65 per share.

     1994 STOCK OPTION PLAN The Company's 1994 Stock Option Plan (the "1994
Plan") provided for the granting of up to 1,000,000 stock options to key
management personnel. Effective with the Offering, no additional options will be
granted under the 1994 Plan and the Company's repurchase obligation upon
exercise of stock options was terminated. As of June 30, 2000, 775,000 options
are outstanding at a weighted average exercise price of $2.43 per share.

     1997 STOCK OPTION PLAN On November 15, 1997, the Company adopted the 1997
Stock Option Plan (the "1997 Plan"), which provides for the granting of up to
1,200,000 stock options to officers, key employees, consultants and directors of
the Company. Any options granted that lapse or are canceled are available for
re-grant under the terms of the 1997 Plan. Stock option grants may be in the
form of incentive stock options, non-qualified options, or a combination
thereof. The exercise price of the stock options granted will be determined by
the Compensation Committee of the Board of Directors of the Company which, in
the case of incentive stock options, shall be equal to or greater than the
market value per share on the date of grant and, in the case of non-qualified
options shall not be less than 85% of the market value per share at the date of
grant. The stock options vest over a period of time determined by the
Compensation Committee and expire after ten years from the date of grant.
Non-employee directors shall be granted 2,000 non-qualified options at the first
annual shareholders

                                       38
<PAGE>   39
                      MPW INDUSTRIAL SERVICES GROUP, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

meeting subsequent to the adoption of the 1997 Plan at which he or she is
elected a director, and 1,000 options shall be granted at each subsequent annual
shareholders meeting at which he or she is re-elected as a director. The
non-employee director option grants vest after one full year from the date of
grant and expire in ten years from the date of grant. Options covering 800,750
shares of common stock have been granted and 730,850 options are outstanding as
of June 30, 2000 at a weighted average exercise price of $10.10 per share.

     The following table summarizes stock option activity:

<TABLE>
<CAPTION>
                                              NUMBER      WEIGHTED AVERAGE
                                                OF         EXERCISE PRICE
                                            OPTIONS(#)      PER SHARE($)
                                            ----------    ----------------
                                                (IN THOUSANDS, EXCEPT
                                                   PER SHARE DATA)
<S>                                         <C>           <C>
Outstanding at July 1, 1997...............      870             2.53
  Granted.................................      572             9.35
  Expired or canceled.....................      (44)            9.00
  Exercised...............................      (16)            3.26
                                              -----
Outstanding at June 30, 1998..............     1382             4.75
  Granted.................................      330            10.94
  Expired or canceled.....................      (34)            6.66
  Exercised...............................      (16)            8.66
                                              -----
Outstanding at June 30, 1999..............    1,662             6.00
  Granted.................................       --               --
  Expired or canceled.....................      (34)            9.95
  Exercised...............................      (82)            2.72
                                              -----
Outstanding at June 30, 2000..............    1,546             6.09
                                              =====
</TABLE>

     The following summarizes information about stock options outstanding at
June 30, 2000:

<TABLE>
<CAPTION>
                                                OPTIONS OUTSTANDING
                                              ------------------------     OPTIONS EXERCISABLE
                                                WEIGHTED                  ----------------------
                                                AVERAGE       WEIGHTED                  WEIGHTED
                                               REMAINING      AVERAGE                   AVERAGE
                                              CONTRACTUAL     EXERCISE                  EXERCISE
  RANGE OF EXERCISE PRICE($)    OPTIONS(#)    LIFE (YEARS)    PRICE($)    OPTIONS(#)    PRICE($)
  --------------------------    ----------    ------------    --------    ----------    --------
                         (IN THOUSANDS, EXCEPT PER SHARE AND YEAR DATA)
<S>                             <C>           <C>             <C>         <C>           <C>
             3.65                    40           0.5           3.65          40          3.65
         2.14 -- 3.23               775           4.6           2.43         696          2.35
        7.65 -- 13.13               731           7.4          10.10         198          9.90
                                  -----           ---          -----         ---          ----
                                  1,546           5.8           6.09         934          4.01
                                  =====           ===          =====         ===          ====
</TABLE>

     The Company has adopted the disclosure only provision of Statement of
Financial Accounting Standard No. 123 ("SFAS No. 123"), Accounting for
Stock-Based Compensation, but has elected to continue to measure compensation
expense in accordance with Accounting Principles Board Opinion No. 25 ("APB No.
25"), Accounting for Stock Issued to Employees, and related interpretations
because, as discussed below, the alternative fair value accounting provided for
under SFAS No. 123 requires use of option valuation models that were not
developed for use in valuing employee stock options.

     In accordance with APB No. 25 and related interpretations, the Company
recorded deferred stock option compensation expense in fiscal 1997 and 1998 for
options granted under the 1991 and 1994 Plans to reflect the value of the
options at each date of grant, appreciation in the option values subsequent to
the grant date and

                                       39
<PAGE>   40
                      MPW INDUSTRIAL SERVICES GROUP, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

conversion of the options to market-value fixed-rate options as a result of the
Offering. Subsequent to the Offering, no additional deferred stock option
compensation expense was recorded for the 1991 and 1994 Plans. The Company's
consolidated results of operations for fiscal 1998 includes deferred stock
option compensation expense related to the 1991 and 1994 Plans in the amount of
$3,365,000.

     The 1997 Plan is a fixed-rate plan and, under APB No. 25, no compensation
expense is recognized for grants when the exercise price equals or exceeds the
market price of the underlying stock on the date of grant. The Company's
consolidated results of operations for fiscal 1998 includes compensation expense
of $50,000 related to options granted under the 1997 Plan at exercise prices
less than the market price of the underlying stock on the date of grant.

     Pro forma information disclosures regarding net income and earnings per
share are required by SFAS No. 123 and have been determined as if the Company
had accounted for its employee stock options under the fair value method of that
Statement. Since the 1991 and 1994 Plans contained repurchase obligation
provisions prior to the Offering, the pro forma information regarding
pre-Offering net income and earnings per share related to the 1991 and 1994
Plans under SFAS No. 123 would not be materially different from reported amounts
under APB No. 25. For purposes of determining the required pro forma information
for fiscal 1998, 1999 and 2000, the fair value of options granted in fiscal 1998
and 1999 (no options were granted in fiscal 2000) under the 1997 Plan and the
fair value of 1991 and 1994 Plan options re-measured at the Offering price of
$9.00 per share were estimated at the date of grant or re-measurement using a
Black-Scholes option pricing model with the following weighted average
assumptions: risk-free interest rate of 5.75% and 6.00%, respectively, dividend
yield of 0.0% for both years, volatility factor of the expected market price of
the Company's common stock of 25% and 30%, respectively and a weighted average
expected life of the options of 4.0 and 3.9 years, respectively. The weighted
average estimated fair value of options granted and re-measured during fiscal
1998 and 1999 was $2.70 and $3.13 per share, respectively. For purposes of pro
forma disclosures, the estimated fair value of the options is amortized to
expense over the options' vesting period. Had compensation expense for the
Company's stock option plans been determined based on the fair value at the
dates of grant and re-measurement consistent with the methods prescribed by SFAS
No. 123, the Company's proforma net income and earnings per share for fiscal
1998, 1999 and 2000 would have been as follows:

<TABLE>
<CAPTION>
                                           YEAR ENDED            YEAR ENDED            YEAR ENDED
                                          JUNE 30, 1998         JUNE 30, 1999         JUNE 30, 2000
                                       -------------------   -------------------   -------------------
                                                  PROFORMA              PROFORMA              PROFORMA
                                                    FOR                   FOR                   FOR
                                          AS        SFAS        AS        SFAS        AS        SFAS
                                       REPORTED   NO. 123    REPORTED   NO. 123    REPORTED   NO. 123
                                       --------   --------   --------   --------   --------   --------
                                                    (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                    <C>        <C>        <C>        <C>        <C>        <C>
Net income...........................   $3,437     $2,323     $6,892     $6,262     $2,553     $1,936
Net income per share.................     0.40       0.27       0.64       0.58       0.23       0.18
Net income per share, assuming
  dilution...........................     0.37       0.25       0.60       0.54       0.22       0.17
</TABLE>

     The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions including the expected stock price
volatility. Because the Company's employee stock options have characteristics
significantly different from those of traded options, and because changes in the
subjective input assumptions can materially affect the fair value estimate, in
management's opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of its employee stock options.

                                       40
<PAGE>   41
                      MPW INDUSTRIAL SERVICES GROUP, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 15. EARNINGS PER SHARE

     The following table sets forth the computation of basic and diluted
earnings per share (in thousands, except per share data):

<TABLE>
<CAPTION>
                                                                  YEAR ENDED JUNE 30,
                                                              ----------------------------
                                                               1998      1999       2000
                                                              ------    -------    -------
<S>                                                           <C>       <C>        <C>
Numerator for basic and diluted earnings per share -- net
  income (loss) from:
  Continuing operations.....................................  $  538    $ 3,282    $(1,051)
  Discontinued operations...................................   2,899      3,610      3,604
Denominator for basic earnings per share -- weighted average
  common shares.............................................   8,604     10,734     10,890
  Effect of dilutive securities:
  Dilutive employee stock options...........................     686        670        586
  Preferred stock of Pentagon...............................      --        117         --
                                                              ------    -------    -------
  Dilutive potential common shares..........................     686        787        586
Denominator for diluted earnings per share -- adjusted
  weighted average common shares and assumed conversions....   9,290     11,521     11,476
                                                              ======    =======    =======
Net income (loss) per share:
  Continuing operations.....................................  $ 0.06    $  0.31    $ (0.10)
                                                              ======    =======    =======
  Discontinued operations...................................  $ 0.34    $  0.34    $  0.33
                                                              ======    =======    =======

Net income (loss) per share, assuming dilution:
  Continuing operations.....................................  $ 0.06    $  0.28    $ (0.09)
                                                              ======    =======    =======
  Discontinued operations...................................  $ 0.31    $  0.31    $  0.31
                                                              ======    =======    =======
</TABLE>

     Options to purchase 100,000, 433,250 and 773,350 shares of common stock at
a weighted average price of $11.13, $11.02 and $10.07 per share, respectively,
were outstanding during fiscal 1998, 1999 and 2000, respectively, but were not
included in the computation of diluted earnings per share because the options'
exercise price was greater than the average market price of the common shares
and, therefore, the effect would be antidilutive.

     The 10% convertible debenture that was issued in connection with the
acquisition of Thermal Coating is convertible into 86,505 shares of common stock
of the Company if the common stock price is at least $11.56 per share. These
shares were not included in the computation of diluted earnings per share
because the conversion price of the convertible debenture was greater than the
market price of the common shares at the end of the fiscal year ended June 30,
2000 and, therefore, the effect would be antidilutive.

NOTE 16. RELATED PARTY TRANSACTIONS

     On February 11, 1998, the Company redeemed $3,600,000 of the AAA Notes as
consideration for the sale of a corporate aircraft to an entity controlled by
its principal shareholder. The transaction resulted in a gain of $238,000 which
has been deferred over the life of the lease described below. The Company rents
certain land, buildings and equipment, including the commercial real estate and
aircraft described above, from entities controlled by its principal shareholder
under long-term lease agreements. Total payments related to these leases were
$1,211,000, $1,336,000 and $1,385,000 for fiscal 1998, 1999 and 2000,
respectively.

                                       41
<PAGE>   42
                      MPW INDUSTRIAL SERVICES GROUP, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

     The Company provides, from time to time, certain operational,
administrative and financial services to Pro-Kleen Industrial Services, Inc.
("Pro-Kleen"), a portable sanitation services company wholly-owned by the
Company's principal shareholder. No amounts were due from Pro-Kleen at June 30,
1999 and 2000.

NOTE 17. COMMITMENTS AND CONTINGENCIES

     The Company is subject to various claims and lawsuits in the ordinary
course of its business including a class action shareholder lawsuit in
connection with the proposed privatization transaction (see Note 4) alleging
that the Company breached its fiduciary responsibilities to shareholders. In the
opinion of management, the outcome of all claims and lawsuits, which is not
clearly determinable at the present time, is either adequately covered by
insurance, or will not, in the aggregate, have a material adverse effect upon
the financial position or the results of future operations of the Company.

NOTE 18. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

<TABLE>
<CAPTION>
                                                                 QUARTER ENDED
                                               --------------------------------------------------
                                               SEPTEMBER 30    DECEMBER 31    MARCH 31    JUNE 30
                                               ------------    -----------    --------    -------
                                                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                            <C>             <C>            <C>         <C>
FISCAL 2000
Revenues.....................................    $29,279         $28,355      $28,545     $29,428
Income from operations.......................      2,600           3,269        2,015       2,407
Income (loss) from continuing operations.....        993           1,217       (2,964)       (297)
Discontinued operations, net of income
  taxes......................................      1,035           1,367          797         405
Net income (loss) per share:
  Continuing operations......................       0.09            0.11        (0.27)      (0.03)
  Discontinued operations....................       0.10            0.13         0.07        0.04
Net income (loss) per share, assuming
  dilution:
  Continuing operations......................       0.08            0.10        (0.27)      (0.03)
  Discontinued operations....................       0.09            0.11         0.07        0.04

FISCAL 1999
Revenues.....................................    $17,995         $22,563      $22,773     $24,248
Income from operations.......................      1,967           2,590          679       2,803
Income (loss) from continuing operations.....        890           1,131          (50)      1,311
Discontinued operations, net of income
  taxes......................................        709           1,136          876         889
Net income (loss) per share:
  Continuing operations......................       0.08            0.11         0.00        0.12
  Discontinued operations....................       0.07            0.11         0.08        0.08
Net income (loss) per share, assuming
  dilution:
  Continuing operations......................       0.08            0.10         0.00        0.11
  Discontinued operations....................       0.06            0.10         0.08        0.08

FISCAL 1998
Revenues.....................................    $14,590         $13,854      $11,564     $15,637
Income (loss)from operations.................      1,934          (1,912)         190       1,432
Income (loss) from continuing operations.....      1,768            (122)          97         751
Discontinued operations net of income
  taxes......................................        563             810          696         830
Net income (loss) per share:
  Continuing operations......................       0.29           (0.02)        0.01        0.07
  Discontinued operations....................       0.09            0.11         0.07        0.08
Net income (loss) per share, assuming
  dilution
  Continuing operations......................       0.26           (0.02)        0.01        0.07
  Discontinued operations....................       0.08            0.11         0.06        0.07
</TABLE>

                                       42
<PAGE>   43
                      MPW INDUSTRIAL SERVICES GROUP, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

     The quarterly financial information presented above is based on historical
financial information and has been restated to account for Filtration Services
as a discontinued operation for all periods presented. See Note 5 above.

     The comparability of the first and second quarters of fiscal 1998 to any
other period was impacted by events that occurred and transactions that were
recorded in connection with the Offering. See Note 3 above.

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

  None

                                       43
<PAGE>   44

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS

     The information required by Item 10 of Form 10-K with respect to
identification of directors is incorporated by reference from the information
contained in the section captioned "Election of Directors" in MPW's Definitive
Proxy Statement for the Annual Meeting of Shareholders to be held on December
13, 2000 (the "Proxy Statement"), a copy of which will be filed with the
Securities and Exchange Commission before the meeting date. For information with
respect to the executive officers of the Company, see "Executive Officers of the
Company" in Part I of this Form 10-K.

ITEM 11. EXECUTIVE COMPENSATION

     The information required by Item 11 of Form 10-K is incorporated by
reference from the information contained in the section captioned "Executive
Compensation and Other Information" in the Proxy Statement.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The information required by Item 12 of Form 10-K is incorporated by
reference from the information contained in the section captioned "Stock
Ownership of Certain Beneficial Owners and Management" in the Proxy Statement.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The information required by Item 13 of Form 10-K is incorporated by
reference from the information contained in the section captioned "Certain
Relationships and Related Transactions" in the Proxy Statement.

                                       44
<PAGE>   45

                                    PART IV

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

<TABLE>
<S>        <C>
           (a)(1) The following consolidated financial statements of
           the Company and its subsidiaries are included in Item 8:
           Report of Independent Auditors
           Consolidated Balance Sheets as of June 30, 1999 and 2000
           Consolidated Statements of Income for the Years Ended June
           30, 1998, 1999 and 2000
           Consolidated Statements of Changes in Shareholders' Equity
           for the Years Ended June 30, 1998, 1999 and 2000
           Consolidated Statements of Cash Flows for the Years Ended
           June 30, 1998, 1999 and 2000
           Notes to Consolidated Financial Statements
           (a)(2) All schedules for which provision is made in the
           applicable accounting regulations of the Securities and
           Exchange Commission are either not required under the
           related instructions, are inapplicable and therefore have
           been omitted, or the required information is provided in the
           Consolidated Financial Statements of the Company and its
           subsidiaries or Notes thereto.
           (a)(3) Exhibits
           The following Exhibits are included in this Annual Report on
           Form 10-K:
 3(a)      Amended and Restated Articles of Incorporation of the
           Company effective November 4, 1999 (filed as Exhibit 3(a) to
           the Company's Quarterly Report on Form 10-Q for the quarter
           ended September 30, 1999, and incorporated herein by
           reference)
 3(b)      Amended and Restated Code of Regulations of the Company
           effective November 4, 1999 (filed as Exhibit 3(b) to the
           Company's Quarterly Report on Form 10-Q for the quarter
           ended September 30, 1999, and incorporated herein by
           reference)
 4(a)      Credit Agreement, dated as of October 20, 1999, among the
           Company and its subsidiaries, Bank One, NA, National City
           Bank, LaSalle Bank, National Association, SunTrust Bank,
           Central Florida, N.A., and Banc One Capital Markets, Inc.
           (filed as Exhibit 4 to the Company's Quarterly Report on
           Form 10-Q for the quarter ended September 30, 1999, and
           incorporated herein by reference)
 4(b)      First Amendment to Credit Agreement and Other Loan
           Documents, dated as of July 17, 2000, among the Company and
           its subsidiaries, Bank One, NA, National City Bank, LaSalle
           Bank, National Association, SunTrust Bank, Central Florida,
           N.A., and Banc One Capital Markets, Inc.
10(a)      Amended and Restated 1997 Stock Option Plan (filed as
           exhibit 10 to the Company's Quarterly Report on Form 10-Q
           for the quarter ended December 31, 1998, and incorporated
           herein by reference)*
10(b)      Lease for Hebron, Ohio facility (filed as exhibit 10(b) to
           the Company's Quarterly Report on Form 10-Q for the quarter
           ended December 31, 1997, and incorporated herein by
           reference)
10(c)      Lease for Newark, Ohio facility (filed as exhibit 10(c) to
           the Company's Quarterly Report on Form 10-Q for the quarter
           ended December 31, 1997, and incorporated herein by
           reference)
10(d)      First Lease Amendment for Chesterfield, Michigan facility
           (filed as exhibit 10(d) to the Company's Quarterly Report on
           Form 10-Q for the quarter ended December 31, 1997, and
           incorporated herein by reference)
10(e)      Aircraft Purchase Agreement (filed as exhibit 10(e) to the
           Company's Quarterly Report on Form 10-Q for the quarter
           ended December 31, 1997, and incorporated herein by
           reference)
10(f)      Aircraft Lease (filed as exhibit 10(f) to the Company's
           Quarterly Report on Form 10-Q for the quarter ended December
           31, 1997, and incorporated herein by reference)
</TABLE>

                                       45
<PAGE>   46
<TABLE>
<S>        <C>
10(g)      Form of Severance Agreement by and between MPW Industrial
           Services Group, Inc. and Executive Officers (filed as
           Exhibit 10(e) to the Company's Registration Statement and
           incorporated herein by reference)*
10(h)      Form of Indemnification Agreement by and between MPW
           Industrial Services Group, Inc. and Directors (filed as
           Exhibit 10(f) to the Company's Registration Statement and
           incorporated herein by reference)*
10(i)      Form of Indemnification Agreement by and between MPW
           Industrial Services Group, Inc. and persons who are a
           Director and an Officer (filed as Exhibit 10(g) to the
           Company's Registration Statement and incorporated herein by
           reference)*
10(j)      Form of Indemnification Agreement by and between MPW
           Industrial Services Group, Inc. and Executive Officers
           (filed as Exhibit 10(h) to the Company's Registration
           Statement and incorporated herein by reference)*
10(k)      Lease for Newark, Ohio additional facility (filed as Exhibit
           10(k) to the Company's Annual Report on Form 10-K for the
           year ended June 30, 1999, and incorporated herein by
           reference)
10(l)      Recapitalization Agreement, dated April 25, 2000, by and
           among the Company, Pentagon Technologies Group, Inc., MPW
           Management Services Corp., Pentagon Merger Sub, Inc., Baird
           Capital Partners III Limited Partnership, BCP III Special
           Affiliates Limited Partnerships and BCP III Affiliates Fund
           Limited Partnership (filed as Exhibit 2.1 to the Company's
           Current Report on Form 8-K filed on August 3, 2000, and
           incorporated herein by reference)
10(m)      Amendment No. 1 to Recapitalization Agreement, dated as of
           July 17, 2000, by and among the Company, Pentagon
           Technologies Group, Inc., MPW Management Services Corp.,
           Pentagon Merger Sub, Inc., Baird Capital Partners III
           Limited Partnership, BCP III Special Affiliates Limited
           Partnerships, BCP III Affiliates Fund Limited Partnership,
           PPM America Private Equity Fund, L.P., Old Hickory Fund I,
           LLC, and Antares Capital Corporation (filed as Exhibit 2.2
           to the Company's Current Report on Form 8-K filed on August
           3, 2000, and incorporated herein by reference)
21         Subsidiaries of the Company
23         Consent of Independent Auditors
24         Powers of Attorney
27         Financial Data Schedule
99(a)      Press Release dated April 25, 2000 (filed as Exhibit 99(a)
           to the Company's Quarterly Report on Form 10-Q for the
           quarter ended March 31, 2000, and incorporated herein by
           reference)
99(b)      Press Release dated April 25, 2000 (filed as Exhibit 99(b)
           to the Company's Quarterly Report on Form 10-Q for the
           quarter ended March 31, 2000, and incorporated herein by
           reference)
99(c)      Press Release dated July 19, 2000 (filed as Exhibit 99.1 to
           the Company's Current Report on Form 8-K filed on August 3,
           2000, and incorporated herein by reference)
99(d)      Press Release dated August 22, 2000
99(e)      Press Release dated September 27, 2000
</TABLE>

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

 * Indicates a management contract or compensatory plan or arrangement required
   to be filed pursuant to Item 14 of Form 10-K.

(b) There were no reports on Form 8-K filed during the three months ended June
    30, 2000.

(c) The response to this portion of Item 14 is included as Exhibits to this
    report.

                                       46
<PAGE>   47

                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on the 27th day of
September, 2000.

                                          MPW INDUSTRIAL SERVICES GROUP, INC.

                                          By:         /s/ IRA O. KANE
                                            ------------------------------------
                                                        Ira O. Kane
                                               President and Chief Operating
                                                           Officer

     Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf of
the Company and in the capacities indicated and on September 27, 2000.

<TABLE>
<CAPTION>
                 SIGNATURE                                         TITLE
                 ---------                                         -----
<C>                                             <S>
                     *                          Chairman of the Board of Directors and Chief
--------------------------------------------    Executive Officer (Principal Executive
               Monte R. Black                   Officer)
                     *                          President and Chief Operating Officer;
--------------------------------------------    Director
                Ira O. Kane
                     *                          Vice President, Chief Financial Officer and
--------------------------------------------    Treasurer (Principal Financial and
              Richard R. Kahle                  Accounting Officer)
                     *                          Director
--------------------------------------------
              Alfred Friedman
                     *                          Director
--------------------------------------------
              Pete A. Klisares
                     *                          Director
--------------------------------------------
          Gerald Nilsson-Weiskott
                     *                          Director
--------------------------------------------
              Timothy A. Walsh
                     *                          Director
--------------------------------------------
              J. Craig Wright
</TABLE>

     * The undersigned, pursuant to certain Powers of Attorney executed by each
       of the directors and officers noted above and previously filed or filed
       herewith contemporaneously with the Securities and Exchange Commission,
       by signing his name hereto, does hereby sign and execute this report on
       behalf of each of the persons noted above, in the capacities indicated.

                                          By:         /s/  IRA O. KANE
                                            ------------------------------------
                                                        Ira O. Kane
                                                      Attorney-in-Fact

Dated: September 27, 2000

                                       47
<PAGE>   48

                                 EXHIBIT INDEX

<TABLE>
<C>      <S>
 3(a)    Amended and Restated Articles of Incorporation of the
         Company effective November 4, 1999 (filed as Exhibit 3(a) to
         the Company's Quarterly Report on Form 10-Q for the quarter
         ended September 30, 1999, and incorporated herein by
         reference)
 3(b)    Amended and Restated Code of Regulations of the Company
         effective November 4, 1999 (filed as Exhibit 3(b) to the
         Company's Quarterly Report on Form 10-Q for the quarter
         ended September 30, 1999, and incorporated herein by
         reference)
 4(a)    Credit Agreement, dated as of October 20, 1999, among the
         Company and its subsidiaries, Bank One, NA, National City
         Bank, LaSalle Bank, National Association, SunTrust Bank,
         Central Florida, N.A., and Banc One Capital Markets, Inc.
         (filed as Exhibit 4 to the Company's Quarterly Report on
         Form 10-Q for the quarter ended September 30, 1999, and
         incorporated herein by reference)
 4(b)    First Amendment to Credit Agreement and Other Loan
         Documents, dated as of July 17, 2000, among the Company and
         its subsidiaries, Bank One, NA, National City Bank, LaSalle
         Bank, National Association, SunTrust Bank, Central Florida,
         N.A., and Banc One Capital Markets, Inc.
10(a)    Amended and Restated 1997 Stock Option Plan (filed as
         exhibit 10 to the Company's Quarterly Report on Form 10-Q
         for the quarter ended December 31, 1998, and incorporated
         herein by reference)*
10(b)    Lease for Hebron, Ohio facility (filed as exhibit 10(b) to
         the Company's Quarterly Report on Form 10-Q for the quarter
         ended December 31, 1997, and incorporated herein by
         reference)
10(c)    Lease for Newark, Ohio facility (filed as exhibit 10(c) to
         the Company's Quarterly Report on Form 10-Q for the quarter
         ended December 31, 1997, and incorporated herein by
         reference)
10(d)    First Lease Amendment for Chesterfield, Michigan facility
         (filed as exhibit 10(d) to the Company's Quarterly Report on
         Form 10-Q for the quarter ended December 31, 1997, and
         incorporated herein by reference)
10(e)    Aircraft Purchase Agreement (filed as exhibit 10(e) to the
         Company's Quarterly Report on Form 10-Q for the quarter
         ended December 31, 1997, and incorporated herein by
         reference)
10(f)    Aircraft Lease (filed as exhibit 10(f) to the Company's
         Quarterly Report on Form 10-Q for the quarter ended December
         31, 1997, and incorporated herein by reference)
10(g)    Form of Severance Agreement by and between MPW Industrial
         Services Group, Inc. and Executive Officers (filed as
         Exhibit 10(e) to the Company's Registration Statement and
         incorporated herein by reference)*
10(h)    Form of Indemnification Agreement by and between MPW
         Industrial Services Group, Inc. and Directors (filed as
         Exhibit 10(f) to the Company's Registration Statement and
         incorporated herein by reference)*
10(i)    Form of Indemnification Agreement by and between MPW
         Industrial Services Group, Inc. and persons who are a
         Director and an Officer (filed as Exhibit 10(g) to the
         Company's Registration Statement and incorporated herein by
         reference)*
10(j)    Form of Indemnification Agreement by and between MPW
         Industrial Services Group, Inc. and Executive Officers
         (filed as Exhibit 10(h) to the Company's Registration
         Statement and incorporated herein by reference)*
10(k)    Lease for Newark, Ohio additional facility (filed as Exhibit
         10(k) to the Company's Annual Report on Form 10-K for the
         year ended June 30, 1999, and incorporated herein by
         reference)
10(l)    Recapitalization Agreement, dated April 25, 2000, by and
         among the Company, Pentagon Technologies Group, Inc., MPW
         Management Services Corp., Pentagon Merger Sub, Inc., Baird
         Capital Partners III Limited Partnership, BCP III Special
         Affiliates Limited Partnerships and BCP III Affiliates Fund
         Limited Partnership (filed as Exhibit 2.1 to the Company's
         Current Report on Form 8-K filed on August 3, 2000, and
         incorporated herein by reference)
</TABLE>

                                       48
<PAGE>   49
<TABLE>
<C>      <S>
10(m)    Amendment No. 1 to Recapitalization Agreement, dated as of
         July 17, 2000, by and among the Company, Pentagon
         Technologies Group, Inc., MPW Management Services Corp.,
         Pentagon Merger Sub, Inc., Baird Capital Partners III
         Limited Partnership, BCP III Special Affiliates Limited
         Partnerships, BCP III Affiliates Fund Limited Partnership,
         PPM America Private Equity Fund, L.P., Old Hickory Fund I,
         LLC, and Antares Capital Corporation (filed as Exhibit 2.2
         to the Company's Current Report on Form 8-K filed on August
         3, 2000, and incorporated herein by reference)
   21    Subsidiaries of the Company
   23    Consent of Independent Auditors
   24    Powers of Attorney
   27    Financial Data Schedule
99(a)    Press Release dated April 25, 2000 (filed as Exhibit 99(a)
         to the Company's Quarterly Report on Form 10-Q for the
         quarter ended March 31, 2000, and incorporated herein by
         reference)
99(b)    Press Release dated April 25, 2000 (filed as Exhibit 99(b)
         to the Company's Quarterly Report on Form 10-Q for the
         quarter ended March 31, 2000, and incorporated herein by
         reference)
99(c)    Press Release dated July 19, 2000 (filed as Exhibit 99.1 to
         the Company's Current Report on Form 8-K filed on August 3,
         2000, and incorporated herein by reference)
99(d)    Press Release dated August 22, 2000
99(e)    Press Release dated September 27, 2000
</TABLE>

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

* Indicates a management contract or compensatory plan or arrangement required
  to be filed pursuant to Item 14 of Form 10-K.

                                       49