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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION  Form 10-Q  (Mark One)  x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended February 29, 2004 OR  oTRANSITION REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from
________ to _______. Commission file number 333-49957-01 EaglePicher Holdings, Inc. A Delaware Corporation
I.R.S. Employer Identification  No. 13-3989553
 3402 East University Drive, Phoenix, Arizona 85034 Registrants telephone number, including area code:602-794-9600 Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days.  Yes x No o Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2)  Yes o No x 1,000,000 shares of common capital stock, $0.01 par value each, were
outstanding at April 5, 2004 1




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TABLE OF ADDITIONAL REGISTRANTS STATE OR OTHERJURISDICTION OF
    
    I.R.S. EMPLOYERINCORPORATION OR
    
    IDENTIFICATIONNAME OF REGISTRANT
    
    ORGANIZATION
    
    NUMBEREaglePicher Incorporated
    
    Ohio
    
    31-0268670Carpenter Enterprises, Inc.
    
    Michigan
    
    38-2752092Daisy Parts, Inc.
    
    Michigan
    
    38-1406772Eagle-Picher Far East, Inc.
    
    Delaware
    
    31-1235685EaglePicher Filtration & Minerals, Inc.
    
    Nevada
    
    31-1188662EaglePicher Technologies, LLC
    
    Delaware
    
    31-1587660EaglePicher Automotive, Inc.
    
    Michigan
    
    38-0946293EaglePicher Pharmaceutical Services, LLC
    
    Delaware
    
    74-3071334
 2




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TABLE OF CONTENTS PageNumberPART I. FINANCIAL INFORMATIONItem 1. Financial Statements (unaudited)Condensed Consolidated Balance Sheets
    
    
    4Condensed Consolidated Statements of Income (Loss)
    
    
    5Condensed Consolidated Statements of Cash Flows
    
    
    6Notes to Condensed Consolidated Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    20Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    28Item 4. Controls and Procedures
    
    
    28PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    29Item 6. Exhibits and Reports on Form 8-K
    
    
    29Signatures
    
    
    30Exhibit Index
    
    
    39EX-10.1EX-10.2EX-31.1EX-31.2EX-32.1EX-32.2
  DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS Certain of the matters discussed in this report may constitute
forward-looking statements. Forward-looking statements can be identified by
the use of forward-looking words such as believes, expects, may, will,
should, seeks, approximately, intends, plans, estimates or
anticipates or the negative of these terms or other comparable words, or by
discussions of strategy, plans or intentions. Statements in this report which
are not historical facts are forward-looking statements. Without limiting the
generality of the preceding statement, all statements in this report concerning
or relating to estimated and projected earnings, margins, costs, expenditures,
cash flows, growth rates and financial results are forward-looking statements.
In addition, we, through our senior management, from time to time make
forward-looking public statements concerning our expected future operations and
performance and other developments. Such forward-looking statements are
necessarily estimates reflecting our judgment based upon current information
and involve a number of risks and uncertainties. Other factors may affect the
accuracy of these forward-looking statements and our actual results may differ
materially from the results anticipated in these forward-looking statements. 3




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PART I. FINANCIAL INFORMATION 
 Item 1. Financial Statements. EaglePicher Holdings, Inc. 
 CONDENSED CONSOLIDATED BALANCE SHEETS
November 30, 2003 and February 29, 2004
(unaudited) (in thousands of dollars)
 2003
    
    2004ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    67,320
    
    
    $
    30,050Receivables, net
    
    
    25,943
    
    
    
    28,090Retained interest in EaglePicher Funding Corporation, net
    
    
    63,335
    
    
    
    60,914Costs and estimated earnings in excess of billings
    
    
    28,433
    
    
    
    37,190Inventories
    
    
    53,205
    
    
    
    57,380Assets of discontinued operations
    
    
    4,441
    
    
    
    4,487Prepaid expenses and other assets
    
    
    10,394
    
    
    
    11,531Deferred income taxes
    
    
    8,526
    
    
    
    8,526261,597
    
    
    
    238,168Property, Plant and Equipment, net
    
    
    151,894
    
    
    
    152,127Goodwill
    
    
    159,640
    
    
    
    167,140Prepaid Pension
    
    
    56,891
    
    
    
    56,931Other Assets, net
    
    
    33,516
    
    
    
    30,193$
    663,538
    
    
    $
    644,559LIABILITIES AND SHAREHOLDERS EQUITY (DEFICIT)Current Liabilities:Accounts payable
    
    $
    89,274
    
    
    $
    79,255Current portion of long-term debt
    
    
    13,300
    
    
    
    3,300Compensation and employee benefits
    
    
    15,783
    
    
    
    13,848Billings in excess of costs and estimated earnings
    
    
    2,098
    
    
    
    988Accrued divestiture reserve
    
    
    9,297
    
    
    
    9,401Liabilities of discontinued operations
    
    
    956
    
    
    
    780Other accrued liabilities
    
    
    32,984
    
    
    
    37,275163,692
    
    
    
    144,847Long-term Debt, net of current portion
    
    
    408,570
    
    
    
    407,835Postretirement Benefits Other Than Pensions
    
    
    17,418
    
    
    
    17,354Other Long-Term Liabilities
    
    
    9,649
    
    
    
    9,57411.75% Cumulative Redeemable Exchangeable Preferred Stock
    
    
    154,416
    
    
    
    158,585753,745
    
    
    
    738,195Commitments and ContingenciesShareholders Equity (Deficit):Common stock
    
    
    10
    
    
    
    10Additional paid-in capital
    
    
    92,810
    
    
    
    92,810Accumulated deficit
    
    
    (184,543
    )
    
    
    (190,343
    )Accumulated other comprehensive income
    
    
    1,516
    
    
    
    3,887(90,207
    )
    
    
    (93,636
    )$
    663,538
    
    
    $
    644,559
 The accompanying notes are an integral part of these consolidated balance sheets. 4




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EaglePicher Holdings, Inc. 
 CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
Three Months Ended February 28, 2003 and February 29, 2004
(unaudited) (in thousands of dollars, except share and per share amounts) 2003
    
    2004Net Sales
    
    $
    164,039
    
    
    $
    166,782Operating Costs and Expenses:Cost of products sold (exclusive of depreciation)
    
    
    127,756
    
    
    
    128,996Selling and administrative
    
    
    14,128
    
    
    
    16,869Depreciation and amortization of intangibles
    
    
    11,114
    
    
    
    9,965Loss from divestitures
    
    
    
    
    
    
    2,600152,998
    
    
    
    158,430Operating Income
    
    
    11,041
    
    
    
    8,352Interest expense
    
    
    (8,373
    )
    
    
    (9,255
    )Preferred stock dividends accrued (see Note F)
    
    
    
    
    
    
    (4,169
    )Other income (expense), net
    
    
    324
    
    
    
    (293
    )Income (Loss) for Continuing Operations Before Taxes
    
    
    2,992
    
    
    
    (5,365
    )Income tax provision
    
    
    896
    
    
    
    373Income (Loss) From Continuing Operations
    
    
    2,096
    
    
    
    (5,738
    )Discontinued Operations:Loss from operations of discontinued businesses
    
    
    (928
    )
    
    
    Loss on disposal of discontinued business
    
    
    
    
    
    
    (62
    )Net Income (Loss)
    
    
    1,168
    
    
    
    (5,800
    )Preferred Stock Dividends Accreted (See Note F)
    
    
    (3,937
    )
    
    
    Loss Applicable to Common Shareholders
    
    $
    (2,769
    )
    
    $
    (5,800
    )Basic and Diluted Net Loss per Share Applicable to Common Shareholders:Loss from continuing operations
    
    $
    (1.98
    )
    
    $
    (5.74
    )Loss from discontinued operations
    
    
    (1.00
    )
    
    
    (0.06
    )Net Loss
    
    $
    (2.98
    )
    
    $
    (5.80
    )Weighted Average Number of Common Shares
    
    
    930,500
    
    
    
    1,000,000
 The accompanying notes are an integral part of these consolidated financial statements. 5




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EaglePicher Holdings, Inc. 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three-Months Ended February 28, 2003 and February 29, 2004
(unaudited) (in thousands of dollars) 2003
    
    2004Cash Flows From Operating Activities:Net income (loss)
    
    $
    1,168
    
    
    $
    (5,800
    )Adjustments to reconcile net income (loss) to net cash
used in operating activities:Depreciation and amortization
    
    
    11,897
    
    
    
    10,458Preferred stock dividends accrued
    
    
    
    
    
    
    4,169Loss on disposal of discontinued operations
    
    
    
    
    
    
    62Loss from divestitures
    
    
    
    
    
    
    2,600Changes in assets and liabilities:Sale of receivables, net (See Note E)
    
    
    (2,700
    )
    
    
    10,245Receivables and retained interest in
EaglePicher Funding Corporation, net
    
    
    1,653
    
    
    
    (8,868
    )Costs and estimated earnings in
excess of billings and billings
in excess of costs and estimated
earnings, net
    
    
    (3,096
    )
    
    
    (9,867
    )Inventories
    
    
    (3
    )
    
    
    (4,034
    )Accounts payable
    
    
    (9,915
    )
    
    
    (10,545
    )Accrued liabilities
    
    
    (4,769
    )
    
    
    (405
    )Other, net
    
    
    (2,763
    )
    
    
    (2,079
    )Net cash used in Operating activities
    
    
    (8,528
    )
    
    
    (14,064
    )Cash Flows From Investing Activities:Proceeds from the sale of property and equipment, and other, net
    
    
    329
    
    
    
    105Capital expenditures
    
    
    (3,720
    )
    
    
    (9,393
    )Acquisition of majority interest in EaglePicher Horizon Batteries LLC
(See Note B)
    
    
    
    
    
    
    (3,500
    )Net cash used in investing activities
    
    
    (3,391
    )
    
    
    (12,788
    )Cash Flows From Financing Activities:Reduction of long-term debt
    
    
    (4,232
    )
    
    
    (10,769
    )Net borrowings under revolving credit agreements
    
    
    14,500
    
    
    
    Net cash (used in) provided by financing activities
    
    
    10,268
    
    
    
    (10,769
    )Net cash provided by (used in) discontinued operations
    
    
    760
    
    
    
    (284
    )Effect of Exchange Rates on Cash
    
    
    1,659
    
    
    
    635Net Increase (Decrease) in Cash and Cash Equivalents
    
    
    768
    
    
    
    (37,270
    )Cash and Cash Equivalents, beginning of period
    
    
    31,522
    
    
    
    67,320Cash and Cash Equivalents, end of period
    
    $
    32,290
    
    
    $
    30,050Supplemental Cash Flow Information:Interest paid
    
    $
    3,068
    
    
    $
    2,940Income taxes paid (refunded), net
    
    $
    
    
    
    $
    476
 The accompanying notes are an integral part of these consolidated financial statements. 6




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EaglePicher Holdings, Inc. 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)  A.
    
    BASIS OF REPORTING FOR INTERIM FINANCIAL STATEMENTS Our accompanying unaudited condensed consolidated financial statements
have been prepared pursuant to the rules and regulations of the Securities and
Exchange Commission (SEC). Certain information and footnote disclosures
normally included in financial statements prepared in accordance with
accounting principles generally accepted in the United States of America have
been omitted pursuant to such rules and regulations, although we believe that
the disclosures are adequate to make the information presented not misleading.
These financial statements should be read in conjunction with our financial
statements and notes thereto for the fiscal year ended November 30, 2003
presented in our Form 10-K, filed with the SEC on February 17, 2004. The financial statements presented herein reflect all adjustments
(consisting of normal and recurring adjustments), which, in our opinion are
necessary to fairly state the results of operations for the three month periods
ended February 28, 2003 and February 29, 2004. Results of operations for
interim periods are not necessarily indicative of results to be expected for an
entire year. Inventories Inventories consisted of the following at November 30, 2003 and February
29, 2004 (in thousands of dollars): 2003
    
    2004Raw materials and supplies
    
    $
    24,441
    
    
    $
    26,487Work-in-process
    
    
    13,784
    
    
    
    15,959Finished goods
    
    
    14,980
    
    
    
    14,934$
    53,205
    
    
    $
    57,380
 Comprehensive Income (Loss) During the three months ended February 28, 2003 and February 29, 2004 our
comprehensive income (loss) was as follows (in thousands of dollars): 2003
    
    2004Net income (loss)
    
    $
    1,168
    
    
    $
    (5,800
    )Gain on interest rate swap agreements
    
    
    545
    
    
    
    1,031Gain (loss) on forward foreign currency contracts
    
    
    (647
    )
    
    
    705Change in currency translation adjustment
    
    
    1,659
    
    
    
    635$
    2,725
    
    
    $
    (3,429
    )
 Revenue Recognition For certain products sold under fixed-price contracts and subcontracts
with various United States Government agencies and aerospace and defense
contractors, we utilize the percentage-of-completion method of accounting.
When we use the percentage-of-completion method, we measure our percent
complete based on total costs incurred to date as compared to our best estimate
of total costs to be incurred. The following provides information on contracts in progress at November
30, 2003 and February 29, 2004 (in thousands of dollars): 7




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2003
    
    2004Costs incurred on uncompleted contracts
    
    $
    167,091
    
    
    $
    154,712Estimated earnings
    
    
    45,606
    
    
    
    47,907212,697
    
    
    
    202,619Less: billings to date
    
    
    (186,362
    )
    
    
    (166,417
    )$
    26,335
    
    
    $
    36,202Costs and estimated earnings in excess of billings
    
    $
    28,433
    
    
    $
    37,190Billings in excess of costs and estimated earnings
    
    
    (2,098
    )
    
    
    (988
    )$
    26,335
    
    
    $
    36,202
  B.
    
    GOODWILL EaglePicher Horizon Batteries LLC was a 50% owned venture that we did not
control as of November 30, 2003. Effective December 1, 2003, this venture was
amended and we acquired an incremental 12% interest from our venture partner
for $7.5 million. We paid, for cash flow purposes, the $7.5 million in two
installment payments of $4.0 million in November 2003 and $3.5 million in
December 2003. We also obtained rights to appoint the General Manager and
control over three of the five members of the board. We now own 62% of this
venture and control the operating board, and accordingly consolidated this
entity in our financial results beginning with our quarter ended February 29,
2004. EaglePicher Horizon Batteries LLC manufactures and distributes next
generation lead-acid woven battery technology.We recognized $7.5 million of
additional goodwill related to taking control and consolidating the entity in
our financial statements.  C.
    
    RECENTLY RELEASED OR ADOPTED ACCOUNTING STANDARDS In January 2003, the Financial Accounting Standards Board (FASB) issued
Interpretation (FIN) No. 46, Consolidation of Variable Interest Entities 
An Interpretation of Accounting Research Bulletin (ARB) No. 51. This
interpretation was subsequently revised by FIN 46 (Revised 2003) in December
2003. This revised interpretation states that consolidation of variable
interest entities will be required by the primary beneficiary if the entities
do not effectively disperse risks among the parties involved. The requirements
are effective for fiscal years ending after December 15, 2003 for
special-purpose entities and for all other types of entities for periods ending
after March 31, 2004. We do not believe that FIN No. 46(R) will have a material
impact on our financial condition or results of operations. In March 2004, the Emerging Issues Task Force (EITF) reached a consensus
on EITF No. 03-16, Accounting for Investments in Limited Liability Companies.
This consensus would require that we account for our investment in a start-up
manufacturing company, as described in Note S of our Form 10-K for the year
ended November 30, 2003, filed on February 17, 2004, as an equity method
investment. As of February 29, 2004, we have $1.2 million recorded in our
balance sheet related to this investment. The consensus, if ratified by the
FASB, would be effective for us on September 1, 2004 and would require that we
record a cumulative effect of a change in accounting principle in our fourth
quarter of 2004. The EITF is currently considering Issue No. 03-R, The Accounting for
Certain Costs in the Mining Industry, Including Deferred Stripping Costs. The
issue is attempting to address numerous implementation and consistency issues
for the mining industry, including the appropriate accounting for deferred
stripping costs. Any conclusions by the EITF on this issue could result in a
change to our accounting policy on Deferred Stripping and as a result could
have a material impact on our financial condition or results of operations. In December 2003, the FASB issued Statement of Financial Accounting
Standards (SFAS) No. 132 (Revised 2003), Employers Disclosures about
Pensions and Other Postretirement Benefits. This standard increases the
existing disclosure requirements by requiring more details about pension plan
assets, benefit obligations, cash flows, benefit costs and related information.
We will be required to segregate plan assets by category, such as debt, equity
and real estate, and to provide certain expected rates of return and other
informational disclosures. We will be required to adopt the disclosure
requirements of SFAS No. 132(R) when we issue our November 30, 2004 financial
statements, and we will be required to disclose various elements of pension and
postretirement benefit costs in interim-period financial statements for
quarters beginning after December 15, 2003 (our second quarter of fiscal 2004
ending May 31, 2004). 8




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D.
    
    DIVESTITURES AND DISCONTINUED OPERATIONS Divestitures We have indemnified buyers of our former divisions and subsidiaries for
certain liabilities related to items such as environmental remediation and
warranty issues on divisions sold in previous years. We had previously
recorded liabilities for these exposures; however, from time to time, as
additional information becomes available, additional amounts need to be
recorded. An analysis of the liabilities related to divestitures is as follows (in
thousands of dollars): Balance at November 30, 2003
    
    $
    9,297Cash paid
    
    
    (2,496
    )Additional charges.
    
    
    2,600Balance at February 29, 2004
    
    $
    9,401
 In the first quarter of 2004, we recorded $2.6 million of expense related
to a litigation settlement of a warranty claim related to a division sold
effective December 1999. Discontinued Operations During the second quarter of 2003, we reached an agreement in principle
for the sale of certain assets at our Hillsdale U.K. Automotive operation (a
former component of our Automotive Segment) for cash of $1.1 million. The sale
closed on June 11, 2003. In addition, we wound down the remaining operations
of our Hillsdale U.K. Automotive operation during 2003. Accordingly, effective
in the second quarter of 2003, upon receipt of authority from our Board of
Directors, we discontinued the operations of our Hillsdale U.K. Automotive
operation and restated all prior period financial statements. We have included
in Loss from Operations of Discontinued Businesses in our Statements of Income
(Loss) a loss of $0.3 million in the first quarter of 2003, which is net of a
zero tax provision (benefit). We expect to incur an additional $0.3 million of
shutdown costs during 2004, which have not been incurred as of February 29,
2004. In July 2003, we completed the sale of certain assets of our
Germanium-based business in our Technologies Segment for net cash proceeds of
approximately $14.0 million. These assets relate to the production of
Germanium-based products primarily used in the infrared optics and fiber optics
applications and do not include any of our assets that are involved in the
production of Germanium substrates and wafers. We agreed that if the buyer is
required to divest the acquired business due to certain regulatory proceedings
commenced within one year of the sale, then we would reimburse the buyer for
50% of the amount by which the sale price is less than $15.0 million up to a
maximum reimbursement of $4.0 million, and we would receive 50% of any excess
of the sale price over the $15.0 million up to a maximum of $4.0 million. We
believe that the expected present value of being required to make a payment
pursuant to these provisions is immaterial, and therefore, we have not recorded
a liability. During the third quarter of 2003, we discontinued the operations
of our Germanium-based business and restated all prior period financial
statements. We have included in Loss from Operations of Discontinued
Businesses in our Statements of Income (Loss) a loss of $0.7 million in the
first quarter of 2003, which is net of a zero tax provision (benefit). In
addition, during the first quarter of 2004, we recorded in Loss on Disposal of
Discontinued Businesses a loss of $0.1 million, which is net of zero tax
provision (benefit), related to incremental sale costs. We do not allocate any general corporate overhead to Loss from Operations
of Discontinued Businesses or Loss on Disposal of Discontinued Businesses.
However, in accordance with the provisions of EITF No. 87-24, Allocation of
Interest to Discontinued Operations we do allocate to Loss from Operations of
Discontinued Businesses (i) interest on debt that is to be assumed by buyers,
(ii) interest on debt that is required to be repaid as a result of the
divestiture, and (iii) a portion of our remaining consolidated interest expense
that is not directly attributable to or related to our other operations. Other
consolidated interest expense that is not attributed to our other operations is
allocated based on the ratio of net assets to be sold or discontinued less debt
that is required to be paid as a result of the disposal transaction to the sum
of our total consolidated net assets plus our consolidated debt other than (a)
debt of the discontinued operation that will be assumed by the buyer, (b) debt
that is required to be paid as a result of the disposal transaction, and (c)
debt that can be directly attributed to our other operations. Interest expense
included in Loss from Operations of Discontinued Businesses for the three
months ended February 28, 2003 was $1.0 million. We do not allocate any
interest expense to the Loss on Disposal of Discontinued Businesses. 9




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At February 29, 2004, the remaining balance in Assets of Discontinued
Operations was primarily an insurance receivable related to an entity that was
supposed to provide a source of Germanium for the sale of certain assets within
our Germanium-based business. The balance in Liabilities of Discontinued
Operations was primarily accounts payable and accrued liabilities related to
our Hillsdale U.K. Automotive operation.  E.
    
    ACCOUNTS RECEIVABLE ASSET-BACKED SECURITIZATION (QUALIFYING SPECIAL
PURPOSE ENTITY) We have an agreement with a major United States financial institution to
sell an interest in certain receivables through an unconsolidated qualifying
special purpose entity, EaglePicher Funding Corporation (EPFC). The size of
this facility is $55.0 million, subject to certain financial covenant
limitations. This agreement provides for the sale of certain receivables to
EPFC, which in turn sells an interest in a revolving pool of receivables to the
financial institution. EPFC has no recourse against us for failure of the
debtors to pay when due. In the third quarter of 2003, we amended this
agreement to extend the receivables program until the earlier of (a) 90 days
prior to the maturity of our Credit Agreement or (b) January 2008. We account for the securitization of these sold receivables in accordance
with SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets
and Extinguishment of Liabilitiesa Replacement of FASB Statement No. 125.
Under this guidance, at the time the receivables are sold, the balances are
removed from our financial statements. For purposes of calculating our debt
covenant compliance under our Credit Agreement, we include the outstanding
obligations of EPFC. We continue to service sold receivables and receive a monthly servicing
fee from EPFC of approximately 1% per annum of the receivable pools average
balance. As this servicing fee approximates our cost to service, no servicing
asset or liability has been recorded at November 30, 2003 or February 29, 2004.
The carrying value of our retained interest is recorded at fair value, which
is estimated as its net realizable value due to the short duration of the
receivables transferred to EPFC. The net realizable value considers the
collection period and includes an estimated provision for credit losses and
returns and allowances, which is based on our historical results and probable
future losses. As of November 30, 2003, our retained interest in EPFC was $63.3 million
and the revolving pool of receivables that we serviced totaled $64.9 million.
At November 30, 2003, the outstanding balance of the interest sold to the
financial institution recorded on EPFCs financial statements was zero. During
the three months ended February 28, 2003, we sold $138.6 million of accounts
receivable to EPFC, and during the same period, EPFC collected $130.9 million
of cash that was reinvested in new securitizations. The effective interest
rate as of November 30, 2003 in the securitization was approximately 2.95%. As of February 29, 2004, our retained interest in EPFC was $60.9 million
and the revolving pool of receivables that we serviced totaled $72.6 million.
At February 29, 2004, the outstanding balance of the interest sold to the
financial institution recorded on EPFCs financial statements was $10.2
million. During the three months ended February 29, 2004, we sold $129.4
million of accounts receivable to EPFC, and during the same period, EPFC
collected $115.6 million of cash that was reinvested in new securitizations.
The effective interest rate as of February 29, 2004 in the securitization was
approximately 4.36%.  F.
    
    11.75% CUMULATIVE REDEEMABLE EXCHANGEABLE PREFERRED STOCK Effective September 1, 2003, we adopted SFAS No. 150, Accounting for
Certain Financial Instruments with Characteristics of both Liabilities and
Equity which requires that certain instruments be classified as liabilities in
our balance sheet. The effect of the adoption was that, as of September 1,
2003, we reclassified the current redemption value plus unpaid dividends of our
preferred stock to long-term liabilities and the accrual of the dividends
subsequent to September 1, 2003 has been recorded as a component of
non-operating expenses in our consolidated statements of income. In accordance
with this statement, the prior period financial statements have not been
reclassified.  G.
    
    LEGAL MATTERS On May 8, 1997, Caradon Doors and Windows, Inc. (Caradon) filed a suit
against us in the United States District Court for the Northern District of
Georgia alleging breach of contract, negligent misrepresentation, and
contributory infringement and seeking contribution and indemnification in the
amount of approximately $20.0 million. 10




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##### Table of Contents



This suit arose out of patent infringement litigation between Caradon and
Therma-Tru Corporation extending over the 1989-1996 time period, the result of
which was for Caradon to be held liable for patent infringement. In June 1997,
we filed a motion with the United States Bankruptcy Court for the Southern
District of Ohio, Western Division, seeking an order that Caradons claims had
been discharged by our bankruptcy and enjoining Caradon from pursuing its
lawsuit. On December 24, 1997, the Bankruptcy Court held that Caradons claims
had been discharged and enjoined Caradon from pursuing its lawsuit. Caradon
appealed the Bankruptcy Courts decision to the United States District Court
for the Southern District of Ohio, and on February 3, 1999, the District Court
reversed on the grounds that the Bankruptcy Court had not done the proper
factual analysis and remanded the matter back to the Bankruptcy Court. The
Bankruptcy Court held a hearing on this matter on September 24 and 25, 2001,
and on May 9, 2002 again held that Caradons claims had been discharged and
enjoined Caradon from pursuing the Caradon Suit. Caradon has again appealed
this decision to the District Court. We intend to contest this suit vigorously
and do not believe that the resolution of this suit will have a material
adverse effect on our financial condition, results of operations or cash flows. In March 2002, a purported class action on behalf of approximately 3,000
homeowners was filed in state court in Colorado against us and a company with a
facility adjacent to our facility in Colorado Springs, Colorado seeking
property damages, testing and remediation costs and punitive damages arising
out of chlorinated solvents and nitrates in the groundwater alleged to arise
out of activities at our facility and the adjacent facility. The case has been
removed to federal court and there has been no decision whether to certify a
class. In September 2002, as amended in May 2003, a trust purportedly the
assignee of approximately 200 property owners filed suit against us and the
same co-defendant in Colorado state court, which was subsequently removed to
Federal District Court in Colorado. This lawsuit seeks unspecified damages to
provide for remediation of the groundwater contamination as well as unspecified
punitive damages. The owner of the adjacent facility, which is upgradient from
our facility, is operating a remediation system aimed at chlorinated solvents
in the groundwater originating from its facility under a compliance order on
consent with the Colorado Department of Public Health and Environment
(CDPHE). We are operating a remediation system for nitrates in the
groundwater originating from our facility, also under a compliance order on
consent with CDPHE. We do not believe that nitrates in groundwater materially
affect any of the properties related to the plaintiffs in these lawsuits.
Neither the United States Environmental Protection Agency nor the CDPHE has
ever required us to undertake a cleanup for chlorinated solvents. In November
2003, we settled the purported class action lawsuit for $0.3 million,
conditioned on the courts certification of the purported class. In November
2003, we also settled the lawsuit brought by the trust, and claims of certain
other individuals, for $0.3 million, conditioned on at least 90% of the 440
individuals covered by the settlement executing releases. In the first quarter
of 2004, more than 90% of the individuals signed releases and this portion of
the settlement was finalized. Certification of the class action is still
pending. On December 10, 2003, a purported class action on behalf of approximately
600 members of the Quapaw Tribe of Oklahoma owning or possessing lands within
the Quapaw Reservation was filed in the United States District Court for the
Northern District of Oklahoma against us and six other corporations. The
lawsuit alleges liability for property damage resulting from historical mining
activities prior to 1959. We believe that any possible liability to members of
the Quapaw Tribe was discharged in connection with our bankruptcy
reorganization in 1996. We intend to contest this lawsuit vigorously and do
not believe that the resolution of this suit will have a material adverse
effect on our financial condition, results of operations, or cash flows. In addition, we are involved in routine litigation, environmental
proceedings and claims pending with respect to matters arising out of the
normal course of our business. In our opinion, the ultimate liability resulting
from all claims, individually or in the aggregate, will not materially affect
our financial position, results of operations or cash flows.  H.
    
    BUSINESS SEGMENT INFORMATION During the first quarter of 2004, we elected to modify our reportable
business segment information and move from reporting three business segments
(Automotive, Technologies and Filtration and Minerals) to reporting six
business segments (Hillsdale, Wolverine, Power Group, Specialty Materials
Group, Pharmaceutical Services, and Filtration and Minerals), which is
consistent with how our chief operating decision maker reviews the performance
of the businesses. We have restated our prior period segment information to
conform to the new presentation. The Hillsdale Segment produces noise, vibration and harshness (NVH)
dampers for engine crankshafts and drivelines, yokes and flanges, transmission
and engine pumps, automatic transmission filtration products, chassis corners
and knuckle assemblies and other precision machined components. 11




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##### Table of Contents



The Wolverine Segment produces rubber-coated materials and gaskets for
automotive and non-automotive applications. Our Power Group Segment develops and commercializes advanced power systems
for defense, aerospace and commercial applications. Our Specialty Materials Group Segment produces boron isotopes for nuclear
radiation containment and supplies ultra-clean scientific containers for
pharmaceutical and environmental testing. Our Pharmaceutical Services Segment provides contract pharmaceutical
services. Our Filtration and Minerals Segment mines, processes and markets
diatomaceous earth and perlite for use as a filtration aid, absorbent,
performance additive and soil amendment. Sales between segments were not material. The following data represents financial information about our reportable
business segments for the three-months ended February 28, 2003 and February 29,
2004 (in thousands of dollars). 2003
    
    2004Net SalesHillsdale
    
    $
    79,873
    
    
    $
    74,048Wolverine
    
    
    20,718
    
    
    
    24,107Automotive Business Unit
    
    
    100,591
    
    
    
    98,155Power Group
    
    
    32,283
    
    
    
    39,836Specialty Materials Group
    
    
    10,357
    
    
    
    7,175Pharmaceutical Services
    
    
    1,902
    
    
    
    2,881Technologies Business Unit
    
    
    44,542
    
    
    
    49,892Filtration and Minerals Business Unit
    
    
    18,906
    
    
    
    18,735$
    164,039
    
    
    $
    166,782Operating Income (Loss)Hillsdale
    
    $
    2,078
    
    
    $
    739Wolverine
    
    
    3,389
    
    
    
    3,615Automotive Business Unit
    
    
    5,467
    
    
    
    4,354Power Group
    
    
    5,305
    
    
    
    5,621Specialty Materials Group
    
    
    3,010
    
    
    
    2,136Pharmaceutical Services
    
    
    (344
    )
    
    
    285Technologies Business Unit
    
    
    7,971
    
    
    
    8,042Filtration and Minerals Business Unit
    
    
    (111
    )
    
    
    582Corporate/ Intersegment
    
    
    (2,286
    )
    
    
    (4,626
    )$
    11,041
    
    
    $
    8,352Depreciation and Amortization of IntangiblesHillsdale
    
    $
    7,336
    
    
    $
    5,809Wolverine
    
    
    1,349
    
    
    
    1,110Automotive Business Unit
    
    
    8,685
    
    
    
    6,919Power Group
    
    
    813
    
    
    
    873Specialty Materials Group
    
    
    347
    
    
    
    270Pharmaceutical Services
    
    
    224
    
    
    
    241Technologies Business Unit
    
    
    1,384
    
    
    
    1,384Filtration and Minerals Business Unit
    
    
    1,258
    
    
    
    1,176Corporate/ Intersegment
    
    
    (213
    )
    
    
    486$
    11,114
    
    
    $
    9,965
 12




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##### Table of Contents



I.
    
    SUBSEQUENT EVENTS Subsequent to February 29, 2004, we entered into an amendment with the
lenders of our Credit Agreement. We reduced the interest rate spread on the
Term Loan by 50 basis points. The new interest rate, effective April 1, 2004,
is at our option, a rate equal to (i) LIBOR plus 300 basis points or (ii)
Alternate Base Rate (as defined) plus 200 basis points. In addition, as part
of entering into this amendment we were provided certain adjustments to our
financial covenant limitations. We paid the lenders of the Credit Agreement an
amendment fee of 1/8%, or $342,000. In April 2004, we sold our Environmental Sciences & Technology division
within our Technologies Business Units Specialty Materials Group Segment for
cash of approximately $23.0 million. We will account for this sale as a
Discontinued Operation when we file our second quarter of 2004 Form 10-Q.
During the year ended November 30, 2003, our Environmental Sciences &
Technology division had approximately $12.0 million in revenues, and as of
November 30, 2003, had approximately $14.0 million in total assets, which were
comprised of primarily inventory, accounts receivable, property, plant and
equipment, and goodwill. During the three months ended February 29, 2004, the
Environmental Sciences & Technology division had approximately $3.0 million in
revenues.  J.
    
    SUBSIDIARY GUARANTORS AND NON-GUARANTORS Our Senior Unsecured Notes and Senior Subordinated Notes were issued by
our wholly owned subsidiary, EaglePicher Incorporated (EPI), and are
guaranteed on a full, unconditional, and joint and several basis by us and
certain of our wholly-owned United States subsidiaries (Subsidiary
Guarantors). We have determined that full financial statements and other
disclosures concerning EPI or the Subsidiary Guarantors would not be material
to investors, and such financial statements are not presented. EPI is subject
to restrictions on the payment of dividends under the terms of both the Credit
Agreement and the Senior Unsecured Notes. The following supplemental condensed
combining financial statements present information regarding EPI, as the
Issuer, the Subsidiary Guarantors and Non-Guarantor Subsidiaries. We only
accrue interest income and expense on intercompany loans once a year in our
fourth fiscal quarter. As part of executing the supplemental indenture to the Senior Subordinated
Notes, as described above, we removed all reporting obligations to those note
holders. Accordingly, effective with the issuance of our August 31, 2003
financial statements, we have only included supplemental guarantor and
non-guarantor financial statements for Subsidiary Guarantors of the Senior
Unsecured Notes. Therefore, the enclosed supplemental condensed combining
financial statements may not be comparable from one period to the next. There
are only minor differences between the presentation of these two sets of
guarantor and non-guarantor financial statements. 13




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##### Table of Contents



EAGLEPICHER HOLDINGS, INC.
SUPPLEMENTAL CONDENSED COMBINING BALANCE SHEETS
AS OF NOVEMBER 30, 2003
(in thousands of dollars) GuarantorsEaglePicher
    
    Subsidiary
    
    Non-GuarantorsIssuer
    
    Holdings, Inc.
    
    Guarantors
    
    Subsidiaries
    
    Eliminations
    
    TotalASSETSCurrent Assets:Cash and cash equivalents
    
    $
    52,478
    
    
    $
    1
    
    
    $
    (2,732
    )
    
    $
    17,573
    
    
    $
    
    
    
    $
    67,320Receivables and retained interest, net
    
    
    62,937
    
    
    
    
    
    
    
    4,668
    
    
    
    21,673
    
    
    
    
    
    
    
    89,278Costs and estimated earnings in excess of billings
    
    
    
    
    
    
    
    
    
    
    17,386
    
    
    
    11,047
    
    
    
    
    
    
    
    28,433Intercompany accounts receivable
    
    
    1,764
    
    
    
    
    
    
    
    7,476
    
    
    
    1,852
    
    
    
    (11,092
    )
    
    
    Inventories
    
    
    5,762
    
    
    
    
    
    
    
    37,949
    
    
    
    11,595
    
    
    
    (2,101
    )
    
    
    53,205Assets of discontinued operations
    
    
    
    
    
    
    
    
    
    
    4,093
    
    
    
    348
    
    
    
    
    
    
    
    4,441Prepaid expenses and other assets
    
    
    2,218
    
    
    
    
    
    
    
    4,301
    
    
    
    3,875
    
    
    
    
    
    
    
    10,394Deferred income taxes
    
    
    8,526
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,526133,685
    
    
    
    1
    
    
    
    73,141
    
    
    
    67,963
    
    
    
    (13,193
    )
    
    
    261,597Property, Plant and Equipment, net
    
    
    24,823
    
    
    
    
    
    
    
    103,234
    
    
    
    23,837
    
    
    
    
    
    
    
    151,894Investment in Subsidiaries
    
    
    288,465
    
    
    
    68,121
    
    
    
    30,455
    
    
    
    
    
    
    
    (387,041
    )
    
    
    Goodwill
    
    
    37,339
    
    
    
    
    
    
    
    112,286
    
    
    
    13,154
    
    
    
    (3,139
    )
    
    
    159,640Prepaid Pension
    
    
    56,891
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    56,891Other Assets, net
    
    
    11,366
    
    
    
    2,472
    
    
    
    23,809
    
    
    
    24,190
    
    
    
    (28,321
    )
    
    
    33,516$
    552,569
    
    
    $
    70,594
    
    
    $
    342,925
    
    
    $
    129,144
    
    
    $
    (431,694
    )
    
    $
    663,538LIABILITIES AND SHAREHOLDERS EQUITY (DEFICIT)Current Liabilities:Accounts payable
    
    $
    22,125
    
    
    $
    
    
    
    $
    56,412
    
    
    $
    10,737
    
    
    $
    
    
    
    $
    89,274Intercompany accounts payable
    
    
    
    
    
    
    
    
    
    
    1,840
    
    
    
    9,252
    
    
    
    (11,092
    )
    
    
    Current portion of long-term debt
    
    
    13,300
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,300Liabilities of discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    956
    
    
    
    
    
    
    
    956Other accrued liabilities
    
    
    29,347
    
    
    
    
    
    
    
    22,470
    
    
    
    8,345
    
    
    
    
    
    
    
    60,16264,772
    
    
    
    
    
    
    
    80,722
    
    
    
    29,290
    
    
    
    (11,092
    )
    
    
    163,692Long-term Debt, net of current portion
    
    
    423,295
    
    
    
    
    
    
    
    720
    
    
    
    15,318
    
    
    
    (30,763
    )
    
    
    408,570Postretirement Benefits Other Than Pensions
    
    
    17,418
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,418Other Long-term Liabilities
    
    
    7,651
    
    
    
    
    
    
    
    
    
    
    
    1,998
    
    
    
    
    
    
    
    9,649Preferred Stock
    
    
    
    
    
    
    154,416
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    154,416513,136
    
    
    
    154,416
    
    
    
    81,442
    
    
    
    46,606
    
    
    
    (41,855
    )
    
    
    753,745Intercompany Accounts
    
    
    (216,625
    )
    
    
    10,790
    
    
    
    181,907
    
    
    
    29,234
    
    
    
    (5,306
    )
    
    
    Shareholders Equity (Deficit)
    
    
    256,058
    
    
    
    (94,612
    )
    
    
    79,576
    
    
    
    53,304
    
    
    
    (384,533
    )
    
    
    (90,207
    )$
    552,569
    
    
    $
    70,594
    
    
    $
    342,925
    
    
    $
    129,144
    
    
    $
    (431,694
    )
    
    $
    663,538
 14




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##### Table of Contents



EAGLEPICHER HOLDINGS, INC.
SUPPLEMENTAL CONDENSED COMBINING BALANCE SHEETS
AS OF FEBRUARY 29, 2004
(in thousands of dollars) GuarantorsEaglePicher
    
    Subsidiary
    
    Non-GuarantorsIssuer
    
    Holdings, Inc.
    
    Guarantors
    
    Subsidiaries
    
    Eliminations
    
    TotalASSETSCurrent Assets:Cash and cash equivalents
    
    $
    10,451
    
    
    $
    1
    
    
    $
    2,917
    
    
    $
    16,681
    
    
    $
    
    
    
    $
    30,050Receivables and retained interest, net
    
    
    60,534
    
    
    
    
    
    
    
    4,042
    
    
    
    24,428
    
    
    
    
    
    
    
    89,004Costs and estimated earnings in excess of billings
    
    
    
    
    
    
    
    
    
    
    23,807
    
    
    
    13,383
    
    
    
    
    
    
    
    37,190Intercompany accounts receivable
    
    
    1,867
    
    
    
    
    
    
    
    6,023
    
    
    
    1,602
    
    
    
    (9,492
    )
    
    
    Inventories
    
    
    6,523
    
    
    
    
    
    
    
    40,124
    
    
    
    12,919
    
    
    
    (2,186
    )
    
    
    57,380Assets of discontinued operations
    
    
    
    
    
    
    
    
    
    
    4,093
    
    
    
    394
    
    
    
    
    
    
    
    4,487Prepaid expenses and other assets
    
    
    3,507
    
    
    
    
    
    
    
    4,346
    
    
    
    3,678
    
    
    
    
    
    
    
    11,531Deferred income taxes
    
    
    8,526
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,52691,408
    
    
    
    1
    
    
    
    85,352
    
    
    
    73,085
    
    
    
    (11,678
    )
    
    
    238,168Property, Plant and Equipment, net
    
    
    23,857
    
    
    
    
    
    
    
    102,568
    
    
    
    25,702
    
    
    
    
    
    
    
    152,127Investment in Subsidiaries
    
    
    295,714
    
    
    
    63,235
    
    
    
    29,878
    
    
    
    
    
    
    
    (388,827
    )
    
    
    Goodwill
    
    
    37,339
    
    
    
    
    
    
    
    112,286
    
    
    
    20,654
    
    
    
    (3,139
    )
    
    
    167,140Prepaid Pension
    
    
    56,931
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    56,931Other Assets, net
    
    
    11,243
    
    
    
    2,324
    
    
    
    23,946
    
    
    
    21,552
    
    
    
    (28,872
    )
    
    
    30,193$
    516,492
    
    
    $
    65,560
    
    
    $
    354,030
    
    
    $
    140,993
    
    
    $
    (432,516
    )
    
    $
    644,559LIABILITIES AND SHAREHOLDERS EQUITY (DEFICIT)Current Liabilities:Accounts payable
    
    $
    19,622
    
    
    $
    
    
    
    $
    48,709
    
    
    $
    10,924
    
    
    $
    
    
    
    $
    79,255Intercompany accounts payable
    
    
    
    
    
    
    
    
    
    
    1,593
    
    
    
    7,899
    
    
    
    (9,492
    )
    
    
    Current portion of long-term debt
    
    
    3,300
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,300Other accrued liabilities
    
    
    33,957
    
    
    
    
    
    
    
    20,056
    
    
    
    8,279
    
    
    
    
    
    
    
    62,29256,879
    
    
    
    
    
    
    
    70,358
    
    
    
    27,102
    
    
    
    (9,492
    )
    
    
    144,847Long-term Debt, net of current portion
    
    
    423,123
    
    
    
    
    
    
    
    635
    
    
    
    15,361
    
    
    
    (31,284
    )
    
    
    407,835Postretirement Benefits Other Than Pensions
    
    
    17,354
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,354Other Long-term Liabilities
    
    
    7,098
    
    
    
    
    
    
    
    
    
    
    
    2,477
    
    
    
    (1
    )
    
    
    9,574Preferred Stock
    
    
    
    
    
    
    158,585
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    158,585504,454
    
    
    
    158,585
    
    
    
    70,993
    
    
    
    44,940
    
    
    
    (40,777
    )
    
    
    738,195Intercompany Accounts
    
    
    (240,870
    )
    
    
    10,494
    
    
    
    196,739
    
    
    
    39,057
    
    
    
    (5,420
    )
    
    
    Shareholders Equity (Deficit)
    
    
    252,908
    
    
    
    (103,519
    )
    
    
    86,298
    
    
    
    56,996
    
    
    
    (386,319
    )
    
    
    (93,636
    )$
    516,492
    
    
    $
    65,560
    
    
    $
    354,030
    
    
    $
    140,993
    
    
    $
    (432,516
    )
    
    $
    644,559
 15




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##### Table of Contents



EAGLEPICHER HOLDINGS, INC.
SUPPLEMENTAL CONDENSED COMBINING STATEMENTS OF INCOME (LOSS)
THREE MONTHS ENDED FEBRUARY 28, 2003
(in thousands of dollars) GuarantorsEaglePicher
    
    Subsidiary
    
    Non-GuarantorsIssuer
    
    Holdings, Inc.
    
    Guarantors
    
    Subsidiaries
    
    Eliminations
    
    TotalNet Sales:Customers
    
    $
    12,714
    
    
    $
    
    
    
    $
    125,785
    
    
    $
    25,540
    
    
    $
    
    
    
    $
    164,039Intercompany
    
    
    4,516
    
    
    
    
    
    
    
    4,450
    
    
    
    314
    
    
    
    (9,280
    )
    
    
    17,230
    
    
    
    
    
    
    
    130,235
    
    
    
    25,854
    
    
    
    (9,280
    )
    
    
    164,039Operating Costs and Expenses:Cost of products sold (exclusive of depreciation)
    
    
    11,085
    
    
    
    
    
    
    
    104,637
    
    
    
    21,313
    
    
    
    (9,279
    )
    
    
    127,756Selling and administrative
    
    
    6,399
    
    
    
    1
    
    
    
    6,144
    
    
    
    1,584
    
    
    
    
    
    
    
    14,128Intercompany charges
    
    
    (1,656
    )
    
    
    
    
    
    
    1,615
    
    
    
    41
    
    
    
    
    
    
    
    Depreciation and amortization of intangibles
    
    
    947
    
    
    
    
    
    
    
    9,028
    
    
    
    1,139
    
    
    
    
    
    
    
    11,11416,775
    
    
    
    1
    
    
    
    121,424
    
    
    
    24,077
    
    
    
    (9,279
    )
    
    
    152,998Operating Income (Loss)
    
    
    455
    
    
    
    (1
    )
    
    
    8,811
    
    
    
    1,777
    
    
    
    (1
    )
    
    
    11,041Other Income (Expense):Interest expense
    
    
    (8,373
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,373
    )Other income (expense), net
    
    
    55
    
    
    
    
    
    
    
    420
    
    
    
    (151
    )
    
    
    
    
    
    
    324Equity in earnings (losses) of
consolidated subsidiaries
    
    
    (2,179
    )
    
    
    1,169
    
    
    
    510
    
    
    
    
    
    
    
    500
    
    
    
    Income (Loss) Before Taxes
    
    
    (10,042
    )
    
    
    1,168
    
    
    
    9,741
    
    
    
    1,626
    
    
    
    499
    
    
    
    2,992Income Taxes
    
    
    
    
    
    
    
    
    
    
    10
    
    
    
    886
    
    
    
    
    
    
    
    896Income (Loss) from Continuing Operations
    
    
    (10,042
    )
    
    
    1,168
    
    
    
    9,731
    
    
    
    740
    
    
    
    499
    
    
    
    2,096Discontinued Operations
    
    
    
    
    
    
    
    
    
    
    (655
    )
    
    
    (273
    )
    
    
    
    
    
    
    (928
    )Net Income (loss)
    
    $
    (10,042
    )
    
    $
    1,168
    
    
    $
    9,076
    
    
    $
    467
    
    
    $
    499
    
    
    $
    1,168
 16




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##### Table of Contents



EAGLEPICHER HOLDINGS, INC.
SUPPLEMENTAL CONDENSED COMBINING STATEMENTS OF INCOME (LOSS)
THREE MONTHS ENDED FEBRUARY 29, 2004
(in thousands of dollars) GuarantorsEaglePicher
    
    Subsidiary
    
    Non-GuarantorsIssuer
    
    Holdings, Inc.
    
    Guarantors
    
    Subsidiaries
    
    Eliminations
    
    TotalNet Sales:Customers
    
    $
    13,891
    
    
    $
    
    
    
    $
    120,156
    
    
    $
    32,735
    
    
    $
    
    
    
    $
    166,782Intercompany
    
    
    6,464
    
    
    
    
    
    
    
    3,552
    
    
    
    435
    
    
    
    (10,451
    )
    
    
    20,355
    
    
    
    
    
    
    
    123,708
    
    
    
    33,170
    
    
    
    (10,451
    )
    
    
    166,782Operating Costs and Expenses:Cost of products sold (exclusive of depreciation)
    
    
    13,849
    
    
    
    
    
    
    
    100,000
    
    
    
    25,598
    
    
    
    (10,451
    )
    
    
    128,996Selling and administrative
    
    
    6,073
    
    
    
    
    
    
    
    7,911
    
    
    
    2,885
    
    
    
    
    
    
    
    16,869Intercompany charges
    
    
    (1,660
    )
    
    
    
    
    
    
    1,526
    
    
    
    134
    
    
    
    
    
    
    
    Depreciation and amortization of intangibles
    
    
    1,422
    
    
    
    
    
    
    
    7,440
    
    
    
    1,103
    
    
    
    
    
    
    
    9,965Loss from divestitures
    
    
    2,600
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,60022,284
    
    
    
    
    
    
    
    116,877
    
    
    
    29,720
    
    
    
    (10,451
    )
    
    
    158,430Operating Income (Loss)
    
    
    (1,929
    )
    
    
    
    
    
    
    6,831
    
    
    
    3,450
    
    
    
    
    
    
    
    8,352Other Income (Expense):Interest (expense) income
    
    
    (9,255
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,255
    )Preferred stock dividends accrued
    
    
    
    
    
    
    (4,169
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,169
    )Other income (expense), net
    
    
    (921
    )
    
    
    148
    
    
    
    530
    
    
    
    (50
    )
    
    
    
    
    
    
    (293
    )Equity in earnings (losses) of
consolidated subsidiaries
    
    
    7,249
    
    
    
    (4,886
    )
    
    
    (577
    )
    
    
    
    
    
    
    (1,786
    )
    
    
    Income (Loss) from Continuing
Operations Before Taxes
    
    
    (4,856
    )
    
    
    (8,907
    )
    
    
    6,784
    
    
    
    3,400
    
    
    
    (1,786
    )
    
    
    (5,365
    )Income Taxes
    
    
    30
    
    
    
    
    
    
    
    
    
    
    
    343
    
    
    
    
    
    
    
    373Income (Loss) from Continuing Operations
    
    
    (4,886
    )
    
    
    (8,907
    )
    
    
    6,784
    
    
    
    3,057
    
    
    
    (1,786
    )
    
    
    (5,738
    )Discontinued Operations
    
    
    
    
    
    
    
    
    
    
    (62
    )
    
    
    
    
    
    
    
    
    
    
    (62
    )Net Income (Loss)
    
    $
    (4,886
    )
    
    $
    (8,907
    )
    
    $
    6,722
    
    
    $
    3,057
    
    
    $
    (1,786
    )
    
    $
    (5,800
    )
 17




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##### Table of Contents



EAGLEPICHER HOLDINGS, INC.
SUPPLEMENTAL CONDENSED COMBINING STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED FEBRUARY 28, 2003
(in thousands of dollars) GuarantorsEaglePicher
    
    Subsidiary
    
    Non-GuarantorsIssuer
    
    Holdings, Inc.
    
    Guarantors
    
    Subsidiaries
    
    Eliminations
    
    TotalCASH FLOWS FROM OPERATING ACTIVITIES:Net income (loss)
    
    $
    (10,042
    )
    
    $
    1,168
    
    
    $
    9,076
    
    
    $
    467
    
    
    $
    499
    
    
    $
    1,168Adjustments to reconcile net income (loss) to cash provided
by (used in) operating activities:Equity in (earnings) loss of consolidated
subsidiaries
    
    
    2,179
    
    
    
    (1,169
    )
    
    
    (510
    )
    
    
    
    
    
    
    (500
    )
    
    
    Depreciation and amortization
    
    
    1,730
    
    
    
    
    
    
    
    9,028
    
    
    
    1,139
    
    
    
    
    
    
    
    11,897Changes in assets and liabilities, net of effect
of non-cash items
    
    
    (30,577
    )
    
    
    24
    
    
    
    (644
    )
    
    
    (1,332
    )
    
    
    10,936
    
    
    
    (21,593
    )(36,710
    )
    
    
    23
    
    
    
    16,950
    
    
    
    274
    
    
    
    10,935
    
    
    
    (8,528
    )CASH FLOWS FROM INVESTING ACTIVITIES:Capital expenditures
    
    
    (422
    )
    
    
    
    
    
    
    (2,329
    )
    
    
    (969
    )
    
    
    
    
    
    
    (3,720
    )Proceeds from sale of property and equipment, and other, net
    
    
    
    
    
    
    
    
    
    
    329
    
    
    
    
    
    
    
    
    
    
    
    329(422
    )
    
    
    
    
    
    
    (2,000
    )
    
    
    (969
    )
    
    
    
    
    
    
    (3,391
    )CASH FLOWS FROM FINANCING ACTIVITIES:Reduction of long-term debt
    
    
    (4,232
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,232
    )Net borrowings (repayments) under revolving
credit agreements
    
    
    14,500
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,50010,268
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,268Cash provided by discontinued operations
    
    
    
    
    
    
    
    
    
    
    375
    
    
    
    385
    
    
    
    
    
    
    
    760Effect of exchange rates on cash
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,659
    
    
    
    
    
    
    
    1,659Net increase (decrease) in cash and
cash equivalents
    
    
    (26,864
    )
    
    
    23
    
    
    
    15,325
    
    
    
    1,349
    
    
    
    10,935
    
    
    
    768Intercompany accounts
    
    
    18,884
    
    
    
    (23
    )
    
    
    (8,252
    )
    
    
    1,146
    
    
    
    (11,755
    )
    
    
    Cash and cash equivalents,
beginning of period
    
    
    27,694
    
    
    
    1
    
    
    
    (4,895
    )
    
    
    7,902
    
    
    
    820
    
    
    
    31,522Cash and cash equivalents,
end of period
    
    $
    19,714
    
    
    $
    1
    
    
    $
    2,178
    
    
    $
    10,397
    
    
    $
    
    
    
    $
    32,290
 18




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##### Table of Contents



EAGLEPICHER HOLDINGS, INC.
SUPPLEMENTAL CONDENSED COMBINING STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED FEBRUARY 29, 2004
(in thousands of dollars) GuarantorsEaglePicher
    
    Subsidiary
    
    Non-GuarantorsIssuer
    
    Holdings, Inc.
    
    Guarantors
    
    Subsidiaries
    
    Eliminations
    
    TotalCASH FLOWS FROM OPERATING ACTIVITIES:Net income (loss)
    
    $
    (4,886
    )
    
    $
    (8,907
    )
    
    $
    6,722
    
    
    $
    3,057
    
    
    $
    (1,786
    )
    
    $
    (5,800
    )Adjustments to reconcile net income
(loss) to cash provided by (used in)
operating activities:Equity in (earnings) loss of consolidated
subsidiaries
    
    
    (7,249
    )
    
    
    4,886
    
    
    
    577
    
    
    
    
    
    
    
    1,786
    
    
    
    Depreciation and amortization
    
    
    1,767
    
    
    
    148
    
    
    
    7,440
    
    
    
    1,103
    
    
    
    
    
    
    
    10,458Preferred
stock dividends accrued
    
    
    
    
    
    
    4,169
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,169Loss on disposal of discontinued operations
    
    
    
    
    
    
    
    
    
    
    62
    
    
    
    
    
    
    
    
    
    
    
    62Loss on divestitures
    
    
    2,600
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,600Changes in assets and liabilities, net of effect
of non-cash items
    
    
    1,700
    
    
    
    
    
    
    
    (20,616
    )
    
    
    (6,721
    )
    
    
    84
    
    
    
    (25,553
    )(6,068
    )
    
    
    296
    
    
    
    (5,815
    )
    
    
    (2,561
    )
    
    
    84
    
    
    
    (14,064
    )CASH FLOWS FROM INVESTING ACTIVITIES:Proceeds from sales of property and equipment and other
    
    
    
    
    
    
    
    
    
    
    105
    
    
    
    
    
    
    
    
    
    
    
    105Capital expenditures
    
    
    (473
    )
    
    
    
    
    
    
    (6,239
    )
    
    
    (2,681
    )
    
    
    
    
    
    
    (9,393
    )Acquisition of majority interest in EaglePicher Horizon Battery LLC
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,500
    )
    
    
    
    
    
    
    (3,500
    )(473
    )
    
    
    
    
    
    
    (6,134
    )
    
    
    (6,181
    )
    
    
    
    
    
    
    (12,788
    )CASH FLOWS FROM FINANCING ACTIVITIES:Reduction of long-term debt
    
    
    (10,769
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,769
    )(10,769
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,769
    )Cash provided by discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (284
    )
    
    
    
    
    
    
    (284
    )Effect of exchange rates on cash
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    635
    
    
    
    
    
    
    
    635Net increase (decrease) in cash and
cash equivalents
    
    
    (17,310
    )
    
    
    296
    
    
    
    (11,949
    )
    
    
    (8,391
    )
    
    
    84
    
    
    
    (37,270
    )Intercompany accounts
    
    
    (24,717
    )
    
    
    (296
    )
    
    
    17,598
    
    
    
    7,499
    
    
    
    (84
    )
    
    
    Cash and cash equivalents,
beginning of period
    
    
    52,478
    
    
    
    1
    
    
    
    (2,732
    )
    
    
    17,573
    
    
    
    
    
    
    
    67,320Cash and cash equivalents,
end of period
    
    $
    10,451
    
    
    $
    1
    
    
    $
    2,917
    
    
    $
    16,681
    
    
    $
    
    
    
    $
    30,050
 19




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations. All references herein to years are to the three-months ended February 28,
2003 or February 29, 2004 unless otherwise indicated. DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS Certain of the matters discussed in this report may constitute
forward-looking statements. Forward-looking statements can be identified by
the use of forward-looking words such as believes, expects, may, will,
should, seeks, approximately, intends, plans, estimates or
anticipates or the negative of these terms or other comparable words, or by
discussions of strategy, plans or intentions. Statements in this report which
are not historical facts are forward-looking statements. Without limiting the
generality of the preceding statement, all statements in this report concerning
or relating to estimated and projected earnings, margins, costs, expenditures,
cash flows, growth rates and financial results are forward-looking statements.
In addition, we, through our senior management, from time to time make
forward-looking public statements concerning our expected future operations and
performance and other developments. Such forward-looking statements are
necessarily estimates reflecting our judgment based upon current information
and involve a number of risks and uncertainties. Other factors may affect the
accuracy of these forward-looking statements and our actual results may differ
materially from the results anticipated in these forward-looking statements. CRITICAL ACCOUNTING POLICIES We have included a summary of our Critical Accounting Policies in our
annual report on Form 10-K for the year ended November 30, 2003, filed on
February 17, 2004. There have been no material changes to the summary provided
in that report. RESULTS OF OPERATIONS The following summary financial information about our business segment
data is presented to gain a better understanding of the narrative discussion
below about our business segments (in thousands of dollars). 2003
    
    2004
    
    Variance
    
    %Net SalesHillsdale
    
    $
    79,873
    
    
    $
    74,048
    
    
    $
    (5,825
    )
    
    
    (7.3
    )Wolverine
    
    
    20,718
    
    
    
    24,107
    
    
    
    3,389
    
    
    
    16.4Automotive Business Unit
    
    
    100,591
    
    
    
    98,155
    
    
    
    (2,436
    )
    
    
    (2.4
    )Power Group
    
    
    32,283
    
    
    
    39,836
    
    
    
    7,553
    
    
    
    23.4Specialty Materials Group
    
    
    10,357
    
    
    
    7,175
    
    
    
    (3,182
    )
    
    
    (30.7
    )Pharmaceutical Services
    
    
    1,902
    
    
    
    2,881
    
    
    
    979
    
    
    
    51.5Technologies Business Unit
    
    
    44,542
    
    
    
    49,892
    
    
    
    5,350
    
    
    
    12.0Filtration and Minerals Business Unit
    
    
    18,906
    
    
    
    18,735
    
    
    
    (171
    )
    
    
    (0.9
    )$
    164,039
    
    
    $
    166,782
    
    
    $
    2,743
    
    
    
    1.7Operating Income (Loss)Hillsdale
    
    $
    2,078
    
    
    $
    739
    
    
    $
    (1,339
    )
    
    
    (64.4
    )Wolverine
    
    
    3,389
    
    
    
    3,615
    
    
    
    226
    
    
    
    6.7Automotive Business Unit
    
    
    5,467
    
    
    
    4,354
    
    
    
    (1,113
    )
    
    
    (20.4
    )Power Group
    
    
    5,305
    
    
    
    5,621
    
    
    
    316
    
    
    
    6.0Specialty Materials Group
    
    
    3,010
    
    
    
    2,136
    
    
    
    (874
    )
    
    
    (29.0
    )Pharmaceutical Services
    
    
    (344
    )
    
    
    285
    
    
    
    629
    
    
    
    N/ATechnologies Business Unit
    
    
    7,971
    
    
    
    8,042
    
    
    
    71
    
    
    
    0.9Filtration and Minerals Business Unit
    
    
    (111
    )
    
    
    582
    
    
    
    693
    
    
    
    N/ACorporate/Intersegment
    
    
    (2,286
    )
    
    
    (4,626
    )
    
    
    (2,340
    )
    
    
    (102.4
    )$
    11,041
    
    
    $
    8,352
    
    
    $
    (2,689
    )
    
    
    (24.4
    )
 20




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##### Table of Contents



Hillsdale Segment (Automotive Business Unit) Sales in our Hillsdale Segment decreased $5.8 million, or 7.3%, to $74.0
million in 2004 from $79.9 million in 2003. This decrease was primarily related
to $4.6 million of volume decreases and $1.2 million of price decreases. The
volume decreases are primarily $2.4 million related to Honda build schedules
and the continued phase-out of three specific programs. The customers
decision to not select Hillsdale on the successor platforms for these three
programs was made well before the current management team joined in 2002. The
sales decrease attributable to the three program phase-outs totaled $2.6
million, including $1.1 million for a Ford Motor Company transmission pump,
$0.9 million for a General Motors connecting rod program, and $0.6 million for
an Acura knuckle program. Partially offsetting these program losses was $1.6
million primarily related to a new technology micro-filtration transmission
program and a Mitsubishi knuckle program. The remaining $1.2 million of volume
decreases are primarily the result of the timing of volume production from the
transition of old programs that have phased-out to new programs beginning to
ramp-up. The North American automotive market remains a highly competitive market
that is subject to potentially significant volume changes. We expect these
competitive pressures to continue and possibly intensify. There are
indications that our customers are consolidating their supplier base,
increasing international sourcing and intensifying pressure for price
reductions. We have been and will continue to respond to these pressures by
(a) continually improving productivity through Lean manufacturing, six sigma,
and increased sourcing from lower cost international suppliers, (b) improving
our technology positions, including designing products to be manufactured at a
lower cost, and (c) achieving cost reductions from our existing supplier base.
The Hillsdale Segments operations are also being impacted by a recent
significant increase in steel prices and surcharges being imposed by metal
suppliers. These increases and surcharges may not in all cases be passed on to
customers. The net impact in the first quarter of 2004 was not significant. Operating income decreased $1.4 million, or 64.4%, to $0.7 million in 2004
from $2.1 million in 2003. This decrease was primarily due to the following
favorable/ (unfavorable) items:  a.
    
    $2.8 million reduction in costs due to productivity and cost
improvements;b.
    
    ($1.2) million in price decreases;c.
    
    ($1.1) million of decreased margin as a result of the volumes
discussed above;d.
    
    ($0.4) million of cost investments to focus on our global
sourcing initiatives; ande.
    
    ($1.5) million in other cost increases and production issues.
These cost increases were primarily related to higher costs for
purchased castings, healthcare costs, and wages at our unionized
facilities. Additionally, we continued to experience increased
start-up costs related to a new Visteon program. Wolverine Segment (Automotive Business Unit) Sales in our Wolverine Segment increased $3.4 million, or 16.4%, to $24.1
million in 2004 from $20.7 million in 2003 due primarily to a 9.2% volume
increase. The volume increase is primarily related to brake programs in Europe
and engine gasket programs in the United States. The remaining increase in
sales is primarily related to the favorable foreign currency exchange rates as
a result of the strengthening of the Euro. Approximately 40% of the Wolverine
divisions sales are from Europe. Operating income increased $0.2 million, or 6.7%, to $3.6 million in 2004
from $3.4 million in 2003. This increase in performance was primarily due to
the following favorable/(unfavorable) items:  a.
    
    $1.7 million from increased sales volumes and favorable
foreign currency exchange rates;b.
    
    ($0.5) million of shutdown costs related to the closing of
our high cost Inkster, Michigan manufacturing line;c.
    
    ($1.0) million in other cost increases primarily related to
healthcare costs, wages at our unionized facilities, and additional
costs due to weather conditions which shut down the primary
manufacturing facility for six days. 21




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Power Group Segment (Technologies Business Unit) Sales in our Power Group Segment increased $7.6 million, or 23.4%, to
$39.9 million in 2004 from $32.3 million in 2003. The increase in sales is
primarily related to higher volumes and improved pricing for our defense and
space batteries. In addition, during 2004, we shipped our first EaglePicher
Horizon Batteries and recognized approximately $1.0 million of revenue. These
batteries utilize a next generation lead-acid woven technology that has been
well received in the marketplace. The increased defense and space volumes were
attributable to strong battery sales to U.S. Army CECOM (Communications
Electronic Command) mobile communications program, increased space battery
sales, and a $2.5 million, or 150%, increase in customer funded product
development contracts. The increase in customer funded product development
contracts is particularly important as they represent a foundation for future
production awards. As of February 29, 2004, the Power Group Segments backlog has increased
$10.3 million, or 7.5% to $146.5 million from $136.2 million at November 30,
2003 primarily as a result of the award of a $19.0 million space station
contract, which was partially offset by reductions in backlog in defense
batteries due to sales volumes. Operating income increased $0.3 million, or 6.0%, to $5.6 million in 2004
from $5.3 million in 2003. This increase in performance was primarily due to
the following favorable/ (unfavorable) items:  a.
    
    $1.4 million increase in margin from the increased volumes
and pricing discussed above;b.
    
    $1.5 million related to productivity initiatives, primarily
related to improved supply chain management and automation of
production processes;c.
    
    ($0.4) million of negative mix primarily related to our
distributed battery business in our commercial power business. The
distributed battery business had negative mix due to decreased
volumes of higher margin batteries sold into the telecommunications
market;d.
    
    ($1.0) million primarily related to management infrastructure
expenses to support growth of our commercial power business; ande.
    
    ($1.2) million in other cost increases primarily related to
energy, healthcare costs, wage increases at our unionized
facilities, and increased legal costs. Specialty Materials Group Segment (Technologies Business Unit) Sales in our Specialty Materials Group Segment decreased $3.2 million, or
30.7%, to $7.2 million in 2004 from $10.4 million in 2003. This sales decrease
was primarily due to reduced volumes in our enriched Boron business due to the
timing of shipments, and the exiting in 2003 of certain product lines.
Operating income decreased $0.9 million, or 29.0%, to $2.1 million in 2004 from
$3.0 million in 2003 primarily due to lower volumes. In April 2004, we sold our Environmental Sciences & Technology division
within our Technologies Business Units Specialty Materials Group Segment for
cash of approximately $23.0 million. We will account for this sale as a
Discontinued Operation when we file our second quarter of 2004 Form 10-Q.
During the year ended November 30, 2003, our Environmental Sciences &
Technology division had approximately $12.0 million in revenues, and as of
November 30, 2003, had approximately $14.0 million in total assets, which were
comprised of primarily inventory, accounts receivable, property, plant and
equipment, and goodwill. During the three months ended February 29, 2004, the
Environmental Sciences & Technology division had approximately $3.0 million in
revenues. Pharmaceutical Services Segment (Technologies Business Unit) Sales in our Pharmaceuticals Services Segment increased $1.0 million, or
51.5%, to $2.9 million in 2004 from $1.9 million in 2003. As previously
disclosed in our Form 10-K for the year ended November 30, 2003, our
Pharmaceutical Services business had a fire at one of its facilities in 2001.
That fire had significantly disrupted operations of the business in 2002 and
2003; however, we have seen an increase in orders for this business, and
accordingly, during the first quarter of 2004, we realized 51.5% growth
entirely from volumes. Operating results improved $0.6 million to income of
$0.3 million in 2004 from a loss of $0.3 million in 2003 due to increased
volumes and favorable sales mix. 22




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Filtration and Minerals Segment (and Business Unit) Sales in our Filtration and Minerals Segment decreased $0.2 million, or
0.9%, to $18.7 million in 2004 from $18.9 million in 2003. The decrease was
primarily related to volume and price decreases, which were partially offset by
favorable foreign currency exchange rates as a result of the strengthening of
the Euro. Operating results improved $0.7 million to income of $0.6 million in 2004
from a loss of $0.1 million in 2003. The improved earnings were primarily due
to favorable foreign currency exchange rates as a result of the strengthening
of the Euro, partially offset by lower volumes and higher natural gas costs due
to higher prices and increased gas usage resulting from unfavorable weather
conditions. Company Discussion Net Sales.Net sales increased $2.8 million, or 1.7%, to $166.8 million
in 2004 from $164.0 million in 2003. The increase was primarily driven by a
$7.6 million, or 23.4%, increase in our Technologies Business Units Power
Group Segment related to higher volumes and improved pricing in our defense and
space businesses, as well as the initial shipments of our EaglePicher Horizon
Batteries that resulted in revenue of $1.0 million. In addition, the increase
was driven by a $3.4 million, or 16.4%, increase in our Automotive Business
Units Wolverine Segment primarily due to a 9.2% volume increase. These
increases were partially offset by a $5.8 million decrease in our Automotive
Business Units Hillsdale Segment as well as decreases in our Technologies
Business Units Specialty Materials Group Segment. See above for a more
detailed discussion of the individual segments results. Cost of Products Sold (exclusive of depreciation). Cost of products sold
(exclusive of depreciation) increased $1.2 million, or 1.0%, to $129.0 million
in 2004 from $127.8 million in 2003. Our gross margin increased by $1.5
million from $36.3 million in 2003 to $37.8 million in 2004 as a result of
higher volumes, improved sales mix, productivity improvements, and favorable
foreign currency exchange rates. Our gross margin increased 0.6 points to
22.7% in 2004 from 22.1% in 2003, despite higher energy, healthcare,
restructuring and shutdown costs, as well as China sourcing and higher wage
costs. The margin rate improvement was primarily a result of productivity
improvements in our Automotive Business Units Hillsdale Segment and our
Technologies Business Units Power Group Segment. Selling and Administrative.Selling and administrative expenses increased
$2.7 million, or 19.4%, to $16.8 million in 2004 from $14.1 million in 2003.
This increase is primarily due to expenses, such as selling and management
infrastructure costs, to support growth initiatives in our Power Group Segment. Depreciation and Amortization of Intangibles.Depreciation and
amortization of intangibles decreased $1.1 million, or 10.3%, to $10.0 million
in 2004 from $11.1 million in 2003. This decrease was primarily related to
certain assets whose depreciation was completed in 2003. Loss from Divestitures.All amounts recorded in loss from divestitures
expense relate to operations that were sold or that were divested prior to
November 30, 2003. During 2004, we recorded a $2.6 million charge related to
the litigation settlement of a warranty claim related to a division sold
effective December 1999. We paid this settlement in the second quarter of
2004. Interest Expense.Interest expense was $8.4 million in 2003 (excluding
$1.0 million which was allocated to discontinued operations) and $9.3 million
in 2004. Including the interest allocated to discontinued operations, this
represents a decrease of 1.1%, or $0.1 million, in 2004 compared to 2003. The
decrease is the result of lower average debt levels. Preferred Stock Dividends Accrued.Effective September 1, 2003, we adopted
SFAS No. 150, Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity which requires that certain
instruments be classified as liabilities in our balance sheet. The effect of
the adoption was that, as of September 1, 2003, we reclassified the current
redemption value plus unpaid dividends on our redeemable preferred stock to
long-term liabilities and the accrual of dividends payable subsequent to
September 1, 2003 has been recorded as a component of non-operating expenses in
our consolidated statements of income (loss). In accordance with this
statement, the prior period financial statements have not been reclassified. 23




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Income (Loss) from Continuing Operations Before Taxes. Income (Loss) from
Continuing Operations Before Taxes declined $8.4 million from income of $3.0
million in 2003 to a loss of $5.4 million in 2004. This decline is primarily
related to the following favorable/ (unfavorable) items:  a.
    
    $1.5 million of additional gross margin due to higher volumes,
improved sales mix, productivity improvements, and favorable foreign
currency exchange rates;b.
    
    ($2.7) million of additional selling and administrative expenses
primarily to support growth initiatives in our Power Segment;c.
    
    ($2.6) million of Loss from Divestitures in 2004; andd.
    
    ($4.2) million of Preferred Stock Dividends accruals in 2004 (these
were not recorded in 2003 as a component of the income statement under
US GAAP). Income Tax Provision.Income tax provision was $0.4 million in 2004
compared to $0.9 million in 2003. These provisions relate to the allocation of
income and loss between the United States and foreign jurisdictions and
represent the estimated tax that will be due in certain jurisdictions where no
tax benefit can be assured from utilizing previous losses. There is no U.S.
Federal or state net tax benefit or provision recorded during 2003 and 2004. Discontinued Operations.During the second quarter of 2003, we accounted
for our Automotive Business Units Hillsdale U.K. operation as a discontinued
operation. During the third quarter of 2003, we accounted for the sale of
certain assets of our Germanium-based business in our Technologies Business
Unit as a discontinued operation. Accordingly, we have restated our prior
period financial statements to conform to the discontinued operations
presentation. Net Income (Loss).Our net income (loss) declined $7.0 million to a net
loss of $5.8 million in 2004 compared to net income of $1.2 million in 2003.
The decline is the result of the items discussed above. LIQUIDITY AND CAPITAL RESOURCES Our cash flows from operations and availability under our credit
facilities are considered adequate to fund our short-term and long-term capital
needs. As of February 29, 2004, we had $126.2 million unused under our various
credit facilities. However, due to various financial covenant limitations
under our Credit Agreement measured at the end of each quarter, on February 29,
2004, we could only incur an additional $37.6 million of indebtedness. At February 29, 2004, we were in compliance with all of our debt
covenants. We expect to remain in compliance with our debt covenants
throughout fiscal year 2004. Cash Flows Operating Activities.Operating activities used $14.1 million in cash
during 2004 compared to $8.5 million in 2003. In 2003, cash flows from
operating activities were impacted by our net income of $1.2 million and a
non-cash charge of $11.9 million from depreciation and amortization, resulting
in cash sources of $13.1 million compared to a 2004 amount of $11.5 million.
The 2004 amount of $11.5 million is comprised of our net loss of $5.8 million,
and non-cash charges of $10.5 million from depreciation and amortization, $4.2
million for preferred stock dividends accrued, $0.1 million from loss from
discontinued operations, and $2.6 million from loss from divestitures. The operating cash flow for 2003 was also decreased by $21.6 million due
to changes in certain assets and liabilities, resulting in net cash used in
operating activities of $8.5 million. This $21.6 million decease was primarily
due to a $9.9 million decrease in accounts payable. The remaining decreases
were the result of increases in production on long-term defense contracts where
costs are incurred before shipments or milestone billings are made and
collected; this was primarily driven by increases in our Power Group Segment
revenues, and decreases in our accrued liabilities. The operating cash flow for 2004 was also decreased by $25.6 million due
to changes in certain assets and liabilities, resulting in net cash used in
operating activities of $14.1 million. This was primarily due to:  a.
    
    $10.2 million source of cash as a result of the issuance of
beneficial interests by our accounts receivable asset-backed
securitization, EaglePicher Funding Corporation;b.
    
    $23.4 million use of cash as a result of negative movement in
the primary working capital areas of accounts receivable,
inventories, and accounts payable; 24




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c.
    
    $9.9 million increase in production on long-term defense
contracts where costs are incurred before shipments or milestone
billings are made and collected; this was primarily driven by a
23.4% increase in our Power Group Segments revenues; andd.
    
    $2.5 million use of cash primarily from the payment of legacy
legal and environmental matters. Investing Activities.Investing activities used $12.8 million of cash
during 2004 compared to using $3.4 million in 2003. The 2004 amount primarily
includes $9.4 million for capital expenditures and $3.5 million for the
purchase of a controlling interest in EaglePicher Horizon Batteries LLC, a
previously unconsolidated venture. The 2003 amount primarily includes $3.7
million for capital expenditures. We expect our capital expenditures to be
between $35.0 million to $40.0 million in 2004. Financing Activities.Financing activities used $10.8 million of cash
during 2004 compared to providing $10.3 million during 2003. During 2004, the
use of cash was primarily to pay off one of our Industrial Revenue Bonds.
During 2003, the source of cash was primarily due to a $4.2 million reduction
in long-term debt, which was more than offset by a $14.5 million increase on
our revolving credit agreement. Capitalization Our capitalization, which excludes the obligations of our accounts
receivable asset-backed securitization of zero at November 30, 2003 and $10.2
million at February 29, 2004, consisted of the following at November 30, 2003
and February 29, 2004 (in thousands of dollars): 2003
    
    2004Credit Agreement:Revolving credit facility
    
    $
    
    
    
    $
    Term loan
    
    
    149,625
    
    
    
    148,875Senior Unsecured Notes, 9.75% interest, due 2013, net of
$1.9 million discount
    
    
    248,040
    
    
    
    248,074Senior Subordinated Notes, 9.375% interest, due 2008
    
    
    9,500
    
    
    
    9,500Industrial Revenue Bonds, 1.8% to 2.2% interest, due in
2004 and 2005
    
    
    13,600
    
    
    
    3,600Other
    
    
    1,105
    
    
    
    1,086421,870
    
    
    
    411,135Preferred Stock
    
    
    154,416
    
    
    
    158,585Shareholders Deficit
    
    
    (90,207
    )
    
    
    (93,636
    )$
    486,079
    
    
    $
    476,084
 Credit Agreement.We have a syndicated senior secured loan facility
(Credit Agreement) providing an original term loan (Term Loan) of $150.0
million and a $125.0 million revolving credit facility (Facility). The
Facility and the Term Loan bear interest, at our option, at a rate equal to (i)
LIBOR plus 350 basis points or (ii) an Alternate Base Rate (which is equal to
the highest of (a) the agents prime rate, (b) the Federal funds effective rate
plus 50 basis points, or (c) the base CD rate plus 100 basis points) plus 250
basis points. Interest is generally payable quarterly on the Facility and Term
Loan. We are permitted to enter into interest rate swap agreements to manage
our variable interest rate exposure. However, as of February 29, 2004, we had
no interest rate swaps outstanding. The Credit Agreement also contains certain
fees. There are fees for letters of credit equal to 3.5% per annum for all
issued letters of credit, and there is a commitment fee on the Facility equal
to 0.5% per annum of the unused portion of the Facility. Subsequent to February 29, 2004, we entered into an amendment with the
lenders of our Credit Agreement. We reduced the interest rate spread on the
Term Loan by 50 basis points. The new interest rate, effective April 1, 2004,
is at our option, equal to (i) LIBOR plus 300 basis points or (ii) Alternate
Base Rate (as defined) plus 200 basis points. In addition, as part of entering
into this amendment we were provided certain adjustments to our financial
covenant limitations. We paid the lenders of the Credit Agreement an amendment
fee of 1/8%, or $342,000. If we meet certain financial benchmarks, the interest rate spreads on the
Facility, the commitment fees and the fees for letters of credit may be
reduced. The Term Loan will mature upon the earlier of (i) August 7, 2009, (ii) 180
days prior to the maturity of our Senior Subordinated Notes if more than $5.0
million of aggregate principal amount of Senior Subordinated Notes are
outstanding, 25




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or (iii) 180 days prior to the mandatory redemption of our 11.75% Cumulative
Redeemable Exchangeable Preferred Stock (Preferred Stock) if more than $5.0
million of its aggregate liquidation preference remains outstanding. The
Facility will mature upon the earlier of (i) August 7, 2008, (ii) 180 days
prior to the maturity of our Senior Subordinated Notes if more than $5.0
million of aggregate principal amount of Senior Subordinated Notes are
outstanding, or (iii) 180 days prior to the mandatory redemption of our
Preferred Stock if more than $5.0 million of its aggregate liquidation
preference remains outstanding. Our Senior Subordinated Notes mature and our
Preferred Stock is scheduled for mandatory redemption on March 1, 2008. At February 29, 2004, we had $27.1 million in outstanding letters of
credit under the Facility, which together with borrowings of zero, made our
available borrowing capacity of $97.9 million. However, due to various
financial covenant limitations under our Credit Agreement measured at the end
of each quarter, on February 29, 2004, we could only incur an additional $37.6
million of indebtedness. The Credit Agreement is secured by our capital stock, the capital stock of
substantially all of our domestic United States subsidiaries, a certain portion
of the capital stock of our foreign subsidiaries, and substantially all other
assets of our United States subsidiaries. Additionally, the Credit Agreement
is guaranteed by us and certain of our United States subsidiaries. The Credit Agreement contains covenants that restrict our ability to
declare dividends or redeem capital stock, incur additional debt or liens,
alter existing debt agreements, make loans or investments, form or invest in
joint ventures, undergo a change in control or engage in mergers, acquisitions
or asset sales. These covenants also limit the annual amount of capital
expenditures and require us to meet certain minimum financial ratios. For
purposes of determining outstanding debt under our Credit Agreement, we are
required to include the outstanding obligations of EPFC, our off-balance sheet
special purpose entity. We were in compliance with all covenants at February
29, 2004. In addition to regularly scheduled payments on the Credit Agreement, we
are required to make mandatory prepayments equal to 50.0% of annual excess cash
flow, as defined in the Credit Agreement, beginning with our fiscal year ending
November 30, 2004. The net proceeds from the sale of assets (subject to
certain conditions), the net proceeds of certain new debt issuance, and 50.0%
of the net proceeds of any equity securities issuance are also subject to
mandatory prepayments on the Credit Agreement. Senior Unsecured Notes. In August 2003, we issued $250.0 million 9.75%
Senior Unsecured Notes, due 2013, at a price of 99.2% of par to yield 9.875%.
Accordingly, the net proceeds before issuance costs were $248.0 million. The
discount is being amortized over the life of the Senior Unsecured Notes. The
Senior Unsecured Notes require semi-annual interest payments on September 1 and
March 1, beginning on March 1, 2004. The Senior Unsecured Notes are redeemable
at our option, in whole or in part, any time after September 1, 2008 at set
redemption prices. We are required to offer to purchase the Senior Unsecured
Notes at a set redemption price should there be a change in control. The Senior
Unsecured Notes contain covenants which restrict or limit our ability to
declare or pay dividends, incur additional debt or liens, issue stock, engage
in affiliate transactions, undergo a change in control or sell assets. We are
in compliance with these covenants at February 29, 2004. The Senior Unsecured
Notes are guaranteed by us and certain of our subsidiaries Senior Subordinated Notes.Our Senior Subordinated Notes require
semi-annual interest payments on September 1 and March 1. In connection with
the issuance of the Senior Unsecured Notes in August 2003, as described above,
we repurchased approximately 95% of the outstanding senior subordinated notes
at par and executed a supplemental indenture on our Senior Subordinated Notes
which eliminated substantially all of the restrictive covenants in the Senior
Subordinated Notes that remain outstanding. We continue to be required to make
interest payments on the Senior Subordinated Notes and will be required to pay
the remaining aggregate principal amount outstanding at maturity in 2008. Industrial Revenue Bond. Our industrial revenue bond requires monthly
interest payments at variable interest rates based on the market for similar
issues and is secured by letters of credit issued under the Facility described
above. Preferred Stock.Our preferred stock increased $4.2 million during the
first quarter of 2004 as a result of the accrual of preferred dividends.
Commencing March 1, 2003, dividends on our Preferred Stock became cash payable
at 11.75% per annum of the liquidation preference if and when declared by the
Board of Directors; the first semiannual dividend payment of $8.3 million was
due September 1, 2003. The Credit Agreement and the Senior Unsecured Notes
contain financial covenants that currently prohibit us from paying dividends on
the Preferred Stock. Our Board of Directors did not declare a cash dividend as
of September 1, 2003. If we do not pay cash dividends on the Preferred Stock,
the holders 26




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of the Preferred Stock may become entitled to elect a majority of our
Board of Directors. Dakruiter S.A. and Harbourgate B.V., both companies
controlled by Granaria Holdings B.V., our controlling common shareholder, hold
approximately 78% of our Preferred Stock, and therefore Granaria Holdings B.V.
would continue to be able to elect our entire Board of Directors. The election
of a majority of the directors is the only remedy of holders of the Preferred
Stock for a failure to pay cash dividends. Unpaid dividends are cumulative but
do not bear interest. Shareholders Deficit.Our shareholders deficit increased $3.4 million
during the first quarter of 2004 due to our comprehensive loss. Accounts Receivable Asset-Backed Securitization (Qualifying Special
Purpose Entity) We have an agreement with a major United States financial institution to
sell an interest in certain receivables through an unconsolidated qualifying
special purpose entity, EaglePicher Funding Corporation (EPFC). The size of
this facility is $55.0 million, subject to certain financial covenant
limitations. This agreement provides for the sale of certain receivables to
EPFC, which in turn sells an interest in a revolving pool of receivables to the
financial institution. EPFC has no recourse against us for failure of the
debtors to pay when due. In the third quarter of 2003, we amended this
agreement to extend the receivables program until the earlier of (a) 90 days
prior to the maturity of our Credit Agreement (as defined in the Capitalization
Section above) or (b) January 2008. We account for the securitization of these sold receivables in accordance
with SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets
and Extinguishment of Liabilitiesa Replacement of FASB Statement No. 125.
Under this guidance, at the time the receivables are sold, the balances are
removed from our financial statements. For purposes of calculating our debt
covenant compliance under our Credit Agreement, we include the outstanding
obligations of EPFC. As of November 30, 2003, our retained interest in EPFC was $63.3 million
and the revolving pool of receivables that we serviced totaled $64.9 million.
At November 30, 2003, the outstanding balance of the interest sold to the
financial institution recorded on EPFCs financial statements was zero. The
effective interest rate as of November 30, 2003 in the securitization was
approximately 2.95%. As of February 29, 2004, our retained interest in EPFC was $60.9 million
and the revolving pool of receivables that we serviced totaled $72.6 million.
At February 29, 2004, the outstanding balance of the interest sold to the
financial institution recorded on EPFCs financial statements was $10.2
million. The effective interest rate as of February 29, 2004 in the
securitization was approximately 4.36%. Credit Agreement and Accounts Receivable Asset-Backed Securitization
Financial Covenants There are three financial covenants contained in our Credit Agreement and
the Accounts Receivable Asset-Backed Securitization, as amended. They are a
leverage ratio (the ratio of total debt, including the obligations of our
accounts receivable asset-backed securitization, to Credit Agreement EBITDA),
an interest coverage ratio (the ratio of Credit Agreement EBITDA to interest
expense) and a fixed charge coverage ratio (the ratio of Credit Agreement
EBITDA minus capital expenditures to the sum of interest expense plus scheduled
principal payments plus cash dividends paid plus income taxes paid), all as
defined in the Credit Agreement and the Accounts Receivable Asset-Backed
Securitization, as amended. As of February 29, 2004, we were in compliance
with the covenant calculations described above. Based on our projections for 2004, we expect to remain in compliance with
all covenants. However, any adverse changes in actual results from
projections, along with the contractual tightening of the covenants under the
Credit Agreement, may place us at risk of not being able to comply with all of
the covenants of the Credit Agreement. In the event we cannot comply with the
terms of the Credit Agreement as currently written, it would be necessary for
us to obtain a waiver or renegotiate our loan covenants, and there can be no
assurance that such negotiations will be successful. Any agreements to amend
the covenants and/or obtain waivers may likely require us to pay a fee and
increase the interest rate payable under the Credit Agreement. The amount of
such fee and increase in interest rate would be determined in the negotiations
of the amendment. Contractual Obligations and Other Commercial Commitments We have included a summary of our Contractual Obligations and Other
Commercial Commitments in our annual report on Form 10-K for the year ended
November 30, 2003, filed on February 17, 2004. There have been no material 27




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changes to the summary provided in that report. Recently Released or Adopted Accounting Standards In January 2003, the FASB issued Interpretation (FIN) No. 46,
Consolidation of Variable Interest Entities  An Interpretation of Accounting
Research Bulletin (ARB) No. 51. This interpretation was subsequently revised
by FIN 46 (Revised 2003) in December 2003. This revised interpretation states
that consolidation of variable interest entities will be required by the
primary beneficiary if the entities do not effectively disperse risks among the
parties involved. The requirements are effective for fiscal years ending after
December 15, 2003 for special-purpose entities and for all other types of
entities for periods ending after March 31, 2004. We do not believe that FIN
No. 46® will have a material impact on our financial condition or results of
operations. In March 2004, the EITF reached a consensus on EITF No. 03-16, Accounting
for Investments in Limited Liability Companies. This consensus would require
that we account for our investment in a start-up manufacturing company, as
described in Note S of our Form 10-K for the year ended November 30, 2003,
filed on February 17, 2004, as an equity method investment. As of February 29,
2004, we have $1.2 million recorded in our balance sheet related to this
investment. The consensus, if ratified by the FASB, would be effective for us
on September 1, 2004 and would require that we record a cumulative effect of a
change in accounting principle in our fourth quarter of 2004. The EITF is currently considering Issue No. 03-R, The Accounting for
Certain Costs in the Mining Industry, Including Deferred Stripping Costs. The
issue is attempting to address numerous implementation and consistency issues
for the mining industry, including the appropriate accounting for deferred
stripping costs. Any conclusions by the EITF on this issue could result in a
change to our accounting policy on Deferred Stripping and as a result could
have a material impact on our financial condition or results of operations. In December 2003, the FASB issued SFAS No. 132 (Revised 2003), Employers
Disclosures about Pensions and Other Postretirement Benefits. This standard
increases the existing disclosure requirements by requiring more details about
pension plan assets, benefit obligations, cash flows, benefit costs and related
information. We will be required to segregate plan assets by category, such as
debt, equity and real estate, and to provide certain expected rates of return
and other informational disclosures. We will be required to adopt the
disclosure requirements of SFAS No. 132® when we issue our November 30, 2004
financial statements, and we will be required to disclose various elements of
pension and postretirement benefit costs in interim-period financial statements
for quarters beginning after December 15, 2003 (our second quarter of fiscal
2004 ending May 31, 2004). 
 Item 3. Quantitative and Qualitative Disclosures About Market Risk We have included a summary of our Quantitative and Qualitative Disclosure
About Market Risk in our annual report on Form 10-K for the year ended November
30, 2003, filed on February 17, 2004. There have been no material changes to
the summary provided in that report. 
 Item 4. Controls and Procedures Our management, including our Chief Executive Officer and our Chief
Financial Officer, conducted an evaluation of our disclosure controls and
procedures as of the end of the period covered by this report as required by
the rules of the Securities and Exchange Commission. Based on that evaluation,
our Chief Executive Officer and our Chief Financial Officer have concluded that
our disclosure controls and procedures are effective in ensuring that all
material information required to be filed in this report has been made known to
them in a timely manner. 28




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PART II. OTHER INFORMATION 
 Item 1. Legal Proceedings Please refer to Note G regarding Legal Matters contained in Part I, Item 1
of this report, which is incorporated by reference in this Part II, as its Item
1. 
 Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: ExhibitNumber
    
    
    
    Title of Exhibit
    
    Note10.1
    
    
    
    Amendment to Credit Agreement dated as of March
31, 2004 among EaglePicher Holdings, Inc.,
EaglePicher Incorporated Harris Trust and
Savings Bank, as administrative agent, and
various lenders party thereto
    
    *10.2
    
    
    
    Second Amendment to Credit Agreement dated as
of March 31, 2004 among EaglePicher Holdings,
Inc., EaglePicher Incorporated Harris Trust and
Savings Bank, as administrative agent, and
various lenders party thereto
    
    *31.1
    
    
    
    Certification Pursuant to Rule
13a-14(a)/15d-14(a) of the Securities Exchange
Act of 1934, as Amended
    
    *31.2
    
    
    
    Certification Pursuant to Rule
13a-14(a)/15d-14(a) of the Securities Exchange
Act of 1934, as Amended
    
    *32.1
    
    
    
    Certification Pursuant to 18 U.S.C. Section
1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
    
    *32.2
    
    
    
    Certification Pursuant to 18 U.S.C. Section
1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
    
    *
 *Filed herewith (b) Reports on Form 8-K  
    
    Form 8-K, filed December 8, 2003, concerning our press release dated December 8, 2003
    
    Form 8-K, filed December 18, 2003, concerning our press release dated December 17, 2003
    
    Form 8-K, filed February 17, 2004, concerning our press release dated February 16, 2004 29




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##### Table of Contents



SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized. EAGLEPICHER HOLDINGS, INC./s/ Thomas R. PilholskiThomas R. PilholskiSenior Vice President and Chief Financial Officer

(Principal Financial Officer) DATE: April 5, 2004 30




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##### Table of Contents



SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized. EAGLEPICHER INCORPORATED/s/ Thomas R. PilholskiThomas R. PilholskiSenior Vice President and Chief Financial Officer
(Principal Financial Officer) DATE: April 5, 2004 31




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##### Table of Contents



SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized. CARPENTER ENTERPRISES, INC./s/ Thomas R. PilholskiThomas R. PilholskiVice President
(Principal Financial Officer) DATE: April 5, 2004 32




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##### Table of Contents



SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized. DAISY PARTS, INC./s/ Thomas R. PilholskiThomas R. PilholskiVice President
(Principal Financial Officer) DATE: April 5, 2004 33




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##### Table of Contents



SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized. EAGLE-PICHER FAR EAST, INC./s/ Thomas R. PilholskiThomas R. PilholskiVice President
(Principal Financial Officer) DATE: April 5, 2004 34




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SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized. EAGLEPICHER FILTRATION & MINERALS, INC./s/ Thomas R. PilholskiThomas R. PilholskiVice President
(Principal Financial Officer) DATE: April 5, 2004 35




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##### Table of Contents



SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized. EAGLEPICHER TECHNOLOGIES, LLC/s/ Bradley J. WatersBradley J. WatersVice President and Chief Financial Officer
(Principal Financial Officer) DATE April 5, 2004 36




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SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized. EAGLEPICHER AUTOMOTIVE, INC./s/ Thomas R. PilholskiThomas R. PilholskiVice President
(Principal Financial Officer) DATE: April 5, 2004 37




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##### Table of Contents



SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized. EAGLEPICHER PHARMACEUTICAL SERVICES, LLC/s/ Thomas R. PilholskiThomas R. PilholskiVice President
(Principal Financial Officer) DATE: April 5, 2004 38




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##### Table of Contents



EXHIBIT INDEX ExhibitNumber
    
    
    
    Title of Exhibit
    
    Note10.1
    
    
    
    
    Amendment to Credit Agreement dated as of March
31, 2004 among EaglePicher Holdings, Inc.,
EaglePicher Incorporated Harris Trust and
Savings Bank, as administrative agent, and
various lenders party thereto
    
    *10.2
    
    
    
    
    Second Amendment to Credit Agreement dated as
of March 31, 2004 among EaglePicher Holdings,
Inc., EaglePicher Incorporated Harris Trust and
Savings Bank, as administrative agent, and
various lenders party thereto
    
    *31.1
    
    
    
    
    Certification Pursuant to Rule
13a-14(a)/15d-14(a) of the Securities Exchange
Act of 1934, as Amended
    
    *31.2
    
    
    
    
    Certification Pursuant to Rule
13a-14(a)/15d-14(a) of the Securities Exchange
Act of 1934, as Amended
    
    *32.1
    
    
    
    
    Certification Pursuant to 18 U.S.C. Section
1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
    
    *32.2
    
    
    
    
    Certification Pursuant to 18 U.S.C. Section
1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
    
    *
 *Filed herewith 39