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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-Q



x QUARTERLY REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934



For the quarterly period ended September 30, 2003



OR



 ̈TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934 [NO FEE REQUIRED]



For the Transition period from
 to



Commission File No. 333-43523



Elgin National Industries, Inc.

(Exact name of registrant as specified in its charter)



|Delaware                                                       |  | 36-3908410                          
|-------------------------------------------------------------- |  | ------------------------------------
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)



2001 Butterfield
Road, Suite 1020, Downers Grove, Illinois 60515-1050

(Address of principal executive offices)



Telephone Number: 630-434-7243

(Registrants telephone number, including area code)



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



As of October 31, 2003, there were outstanding 6,408.3 shares of Class A Common Stock and 19,951.7 shares of Preferred Stock.



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##### Table of Contents

ELGIN NATIONAL INDUSTRIES, INC.



TABLE OF CONTENTS



|                                                                                                                                                                                |  | Page
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----
|                                                                                                                                                                                | 
|PART IFINANCIAL INFORMATION                                                                                                                                                    |  |     
|                                                                                                                                                                                | 
|ITEM 1Financial Statements                                                                                                                                                     |  |     
|                                                                                                                                                                                | 
|Consolidated Balance Sheets as of September 30, 2003 and December 31, 2002                                                                                                      |  | 3   
|                                                                                                                                                                                | 
|Consolidated Statements of Income for the Nine Months Ended September 30, 2003 and September 30, 2002, and for the Three Months Ended September 30, 2003 and September 30, 2002 |  | 4   
|                                                                                                                                                                                | 
|Consolidated Statements of Changes in Stockholders Deficit for the Nine Months Ended September 30, 2003                                                                        |  | 5   
|                                                                                                                                                                                | 
|Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2003 and September 30, 2002                                                             |  | 6   
|                                                                                                                                                                                | 
|Notes to Condensed Consolidated Financial Statements                                                                                                                            |  | 7   
|                                                                                                                                                                                | 
|ITEM 2
Managements Discussion and Analysis of Financial Condition and Results of Operations                                                                                   |  | 11  
|                                                                                                                                                                                | 
|ITEM 3
Quantitative and Qualitative Disclosures about Market Risk                                                                                                              |  | 13  
|                                                                                                                                                                                | 
|ITEM 4
Controls and Procedures                                                                                                                                                 |  | 14  
|                                                                                                                                                                                | 
|PART IIOTHER INFORMATION                                                                                                                                                       |  |     
|                                                                                                                                                                                | 
|ITEM 1
Legal Proceedings                                                                                                                                                       |  | 15  
|                                                                                                                                                                                | 
|ITEM 6
Exhibits and Reports on Form 8-K                                                                                                                                        |  | 15  
|                                                                                                                                                                                | 
|SIGNATURES                                                                                                                                                                      |  | 16  
|                                                                                                                                                                                | 
|EXHIBIT INDEX                                                                                                                                                                   |  | 17  



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##### Table of Contents

PART I



|ITEM 1. |  | FINANCIAL STATEMENTS
|------- |  | --------------------



ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES



CONSOLIDATED BALANCE SHEETS



(in thousands except share data)

(Unaudited)



|                                                                                                       |  | September 30, 2003 |         |   | December 31, 2002 |  
|------------------------------------------------------------------------------------------------------ |  | ------------------ | ------- | - | ----------------- | -
|ASSETS                                                                                                 |  |                    |         |   |                   |  
|Current assets:                                                                                        |  |                    |         |   |                   |  
|Accounts receivable, net                                                                               |  | $                  | 22,906  |   |                   | $
|Inventories, net                                                                                       |  |                    | 16,882  |   |                   |  
|Prepaid expenses and other assets                                                                      |  |                    | 2,278   |   |                   |  
|Deferred income taxes                                                                                  |  |                    | 3,797   |   |                   |  
|                                                                                                       |  |                    |         |   |                   |  
|Total current assets                                                                                   |  |                    | 45,863  |   |                   |  
|Property, plant and equipment, net                                                                     |  |                    | 20,725  |   |                   |  
|Loans receivable from related parties                                                                  |  |                    | 10,708  |   |                   |  
|Other assets                                                                                           |  |                    | 27,806  |   |                   |  
|Goodwill                                                                                               |  |                    | 18,995  |   |                   |  
|                                                                                                       |  |                    |         |   |                   |  
|Total assets                                                                                           |  | $                  | 124,097 |   |                   | $
|                                                                                                       |  |                    |         |   |                   |  
|LIABILITIES AND STOCKHOLDERS DEFICIT                                                                  |  |                    |         |   |                   |  
|Current liabilities:                                                                                   |  |                    |         |   |                   |  
|Current portion of long-term debt                                                                      |  | $                  | 2,073   |   |                   | $
|Accounts payable                                                                                       |  |                    | 14,130  |   |                   |  
|Accrued expenses                                                                                       |  |                    | 11,679  |   |                   |  
|                                                                                                       |  |                    |         |   |                   |  
|Total current liabilities                                                                              |  |                    | 27,882  |   |                   |  
|Long-term debt less current portion                                                                    |  |                    | 97,250  |   |                   |  
|Other liabilities                                                                                      |  |                    | 2,377   |   |                   |  
|Deferred income taxes                                                                                  |  |                    | 3,461   |   |                   |  
|                                                                                                       |  |                    |         |   |                   |  
|Total liabilities                                                                                      |  |                    | 130,970 |   |                   |  
|                                                                                                       |  |                    |         |   |                   |  
|Redeemable preferred stock units                                                                       |  |                    | 14,561  |   |                   |  
|                                                                                                       |  |                    |         |   |                   |  
|Redeemable preferred stock                                                                             |  |                    | 3,994   |   |                   |  
|                                                                                                       |  |                    |         |   |                   |  
|Common stockholders deficit:                                                                          |  |                    |         |   |                   |  
|Common stock, Class A par value $.01 per share; authorized 23,678 shares; 6,408 issued and outstanding |  |                    |         |   |                   |  
|Retained deficit                                                                                       |  |                    | (25,428 | ) |                   |  
|                                                                                                       |  |                    |         |   |                   |  
|Total common stockholders deficit                                                                     |  |                    | (25,428 | ) |                   |  
|                                                                                                       |  |                    |         |   |                   |  
|Total liabilities and stockholders deficit                                                            |  | $                  | 124,097 |   |                   | $
|                                                                                                       |  |                    |         |   |                   |  



The accompanying notes
are an integral part of the condensed consolidated financial statements



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ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES



CONSOLIDATED STATEMENTS OF OPERATIONS



(in thousands)

(Unaudited)



|                                             |  | For the Nine Months Ended September 30, |        |   | For the Three Months Ended September 30, |  
|-------------------------------------------- |  | --------------------------------------- | ------ | - | ---------------------------------------- | -
|                                             |  | 2003                                    |        |   | 2002                                     |  
|Net sales                                    |  | $                                       | 93,667 |   |                                          | $
|Cost of sales                                |  |                                         | 70,868 |   |                                          |  
|                                             |  |                                         |        |   |                                          |  
|Gross profit                                 |  |                                         | 22,799 |   |                                          |  
|Selling, general and administrative expenses |  |                                         | 18,286 |   |                                          |  
|                                             |  |                                         |        |   |                                          |  
|Operating income                             |  |                                         | 4,513  |   |                                          |  
|Other expenses (income)                      |  |                                         |        |   |                                          |  
|Interest income                              |  |                                         | (474   | ) |                                          |  
|Interest expense                             |  |                                         | 7,952  |   |                                          |  
|                                             |  |                                         |        |   |                                          |  
|Loss before income taxes                     |  |                                         | (2,965 | ) |                                          |  
|Benefit for income taxes                     |  |                                         | (1,097 | ) |                                          |  
|                                             |  |                                         |        |   |                                          |  
|Net loss                                     |  | $                                       | (1,868 | ) |                                          | $
|                                             |  |                                         |        |   |                                          |  







The accompanying notes are an integral part of the condensed consolidated
financial statements



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ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES



CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS DEFICIT



For the Nine Months Ended September 30, 2003

(in thousands except share data)

(Unaudited)



|                                                                        |  | Common Stock |  | Retained (Deficit) |   |         | Total Stockholders Deficit | 
|----------------------------------------------------------------------- |  | ------------ |  | ------------------ | - | ------- | --------------------------- | 
|Balance as of December 31, 2002                                         |  | $            |  |                    | $ | (23,074 | )                           | 
|Net loss for the nine months ended September 30, 2003                   |  |              |  |                    |   | (1,868  | )                           | 
|Redeemable preferred stock unit dividends, net of tax of $209           |  |              |  |                    |   | (336    | )                           | 
|Redeemable preferred stock dividends (19,952 shares at $7.50 per share) |  |              |  |                    |   | (150    | )                           | 
|                                                                        |  |              |  |                    |   |         |                             | 
|Balance as of September 30, 2003                                        |  | $            |  |                    | $ | (25,428 | )                           | 
|                                                                        |  |              |  |                    |   |         |                             | 







The accompanying notes are an integral part of the condensed consolidated
financial statements



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ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES



CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS



For the Nine Months Ended September 30, 2003 and 2002

(in thousands)

(unaudited)



|                                                  |  | 2003 |         |   | 2002 |  
|------------------------------------------------- |  | ---- | ------- | - | ---- | -
|Net cash provided (used ) by operating activities |  | $    | 665     |   |      | $
|                                                  |  |      |         |   |      |  
|Cash flows from investing activities:             |  |      |         |   |      |  
|Purchase of property, plant and equipment         |  |      | (610    | ) |      |  
|Proceeds from sale of assets                      |  |      | 37      |   |      |  
|                                                  |  |      |         |   |      |  
|Net cash used by investing activities             |  |      | (573    | ) |      |  
|                                                  |  |      |         |   |      |  
|Cash flows from financing activities:             |  |      |         |   |      |  
|Borrowings of long-term debt                      |  |      | 25,000  |   |      |  
|Repayments of long-term debt                      |  |      | (23,005 | ) |      |  
|Debt issuance costs                               |  |      | (2,087  | ) |      |  
|                                                  |  |      |         |   |      |  
|Net cash (used) provided by financing activities  |  |      | (92     | ) |      |  
|                                                  |  |      |         |   |      |  
|Net decrease in cash                              |  |      | 0       |   |      |  
|Cash and cash equivalents at beginning of period  |  |      |         |   |      |  
|                                                  |  |      |         |   |      |  
|Cash and cash equivalents at end of period        |  | $    | 0       |   |      | $
|                                                  |  |      |         |   |      |  







The accompanying notes are an integral part of the condensed consolidated
financial statements



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ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



1.    Report Preparation



The accompanying condensed consolidated financial statements, which have not
been audited by independent certified public accountants, were prepared in conformity with accounting principles generally accepted in the United States and such principles were applied on a basis consistent with the preparation of the audited
consolidated financial statements included in the Companys December 31, 2002 10-K filed with the Securities and Exchange Commission. The financial information furnished includes all normal recurring accrual adjustments which are, in the
opinion of management, necessary for a fair statement of results for the interim period. Results for the first nine months of 2003 are not necessarily indicative of the results to be expected for the full year. For further information refer to the
Companys consolidated financial statements included in the annual report on Form 10-K.



2.    Inventories



|                                 |  | September 30, 2003 |        | December 31, 2002
|-------------------------------- |  | ------------------ | ------ | -----------------
|                                 |  | (in thousands)    
|Finished goods                   |  | $                  | 10,923 |                  
|Work-in-process                  |  |                    | 2,348  |                  
|Raw materials                    |  |                    | 5,263  |                  
|                                 |  |                    |        |                  
|                                 |  |                    | 18,534 |                  
|Less excess and obsolete reserve |  |                    | 1,652  |                  
|                                 |  |                    |        |                  
|                                 |  | $                  | 16,882 |                  
|                                 |  |                    |        |                  



3.    Senior
Credit Facility



On February 10, 2003, the Company and its
subsidiaries entered into a Loan and Security Agreement to increase its borrowing capacity. Proceeds from the Loan and Security Agreement were used to repay and retire all amounts outstanding under the prior Bank Credit Agreement. The Loan and
Security Agreement includes three term loans, Term Loan A, Term Loan B and Term Loan C, having original principal amounts of $7,500,000, $2,500,000 and $15,000,000, respectively. The Loan and Security Agreement also includes a revolver loan with a
commitment amount of $27,500,000 subject to borrowing base and other restrictions, as well as restrictions under the Companys Indenture. Term Loan A and Term Loan B requires monthly principal payments of $104,000 and $63,000, respectively
beginning May 2003. Term Loan C does not require current principal repayments and is due in full on February 10, 2006. The Companys assets are pledged under the terms of the Loan and Security Agreement. The Loan and Security Agreement has a
maturity date of February 10, 2008. Term Loan A will accrue interest at the prime rate set by Wells Fargos principal office (Prime Rate) plus a margin determined by a pricing grid. Term Loan B will accrue interest at the Prime Rate
plus 3.00% per annum. Term Loan C will accrue interest at the Prime Rate plus 4.75% per annum. The revolver loan will accrue interest at the Prime Rate plus 1.00% per annum.



Upon refinancing remaining financing costs related to the prior Bank Credit Agreement of $488,000 were expensed.



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ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Annual principal payments on the term loan portion of the Loan and Security Agreement will be as
follows (in thousands):



|                    |  | Term Loan A |       | Term Loan B |   | Term Loan C |  | Total
|------------------- |  | ----------- | ----- | ----------- | - | ----------- |  | -----
|2003                |  | $           | 500   |             | $ | 832         |  |      
|2004                |  |             | 750   |             |   | 1,250       |  |      
|2005                |  |             | 1,125 |             |   | 418         |  |      
|2006                |  |             | 1,200 |             |   |             |  | $    
|2007                |  |             | 1,200 |             |   |             |  |      
|2008 and thereafter |  |             | 2,725 |             |   |             |  |      
|                    |  |             |       |             |   |             |  |      
|                    |  | $           | 7,500 |             | $ | 2,500       |  | $    
|                    |  |             |       |             |   |             |  |      



Along with scheduled principal
repayments, the term loans require additional principal payments after the end of each year based on an excess cash flow calculation.



4.    Segment Information



The Company operates primarily in two industries, Manufactured Products and Engineering Services. In accordance with the Companys method of internal
reporting, corporate headquarters costs are not allocated to the individual segments. Information about the Company by industry is presented below for the nine months and three months ended September 30:



|                                                         |  | Nine Months Ended September 30 |        |   | Three Months Ended September 30 |  
|-------------------------------------------------------- |  | ------------------------------ | ------ | - | ------------------------------- | -
|                                                         |  | 2003                           |        |   | 2002                            |  
|                                                         |  | (in thousands)                 |       
|Net sales to external customers:                         |  |                                |        |   |                                 |  
|Manufactured Products                                    |  | $                              | 65,640 |   |                                 | $
|Engineering Services                                     |  |                                | 28,027 |   |                                 |  
|                                                         |  |                                |        |   |                                 |  
|Total net sales to external customers                    |  | $                              | 93,667 |   |                                 | $
|                                                         |  |                                |        |   |                                 |  
|Net sales to internal customers:                         |  |                                |        |   |                                 |  
|Manufactured Products                                    |  | $                              | 2,356  |   |                                 | $
|Engineering Services                                     |  |                                | 84     |   |                                 |  
|                                                         |  |                                |        |   |                                 |  
|Total net sales to internal customers                    |  | $                              | 2,440  |   |                                 | $
|                                                         |  |                                |        |   |                                 |  
|Total net sales                                          |  |                                |        |   |                                 |  
|Manufactured Products                                    |  | $                              | 67,996 |   |                                 | $
|Engineering Services                                     |  |                                | 28,111 |   |                                 |  
|                                                         |  |                                |        |   |                                 |  
|Total net sales                                          |  |                                | 96,107 |   |                                 |  
|Elimination of net sales to internal customers           |  |                                | 2,440  |   |                                 |  
|                                                         |  |                                |        |   |                                 |  
|Total consolidated net sales                             |  | $                              | 93,667 |   |                                 | $
|                                                         |  |                                |        |   |                                 |  
|Earnings (loss) before interest, taxes and amortization: |  |                                |        |   |                                 |  
|Manufactured Products                                    |  | $                              | 8,972  |   |                                 | $
|Engineering Services                                     |  |                                | 77     |   |                                 |  
|                                                         |  |                                |        |   |                                 |  
|Total segment earnings                                   |  |                                | 9,049  |   |                                 |  
|Corporate expenses                                       |  |                                | (4,536 | ) |                                 |  
|Interest income                                          |  |                                | 474    |   |                                 |  
|Interest expense                                         |  |                                | (7,952 | ) |                                 |  
|                                                         |  |                                |        |   |                                 |  
|Consolidated loss before income taxes                    |  | $                              | (2,965 | ) |                                 | $
|                                                         |  |                                |        |   |                                 |  



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ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



5.     Subsidiary Guarantors



The Companys payment obligations under the Senior Notes are fully and
unconditionally guaranteed on a joint and several basis (collectively, Subsidiary Guarantees) by Tabor Machine Company, Norris Screen and Manufacturing, Inc., TranService, Inc., Mining Controls, Inc., Clinch River Corporation,
Centrifugal Services, Inc., Roberts & Schaefer Company, Soros Associates, Inc., Vanco International, Inc., Leland Powell Fasteners, Inc. and Best Metal Finishing, Inc. (the Guarantors) each a direct, wholly-owned subsidiary of the
Company. The following summarized combined financial data illustrates the composition of the combined Guarantors.



|                                                |  | September 30, 2003                   |       
|----------------------------------------------- |  | ------------------------------------ | ------
|                                                |  | Parent                               |       
|                                                |  | (in thousands)                       |       
|Current assets                                  |  | $                                    | 12,769
|Noncurrent assets                               |  |                                      | 59,102
|                                                |  |                                      |       
|Total assets                                    |  | $                                    | 71,871
|                                                |  |                                      |       
|Current liabilities                             |  | $                                    | 8,673 
|Total liabilities                               |  | $                                    | 75,526
|                                                | 
|                                                |  | December 31, 2002                    |       
|                                                |  | Parent                               |       
|                                                |  | (in thousands)                       |       
|Current assets                                  |  | $                                    | 13,492
|Noncurrent assets                               |  |                                      | 59,266
|                                                |  |                                      |       
|Total assets                                    |  | $                                    | 72,758
|                                                |  |                                      |       
|Current liabilities                             |  | $                                    | 10,087
|Total liabilities                               |  | $                                    | 74,993
|                                                | 
|                                                |  | Nine months ended September 30, 2003 |       
|                                                |  | Parent                               |       
|                                                |  | (in thousands)                       |       
|Sales, net                                      |  | $                                    | 22,886
|Gross profit                                    |  |                                      | 8,190 
|(Loss) income before income tax                 |  |                                      | (2,965
|Net (loss) income                               |  |                                      | (1,868
|Cash provided by operating activities           |  |                                      | 131   
|Cash used in investing activities               |  |                                      | (61   
|Cash used in financing activities               |  |                                      | (70   
|                                                | 
|                                                |  | Nine months ended September 30, 2002 |       
|                                                |  | Parent                               |       
|                                                |  | (in thousands)                       |       
|Sales, net                                      |  | $                                    | 24,544
|Gross profit                                    |  |                                      | 7,886 
|(Loss) income before income tax                 |  |                                      | (2,017
|Net (loss) Income                               |  |                                      | (1,270
|Cash (used in) provided by operating activities |  |                                      | (5,481
|Cash used in investing activities               |  |                                      | (246  
|Cash provided by financing activities           |  |                                      | 5,727 



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ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



|                                |  | Three months ended September 30, 2003 |       
|------------------------------- |  | ------------------------------------- | ------
|                                |  | Parent                                |       
|                                |  | (in thousands)                        |       
|Sales, net                      |  | $                                     | 7,933 
|Gross profit                    |  |                                       | 3,185 
|(Loss) income before income tax |  |                                       | (1,136
|Net (loss) Income               |  |                                       | (713  
|                                | 
|                                |  | Three months ended September 30, 2002 |       
|                                |  | Parent                                |       
|                                |  | (in thousands)                        |       
|Sales, net                      |  | $                                     | 8,241 
|Gross profit                    |  |                                       | 2,712 
|(Loss) income before income tax |  |                                       | (268  
|Net (loss) Income               |  |                                       | (203  



The direct and
non-direct, non-guarantor subsidiaries, in terms of assets, equity, income, and cash flows, on an individual and combined basis are inconsequential.



Separate financial statements of the Guarantors are not presented because management has determined that these would not be material to investors.



5.    Contingencies



The Company has claims against others, and there are claims by others
against it, in a variety of matters arising out of the conduct of the Companys business. The ultimate resolution of all such claims would not, in the opinion of management, have a material effect on the Companys financial position, cash
flows or results of operations.



6.    Adoption of
Accounting Principles



In May 2003, the FASB issued SFAS
No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity. This statement establishes standards for how an issuer classifies and measures certain financial instruments with characteristics
of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances).



The Company will implement the provisions of SFAS No. 150 beginning in the first quarter of 2004. Through the implementation
of SFAS No. 150 the Company will classify its redeemable preferred stock units and redeemable preferred stock as liabilities and the corresponding dividend and other amounts to be paid to holders as interest expense.



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|ITEM 2. |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- |  | -------------------------------------------------------------------------------------



Results of Operations



Three Months Ended September 30, 2003 Compared to Three Months Ended September 30, 2002



Net Sales:  Net sales for the quarter ended September 30,
2003 decreased $3.4 million, or 9.2%, to $33.5 million from $36.9 million for the corresponding period in 2002. The Engineering Services Segments sales decreased $3.0 million, or 19.4% to $12.6 million from $15.6 million for the corresponding
period in 2002 due to a delay in commitments to major capital projects. For the quarter ended September 30, 2003 the Engineering Services Segment had four projects with sales in excess of $500,000, totalling $9.1 million in sales, compared to five
such projects totalling $13.3 million in sales for the quarter ended September 30, 2002. This decrease in projects in excess of $500,000 was partially offset with increased sales from smaller projects, each with individual sales less than $500,000.
For the quarter ended September 30, 2003 the Engineering Services Segment had sales from these smaller projects of $3.5 million compared to $2.3 million for the quarter ended September 30, 2002. The Manufactured Products Segments sales
decreased $0.4 million, or 1.7%, primarily due to the decrease of fastener sales and sales of fabricated equipment, partially offset with increased sales of centrifugal dryers.



Gross Profit:  Gross profit for the quarter ended September 30, 2003 of $7.8 million was $0.1 million or
2.0% lower than the gross profit of $7.9 million for the corresponding period in 2002 due to the lower sales level. As a percentage of net sales, the gross profit increased to 23.2% for the quarter ended September 30, 2003 from 21.5% for the
corresponding period in 2002. The increase resulted from a higher percentage of sales from the Manufactured Products Segment, which earns a higher margin on sales than the Engineering Services Segment.



Selling, General and Administrative Expenses:  Selling,
general and administrative expenses of the Company for the quarter ended September 30, 2003 of $6.4 million were $0.5 million or 7.9% above the selling, general and administrative expenses of $5.9 million for the corresponding period in 2002. This
was due to higher employee related costs. As a percentage of net sales, selling, general and administrative expenses increased from 16.0% for the quarter ended September 30, 2002 to 19.0% for the quarter ended September 30, 2003 due to decreased
sales.



Interest Income:  Interest income of
the Company for the quarter ended September 30, 2003 of $0.2 million approximated interest income for the corresponding period ended September 30, 2002.



Interest Expense:  Interest expense of the Company for the quarter ended September 30, 2003 of $2.7 million increased $0.3 million or
11.9% from $2.4 million for the corresponding period in 2002. This increase was due to the higher debt level and higher interest rates.



Benefit for Income Taxes:  Benefit for income taxes of the Company for the quarter ended September 30, 2003 of $0.4 million compared to
$0.1 million for the quarter ended September 30, 2002. The increase of $0.3 million was due to the larger loss before income taxes for the quarter ended September 30, 2003.



Net Loss:  The net loss for the Company for the quarter ended September 30, 2003 of $0.7 million was $0.5
million higher than the net loss of $0.2 million for the quarter ended September 30, 2002 for the reasons discussed above.



Nine months ended September 30, 2003 Compared to Nine months ended September 30, 2002



Net Sales:  Net sales for the nine months ended September
30, 2003 decreased $18.7 million, or 16.6%, to $93.7 million from $112.4 million for the corresponding period in 2002. The Engineering Services Segments sales decreased $15.6 million, or 35.8%. For the nine months ended September 30, 2003 the
Company had seven



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projects with sales in excess of $1.0 million, totalling $19.3 million, compared to seven such projects, totalling $34.3 million for the nine months ended
September 30, 2002. The Manufactured Products Segments sales decreased $3.1 million, or 4.5%, primarily due to decreased sales of fabricated equipment and fasteners.



Gross Profit:  Gross profit for the nine months ended September 30, 2003 decreased $0.2 million to $22.8
million from $23.0 million for the corresponding period in 2002. As a percentage of net sales the gross profit increased to 24.3% for the nine months ended September 30, 2003 from 20.5% for the nine months ended September 30, 2002. Within the
Engineering Services Segment the gross profit of $3.6 million was $0.4 million or 10.2% lower than the gross profit of $4.0 million for the corresponding period in 2002. The lower gross profit resulted from the lower sales level, partially offset
with a higher gross profit margin earned as a percentage of sales. For the nine months ended September 30, 2003 the Engineering Services Segments gross profit increased to 12.9% from 9.2% for the nine months ended September 30, 2002. Within
the Manufactured Products Segment the gross profit of $19.2 million increased $0.2 million or 1.0% from $19.0 million for the corresponding period in 2002 due to a higher gross profit margin earned as a percentage of sales, partially offset with the
lower sales level. As a percentage of sales the Manufactured Products Segments gross profit increased to 29.2% from 27.6%.



Selling, General and Administrative Expenses:  Selling, general and administrative expenses of the Company for the nine months ended
September 30, 2003 of $18.3 million approximated the expense for the corresponding period ended September 30, 2002.



Interest Income:  Interest income of the Company of $0.5 million for the nine months ended September 30, 2003 increased $0.2 million or
38.1% from $0.3 million for the corresponding period in 2002. The increase was due to higher interest on officers notes.



Interest Expense:  Interest expense of the Company for the nine months ended September 30, 2003 of $8.0 million was $0.9 million higher
than the interest expense of $7.1 million for the corresponding period in 2002. This increase was due to an increased debt level and higher interest rates.



Benefit for Income Taxes:  Benefit for income taxes of the Company for the nine months ended September 30, 2003 of $1.1 million was $0.4
million higher than the benefit for income taxes of $0.7 million for the nine months ended September 30, 2002 due to the larger loss before taxes for the nine month period ended September 30, 2003.



Net Loss:  The net loss for the Company for the nine months
ended September 30, 2003 of $1.9 million compared to net loss of $1.3 million for the nine months ended September 30, 2002 for the reasons discussed above.



Liquidity and Capital Resources



Net cash provided by operating activities for the nine months ended September 30, 2003 of $0.7 million was generated from the net loss adjusted for
non-cash charges, increased accrued expenses, and decreased accounts receivable. These provisions were partially offset with cash used to decrease accounts payable, increase prepaid expenses and other assets and increase inventory. Included in
non-cash charges for the nine months ended September 30, 2003 was depreciation of $2.3 million and other deferred charges of $1.0 million, partially offset with pension income of $0.8 million. Cash flows from operations for any specific period are
often materially affected by the timing and amounts of cash receipts and cash disbursements related to engineering services projects.



Cash used in investing activities for the nine months ended September 30, 2003 of $0.6 million consisted of capital expenditures resulting from the
Companys regular practice of upgrading and maintaining its equipment base and facilities.



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Cash used by financing activities for the nine months ended Sepember 30, 2003 of $0.1 million consisted
of debt issuance costs of $2.1 million and the repayment of long-term debt of $23.0 million, partially offset with the issuance of $25.0 million of long-term debt.



On February 10, 2003, the Company and its subsidiaries entered into a Loan and Security Agreement to increase its borrowing
capacity. Proceeds from the new credit facility were used to repay and retire all amounts outstanding under the existing Senior Credit Facility. The new Loan and Security Agreement includes three term loans, Term Loan A, Term Loan, B and Term Loan
C, having original principal amounts of $7,500,000, $2,500,000 and $15,000,000, respectively. The new Loan and Security Agreement also includes a revolver loan with a commitment amount of $27,500,000 subject to borrowing base and other restrictions,
as well as restrictions under the Companys Indenture. Term Loan A requires monthly principal payments of $0.1 million beginning May 2003. Term Loan B requires monthly principal payments of $0.1 million beginning in May 2003. Term Loan C does
not require current principal repayments. The Companys assets are pledged under the terms of the new Loan and Security Agreement.



The Companys liquidity requirements, both long term (over one year) and short term, are for working capital, capital expenditures and debt service.
The primary source for meeting these needs has been funds provided by operations and funds available under the Loan and Security Agreement. The Company anticipates with improved operating results that funds provided by future operations and
available credit will be sufficient to meet its anticipated debt service requirements, working capital needs and capital expenditures.



Backlog



The Companys backlog consists primarily of that portion of engineering services contracts that have been awarded but not performed and also includes open manufacturing orders. Backlog at September 30, 2003 was
$95.4 million. Approximately $9.2 million relates to the Manufactured Products Segment, with the remainder of $86.2 million relating to the Engineering Services Segment. A substantial majority of current backlog is expected to be realized in the
next twelve months.



Safe Harbor



Statements herein regarding the Companys ability to meet its liquidity
requirements, and the Companys expected realization of current backlog constitute forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Act of 1934. Such statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from those projected. Further, statements herein regarding the Companys performance in future periods are subject to risks relating to, deterioration of relationships with, or
the loss of material customers or suppliers, possible product liability claims, decreases in demand for the Companys products, and adverse changes in general market and industry conditions and any resulting inability to comply with the
financial covenants imposed by the Companys credit facility. Management believes these forward-looking statements are reasonable; however, undue reliance should not be placed on such forward-looking statements, which are based on current
expectations.



|ITEM 3. |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|------- |  | ----------------------------------------------------------



The Company continues to use its reputation in the United States to expand into international markets. In the nine months ended September 30, 2003
approximately 12% of the Companys net sales were attributable to services provided or products sold for use outside the United States, primarily to Australia. A portion of these net sales and cost of sales is derived from international
operations which are conducted in foreign currencies. Changes in the value of these foreign currencies relative to the U.S. dollar could adversely affect the Companys business, financial condition, results of operation and debt service
capability. Foreign sales, particularly construction management projects undertaken at foreign locations, are subject to various risks, including exposure to currency fluctuations, political, religious and economic instability, local labor market
conditions, the



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imposition of foreign tariffs and other trade barriers, and changes in governmental policies. There can be no assurance that the Companys foreign
operations, or expansion thereof, would not have a material adverse effect on the Companys business, financial condition, results of operations and debt service capability.



|ITEM 4. |  | CONTROLS AND PROCEDURES
|------- |  | -----------------------



Elgin National Industries Inc. management, including the Chief Executive Officer and the Chief Financial Officer, have conducted an evaluation of the
effectiveness of disclosure controls and procedures pursuant to Exchange Act Rule 13a-14 as of the end of period covered by this report. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the
disclosure controls and procedures are effective in ensuring that all material information required to be filed in this quarterly report has been made known to them in a timely fashion. There have been no significant changes in internal controls, or
in other factors that could significantly affect internal controls, subsequent to the date the Chief Executive Officer and Chief Financial Officer completed their evalution.



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PART II



|ITEM 1. |  | LEGAL PROCEEDINGS
|------- |  | -----------------



The Company and its subsidiaries are involved in legal proceedings from time to time in the ordinary course of its business. As of the date of this
filing, neither the Company nor any of its subsidiaries are a party to any lawsuit or proceeding which, individually or in the aggregate, in the opinion of management, is reasonably likely to have a material adverse effect on the financial
condition, results of operation or cash flow of the Company.



|ITEM 2. |  | CHANGES IN SECURITIES AND USE OF PROCEEDS
|------- |  | -----------------------------------------



None



|ITEM 3. |  | DEFAULTS UPON SENIOR SECURITIES
|------- |  | -------------------------------



None



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



None



|ITEM 5. |  | OTHER INFORMATION
|------- |  | -----------------



None



|ITEM 6. |  | EXHIBITS AND REPORTS ON FORM 8-K
|------- |  | --------------------------------



None



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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.



ELGIN NATIONAL INDUSTRIES, INC.By:

/s/    WAYNE J.
CONNERName:



Wayne J. ConnerTitle:



Vice President, Treasurer, and ChiefFinancial Officer(Duly Authorized Officer and PrincipalFinancial Officer)




Dated: November 10, 2003



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EXHIBITS INDEX



|Exhibit Number |  | Document Description                                                                                                                                                                                                                                                                                                      |  | Footnote Reference |  
|-------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | -
|3.1            |  | Certificate of Incorporation of Elgin National Industries, Inc.                                                                                                                                                                                                                                                           |  | (3                 | )
|               |  |                                                                                                                                                                                                                                                                                                                          
|3.2            |  | Bylaws of Elgin National Industries, Inc.                                                                                                                                                                                                                                                                                 |  | (3                 | )
|               |  |                                                                                                                                                                                                                                                                                                                          
|4.1            |  | Indenture dated November 5, 1997, between Elgin National Industries, Inc., subsidiaries and Norwest Bank Minnesota, as Trustee.                                                                                                                                                                                           |  | (2                 | )
|               |  |                                                                                                                                                                                                                                                                                                                          
|4.2            |  | Form of 11% Senior Note due 2007 (included in Exhibit 4.1).                                                                                                                                                                                                                                                               |  | (2                 | )
|               |  |                                                                                                                                                                                                                                                                                                                          
|4.3            |  | Registration Rights Agreement dated November 5, 1997, by and among Elgin National Industries, Inc., certain of its subsidiaries, and BancAmerica Robertson Stephens and CIBC Wood
Gundy Securities Corp.                                                                                                                  |  | (3                 | )
|               |  |                                                                                                                                                                                                                                                                                                                          
|4.4            |  | Form of Subsidiary Guaranty (included in Exhibit 4.1).                                                                                                                                                                                                                                                                    |  | (2                 | )
|               |  |                                                                                                                                                                                                                                                                                                                          
|10.1           |  | Credit Agreement dated as of September 24, 1993, as Amended and Restated as of November 5, 1997, by and among Elgin National Industries, Inc., various financial institutions, and
Bank of America National Trust and Savings Association, individually and as agent.                                                     |  | (2                 | )
|               |  |                                                                                                                                                                                                                                                                                                                          
|10.2           |  | Employment and Non-Competition Agreement dated as of November 5, 1997, between Elgin National Industries, Inc. and Fred C. Schulte.*                                                                                                                                                                                      |  | (2                 | )
|               |  |                                                                                                                                                                                                                                                                                                                          
|10.3           |  | Employment and Non-Competition Agreement dated as of November 5, 1997, between Elgin National Industries, Inc. and Charles D. Hall.*                                                                                                                                                                                      |  | (2                 | )
|               |  |                                                                                                                                                                                                                                                                                                                          
|10.4           |  | Employment and Non-Competition Agreement dated as of November 5, 1997, between Elgin National Industries, Inc. and Wayne J. Conner.*                                                                                                                                                                                      |  | (2                 | )
|               |  |                                                                                                                                                                                                                                                                                                                          
|10.5           |  | The Elgin National Industries, Inc. Supplemental Retirement Plan dated as of 1995, and effective January 1, 1995.*                                                                                                                                                                                                        |  | (3                 | )
|               |  |                                                                                                                                                                                                                                                                                                                          
|10.6           |  | Credit Agreement dated as of September 24, 1993, as Amended and Restated as of January 18, 2001, by and among Elgin National Industries, Inc., various financial institutions, and
PNC Bank, National Association, individually and as agent.                                                                             |  | (4                 | )
|               |  |                                                                                                                                                                                                                                                                                                                          
|10.7           |  | First Amendment to Credit Agreement dated as of September 24, 1993, as Amended and Restated as of January 18, 2001, and further amended as of March 1, 2001 by and among Elgin
National Industries, Inc., various financial institutions, and PNC Bank, National Association, individually and as agent.                  |  | (4                 | )
|               |  |                                                                                                                                                                                                                                                                                                                          
|10.8           |  | Second Amended to Credit Agreement dated as of September 24, 1993, as Amended and Restated as of January 18, 2001, and further amended as of June 28, 2001 by and among Elgin
National Industries, Inc., various financial institutions, and PNC Bank, National Association, individually and as agent.                   |  | (4                 | )
|               |  |                                                                                                                                                                                                                                                                                                                          
|10.9           |  | Third Amendment to Credit Agreement dated as of September 24, 1993, as Amended and Restated as of January 18, 2001, and further amended as of March 31, 2002 by and among Elgin
National Industries, Inc., various financial institutions, and PNC Bank, National Association, individually and as agent.                 |  | (5                 | )
|               |  |                                                                                                                                                                                                                                                                                                                          
|10.10          |  | Waiver and Fourth Amendment to Credit Agreement dated as of September 24, 1993, as Amended and Restated as of January 18, 2001, and further amended as of September 30, 2002 by and
among Elgin National Industries, Inc., various financial institutions, and PNC Bank, National Association, individually and as agent. |  | (6                 | )
|               |  |                                                                                                                                                                                                                                                                                                                          
|10.11          |  | Loan and Security Agreement, dated February 10, 2003 by and among Elgin National Industries, Inc. and each of its subsidiaries and Foothill Capital Corporation, as lender,
Arranger and administrative agent and Ableco Finance LLC, as lender.                                                                          |  | (7                 | )



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|Exhibit Number |  | Document Description                                                                                                                             |  | Footnote Reference |  
|-------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------------ | -
|10.12          |  | Amendment to Employment and Non-Competition Agreement dated as of January 29, 2003, between Elgin National Industries, Inc. and Charles D. Hall. |  | (8                 | )
|               |  |                                                                                                                                                 
|10.13          |  | Amendment to Employment and Non-Competition Agreement dated as of January 29, 2003, between Elgin National Industries, Inc. and Fred C. Schulte. |  | (8                 | )
|               |  |                                                                                                                                                 
|10.14          |  | Amendment to Employment and Non-Competition Agreement dated as of January 29, 2003, between Elgin National Industries, Inc. and Wayne J. Conner. |  | (8                 | )
|               |  |                                                                                                                                                 
|21             |  | Subsidiaries of Elgin National Industries, Inc.                                                                                                  |  | (2                 | )
|               |  |                                                                                                                                                 
|31.1           |  | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                          |  | (1                 | )
|               |  |                                                                                                                                                 
|31.2           |  | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                          |  | (1                 | )
|               |  |                                                                                                                                                 
|32.1           |  | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                          |  | (1                 | )
|               |  |                                                                                                                                                 
|32.2           |  | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                          |  | (1                 | )

---

|(1) | Filed within
|--- | ------------

|(2) | Incorporated by reference to Pre-Effective Form S-4 Registration Statement of the Company (File No. 333-43523) filed with the Commission on December 30, 1997 .
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Incorporated by reference to Pre-Effective Amendment No. 1 to Form S-4 Registration Statement of the Company (File No. 333-43523) filed with the Commission on January 23, 1998.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Incorporated by reference to Form 10-Q of the Company (File No. 001-03771) filed with the Commission on August 10, 2001.
|--- | ------------------------------------------------------------------------------------------------------------------------

|(5) | Incorporated by reference to Form 10-Q of the Company (File No. 001-05771) filed with the Commission on May 15, 2002
|--- | --------------------------------------------------------------------------------------------------------------------

|(6) | Incorporated by reference to Form 10-Q of the Company (File No. 001-05771) filed with the Commission on November 12, 2002.
|--- | --------------------------------------------------------------------------------------------------------------------------

|(7) | Incorporated by reference to Form 8-K of the Company (File No. 001-05771) filed with the Commission on February 18, 2003.
|--- | -------------------------------------------------------------------------------------------------------------------------

|(8) | Incorporated by reference to Form 10-K of the company (File No. 001-05771) filed with the Commission on March 27, 2003.
|--- | -----------------------------------------------------------------------------------------------------------------------

|* | Management contract or compensatory plan or arrangement
|- | -------------------------------------------------------



18