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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 March 31, 2004



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



Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (SS 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-Q or any amendment to this Form 10-Q. ̈Yes  x No



Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). ̈Yes  x No



As of April 30, 2004, 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 March 31, 2004 and December 31, 2003                                       |  | 3   
|                                                                                                             | 
|Consolidated Statements of Operations for the Three Months Ended March 31, 2004 and March 31, 2003           |  | 4   
|                                                                                                             | 
|Consolidated Statement of Changes in Stockholders Deficit for the Three Months Ended March 31, 2004         |  | 5   
|                                                                                                             | 
|Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2004 and March 31, 2003 |  | 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                                            |  | 12  
|                                                                                                             | 
|ITEM 4Controls and Procedures                                                                               |  | 13  
|                                                                                                             | 
|PART IIOTHER INFORMATION                                                                                    |  |     
|                                                                                                             | 
|ITEM 1Legal Proceedings                                                                                     |  | 14  
|                                                                                                             | 
|ITEM 6Exhibits and Reports on Form 8-K                                                                      |  | 14  
|                                                                                                             | 
|SIGNATURES                                                                                                   |  | 15  
|                                                                                                             | 
|CERTIFICATIONS                                                                                               |  |     
|                                                                                                             | 
|EXHIBIT INDEX                                                                                                |  | 16  



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PART I



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



ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES



CONSOLIDATED BALANCE SHEETS



(in
thousands except share data)

(Unaudited)



|                                                                                                                                                  |  |                |         |   |                   |   |         |  
|------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------- | ------- | - | ----------------- | - | ------- | -
|                                                                                                                                                  |  | March 31, 2004 |         |   | December 31, 2003 |  
|ASSETS                                                                                                                                            |  |                |         |   |                   |   |         |  
|Current assets:                                                                                                                                   |  |                |         |   |                   |   |         |  
|Cash and equivalents                                                                                                                              |  | $              |         |   |                   | $ | 3,391   |  
|Accounts receivable, net                                                                                                                          |  |                | 31,576  |   |                   |   | 27,062  |  
|Inventories, net                                                                                                                                  |  |                | 20,430  |   |                   |   | 17,495  |  
|Prepaid expenses and other assets                                                                                                                 |  |                | 3,512   |   |                   |   | 2,277   |  
|Deferred income taxes                                                                                                                             |  |                | 3,497   |   |                   |   | 3,497   |  
|                                                                                                                                                  |  |                |         |   |                   |   |         |  
|Total current assets                                                                                                                              |  |                | 59,015  |   |                   |   | 53,722  |  
|Property, plant and equipment, net                                                                                                                |  |                | 19,750  |   |                   |   | 20,308  |  
|Loans receivable to related parties                                                                                                               |  |                | 11,010  |   |                   |   | 10,855  |  
|Other assets                                                                                                                                      |  |                | 30,097  |   |                   |   | 29,507  |  
|Goodwill                                                                                                                                          |  |                | 18,995  |   |                   |   | 18,995  |  
|                                                                                                                                                  |  |                |         |   |                   |   |         |  
|Total assets                                                                                                                                      |  | $              | 138,867 |   |                   | $ | 133,387 |  
|                                                                                                                                                  |  |                |         |   |                   |   |         |  
|LIABILITIES AND COMMON STOCKHOLDERS DEFICIT                                                                                                      |  |                |         |   |                   |   |         |  
|Current liabilities:                                                                                                                              |  |                |         |   |                   |   |         |  
|Current portion of long-term debt                                                                                                                 |  | $              | 2,032   |   |                   | $ | 2,019   |  
|Accounts payable                                                                                                                                  |  |                | 28,952  |   |                   |   | 25,076  |  
|Accrued expenses                                                                                                                                  |  |                | 11,493  |   |                   |   | 9,568   |  
|                                                                                                                                                  |  |                |         |   |                   |   |         |  
|Total current liabilities                                                                                                                         |  |                | 42,477  |   |                   |   | 36,663  |  
|Long-term debt less current portion                                                                                                               |  |                | 96,226  |   |                   |   | 96,741  |  
|Redeemable preferred stock units                                                                                                                  |  |                | 14,925  |   |                   |   | 14,743  |  
|Redeemable preferred stock                                                                                                                        |  |                | 4,094   |   |                   |   | 4,044   |  
|Other liabilities                                                                                                                                 |  |                | 2,322   |   |                   |   | 2,345   |  
|Deferred income taxes                                                                                                                             |  |                | 4,411   |   |                   |   | 4,411   |  
|                                                                                                                                                  |  |                |         |   |                   |   |         |  
|Total liabilities                                                                                                                                 |  |                | 164,455 |   |                   |   | 158,947 |  
|                                                                                                                                                  |  |                |         |   |                   |   |         |  
|Common stockholders deficit:                                                                                                                     |  |                |         |   |                   |   |         |  
|Common stock, Class A par value $.01 per share; authorized 23,678 shares; 6,408 issued and outstanding as of March 31, 2004 and December 31,
2003 |  |                |         |   |                   |   |         |  
|Retained deficit                                                                                                                                  |  |                | (25,834 | ) |                   |   | (25,836 | )
|Accumulated other comprehensive income                                                                                                            |  |                | 246     |   |                   |   | 276     |  
|                                                                                                                                                  |  |                |         |   |                   |   |         |  
|Total common stockholders deficit                                                                                                                |  |                | (25,588 | ) |                   |   | (25,560 | )
|                                                                                                                                                  |  |                |         |   |                   |   |         |  
|Total liabilities and stockholders deficit                                                                                                       |  | $              | 138,867 |   |                   | $ | 133,387 |  
|                                                                                                                                                  |  |                |         |   |                   |   |         |  



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



For the Three Months Ended March 31, 2004 and 2003

(in thousands)

(Unaudited)



|                                             |  |      |        |   |      |   |        |  
|-------------------------------------------- |  | ---- | ------ | - | ---- | - | ------ | -
|                                             |  | 2004 |        |   | 2003 |  
|Net sales                                    |  | $    | 52,396 |   |      | $ | 28,462 |  
|Cost of sales                                |  |      | 43,097 |   |      |   | 21,276 |  
|                                             |  |      |        |   |      |   |        |  
|Gross profit                                 |  |      | 9,299  |   |      |   | 7,186  |  
|Selling, general and administrative expenses |  |      | 6,581  |   |      |   | 6,021  |  
|                                             |  |      |        |   |      |   |        |  
|Operating income                             |  |      | 2,718  |   |      |   | 1,165  |  
|Other expenses (income)                      |  |      |        |   |      |   |        |  
|Interest income                              |  |      | (171   | ) |      |   | (153   | )
|Interest expense                             |  |      | 2,886  |   |      |   | 2,555  |  
|                                             |  |      |        |   |      |   |        |  
|Income (loss) before income taxes            |  |      | 3      |   |      |   | (1,237 | )
|Provision (benefit) for income taxes         |  |      | 1      |   |      |   | (466   | )
|                                             |  |      |        |   |      |   |        |  
|Net income (loss)                            |  | $    | 2      |   |      | $ | (771   | )
|                                             |  |      |        |   |      |   |        |  



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 STATEMENT OF CHANGES IN COMMON STOCKHOLDERS DEFICIT



For the Three Months Ended March 31, 2004

(in thousands except share data)

(Unaudited)



|                                                             |  |              |  |                    |   |         |                                        |  |   |                             |   |  |   |         |  
|------------------------------------------------------------ |  | ------------ |  | ------------------ | - | ------- | -------------------------------------- |  | - | --------------------------- | - |  | - | ------- | -
|                                                             |  | Common Stock |  | Retained (Deficit) |   |         | Accumulated Other Comprehensive Income |  |   | Total Stockholders Deficit |  
|Balance as of December 31, 2003                              |  | $            |  |                    | $ | (25,836 | )                                      |  | $ | 276                         |   |  | $ | (25,560 | )
|Net income for the three months ended March 31, 2004         |  |              |  |                    |   | 2       |                                        |  |   |                             |   |  |   | 2       |  
|Foreign currency translation adjustments net of tax of $(22) |  |              |  |                    |   |         |                                        |  |   | (30                         | ) |  |   | (30     | )
|                                                             |  |              |  |                    |   |         |                                        |  |   |                             |   |  |   |         |  
|Balance as of March 31, 2004                                 |  | $            |  |                    | $ | (25,834 | )                                      |  | $ | 246                         |   |  | $ | (25,588 | )
|                                                             |  |              |  |                    |   |         |                                        |  |   |                             |   |  |   |         |  



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 Three Months Ended March 31, 2004 and 2003

(in thousands)

(Unaudited)



|                                                    |  |      |        |   |      |   |         |  
|--------------------------------------------------- |  | ---- | ------ | - | ---- | - | ------- | -
|                                                    |  | 2004 |        |   | 2003 |  
|Net cash used in operating activities               |  | $    | (2,808 | ) |      | $ | (967    | )
|                                                    |  |      |        |   |      |   |         |  
|Cash flows from investing activities:               |  |      |        |   |      |   |         |  
|Proceeds from sale of assets                        |  |      | 2      |   |      |   |         |  
|Purchase of property, plant and equipment           |  |      | (83    | ) |      |   | (100    | )
|                                                    |  |      |        |   |      |   |         |  
|Net cash used by investing activities               |  |      | (81    | ) |      |   | (100    | )
|                                                    |  |      |        |   |      |   |         |  
|Cash flows from financing activities:               |  |      |        |   |      |   |         |  
|Borrowings on long-term debt                        |  |      |        |   |      |   | 25,000  |  
|Repayments of long-term debt                        |  |      | (502   | ) |      |   | (22,157 | )
|Debt issuance costs                                 |  |      |        |   |      |   | (1,776  | )
|                                                    |  |      |        |   |      |   |         |  
|Net cash (used in) provided by financing activities |  |      | (502   | ) |      |   | 1,067   |  
|                                                    |  |      |        |   |      |   |         |  
|Net (decrease) in cash                              |  |      | (3,391 | ) |      |   | 0       |  
|                                                    |  |      |        |   |      |   |         |  
|Cash and cash equivalents at beginning of period    |  |      | 3,391  |   |      |   | 0       |  
|                                                    |  |      |        |   |      |   |         |  
|Cash and cash equivalents at end of period          |  | $    | 0      |   |      | $ | 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 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, 2003 Form 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 three months of 2004 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



Inventories consist of:



|                                 |  |                |        |                   |   |       
|-------------------------------- |  | -------------- | ------ | ----------------- | - | ------
|                                 |  | March 31, 2004 |        | December 31, 2003
|                                 |  | (in thousands)
|Finished goods                   |  | $              | 12,406 |                   | $ | 11,098
|Work-in-process                  |  |                | 3,280  |                   |   | 2,420 
|Raw materials                    |  |                | 6,378  |                   |   | 5,519 
|                                 |  |                |        |                   |   |       
|                                 |  |                | 22,064 |                   |   | 19,037
|Less excess and obsolete reserve |  |                | 1,634  |                   |   | 1,542 
|                                 |  |                |        |                   |   |       
|                                 |  | $              | 20,430 |                   | $ | 17,495
|                                 |  |                |        |                   |   |       



3.    Comprehensive loss



Total comprehensive loss and its components, net of related tax are as follows for the three months ended:



|                             |  |                |     |   |                |   |      |  
|---------------------------- |  | -------------- | --- | - | -------------- | - | ---- | -
|                             |  | March 31, 2004 |     |   | March 31, 2003 |  
|                             |  | (in thousands) |    
|Net income (loss)            |  | $              | 2   |   |                | $ | (771 | )
|Foreign currency translation |  |                | (30 | ) |                |   |     |  
|                             |  |                |     |   |                |   |      |  
|                             |  | $              | (28 | ) |                | $ | (771 | )
|                             |  |                |     |   |                |   |      |  



The components of
accumulated other comprehensive income, net of related tax consists of foreign currency translation of $246,000 and $276,000 as of March 31, 2004 and December 31, 2003, respectively.



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ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



4.    Components of Net Periodic Pension Cost



|                                        |  |                |        |   |                |   |      |  
|--------------------------------------- |  | -------------- | ------ | - | -------------- | - | ---- | -
|                                        |  | March 31, 2004 |        |   | March 31, 2003 |  
|                                        |  | (in thousands) |       
|Service cost                            |  | $              | 674    |   |                | $ | 262  |  
|Interest cost                           |  |                | 914    |   |                |   | 297  |  
|Expected return on assets               |  |                | (1,987 | ) |                |   | (798 | )
|Net amortization of prior service costs |  |                | (15    | ) |                |   | (18  | )
|Net amortization of prior gain          |  |                | 266    |   |                |   | 7    |  
|                                        |  |                |        |   |                |   |      |  
|Net periodic pension cost               |  | $              | (148   | ) |                | $ | (250 | )
|                                        |  |                |        |   |                |   |      |  



5.    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 three months ended March 31:



|                                                                |  |                |        |   |      |   |        |  
|--------------------------------------------------------------- |  | -------------- | ------ | - | ---- | - | ------ | -
|                                                                |  | 2004           |        |   | 2003 |  
|                                                                |  | (In thousands) |       
|Net sales to external customers:                                |  |                |        |   |      |   |        |  
|Manufactured Products                                           |  | $              | 24,694 |   |      | $ | 22,048 |  
|Engineering Services                                            |  |                | 27,702 |   |      |   | 6,414  |  
|                                                                |  |                |        |   |      |   |        |  
|Total net sales to external customers                           |  | $              | 52,396 |   |      | $ | 28,462 |  
|                                                                |  |                |        |   |      |   |        |  
|Net sales to internal customers:                                |  |                |        |   |      |   |        |  
|Manufactured Products                                           |  | $              | 1,987  |   |      | $ | 596    |  
|Engineering Services                                            |  |                | 49     |   |      |   | 24     |  
|                                                                |  |                |        |   |      |   |        |  
|Total net sales to internal customers                           |  | $              | 2,036  |   |      | $ | 620    |  
|                                                                |  |                |        |   |      |   |        |  
|Net sales:                                                      |  |                |        |   |      |   |        |  
|Manufactured Products                                           |  | $              | 26,681 |   |      | $ | 22,644 |  
|Engineering Services                                            |  |                | 27,751 |   |      |   | 6,438  |  
|                                                                |  |                |        |   |      |   |        |  
|Total net sales                                                 |  |                | 54,432 |   |      |   | 29,082 |  
|Elimination of net sales to internal customers                  |  |                | 2,036  |   |      |   | 620    |  
|                                                                |  |                |        |   |      |   |        |  
|Total consolidated net sales                                    |  | $              | 52,396 |   |      | $ | 28,462 |  
|                                                                |  |                |        |   |      |   |        |  
|Earnings before corporate expenses, interest, and income taxes: |  |                |        |   |      |   |        |  
|Manufactured Products                                           |  | $              | 3,725  |   |      | $ | 2,672  |  
|Engineering Services                                            |  |                | 568    |   |      |   | 284    |  
|                                                                |  |                |        |   |      |   |        |  
|Total segment earnings                                          |  |                | 4,293  |   |      |   | 2,956  |  
|Corporate expenses                                              |  |                | (1,575 | ) |      |   | (1,791 | )
|Interest income                                                 |  |                | 171    |   |      |   | 153    |  
|Interest expense                                                |  |                | (2,886 | ) |      |   | (2,555 | )
|                                                                |  |                |        |   |      |   |        |  
|Consolidated income (loss) before income taxes                  |  | $              | 3      |   |      | $ | (1,237 | )
|                                                                |  |                |        |   |      |   |        |  



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ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



6.    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.



|                                                |  |                                   |        |   |                    |   |        |                          |  |   |                   |   |  |   |         |  
|----------------------------------------------- |  | --------------------------------- | ------ | - | ------------------ | - | ------ | ------------------------ |  | - | ----------------- | - |  | - | ------- | -
|                                                |  | March 31, 2004                    |       
|                                                |  | Parent                            |        |   | CombinedGuarantors |   |        | ConsolidatingAdjustments |  |   | ConsolidatedTotal |  
|                                                |  | (in thousands)                    |       
|Current assets                                  |  | $                                 | 15,033 |   |                    | $ | 43,982 |                          |  |   |                   |   |  | $ | 59,015  |  
|Noncurrent assets                               |  |                                   | 51,991 |   |                    |   | 49,371 |                          |  | $ | (21,510           | ) |  |   | 79,852  |  
|                                                |  |                                   |        |   |                    |   |        |                          |  |   |                   |   |  |   |         |  
|Total assets                                    |  | $                                 | 67,024 |   |                    | $ | 93,353 |                          |  | $ | (21,510           | ) |  | $ | 138,867 |  
|                                                |  |                                   |        |   |                    |   |        |                          |  |   |                   |   |  |   |         |  
|Current liabilities                             |  | $                                 | 10,055 |   |                    | $ | 32,422 |                          |  |   |                   |   |  | $ | 42,477  |  
|Total liabilities                               |  | $                                 | 90,178 |   |                    | $ | 74,277 |                          |  |   |                   |   |  | $ | 164,455 |  
|                                                | 
|                                                |  | December 31, 2003                 |       
|                                                |  | Parent                            |        |   | CombinedGuarantors |   |        | ConsolidatingAdjustments |  |   | ConsolidatedTotal |  
|                                                |  | (in thousands)                    |       
|Current assets                                  |  | $                                 | 16,852 |   |                    | $ | 36,870 |                          |  |   |                   |   |  | $ | 53,722  |  
|Noncurrent assets                               |  |                                   | 49,824 |   |                    |   | 49,810 |                          |  | $ | (19,969           | ) |  |   | 79,665  |  
|                                                |  |                                   |        |   |                    |   |        |                          |  |   |                   |   |  |   |         |  
|Total assets                                    |  | $                                 | 66,676 |   |                    | $ | 86,680 |                          |  | $ | (19,969           | ) |  | $ | 133,387 |  
|                                                |  |                                   |        |   |                    |   |        |                          |  |   |                   |   |  |   |         |  
|Current liabilities                             |  | $                                 | 9,761  |   |                    | $ | 26,902 |                          |  |   |                   |   |  | $ | 36,663  |  
|Total liabilities                               |  | $                                 | 90,174 |   |                    | $ | 68,773 |                          |  |   |                   |   |  | $ | 158,947 |  
|                                                | 
|                                                |  | Three months ended March 31, 2004 |       
|                                                |  | Parent                            |        |   | CombinedGuarantors |   |        | ConsolidatingAdjustments |  |   | ConsolidatedTotal |  
|                                                |  | (in thousands)                    |       
|Sales, net                                      |  | $                                 | 8,229  |   |                    | $ | 44,686 |                          |  | $ | (519              | ) |  | $ | 52,396  |  
|Gross profit                                    |  |                                   | 3,108  |   |                    |   | 6,191  |                          |  |   |                   |   |  |   | 9,299   |  
|Income before income tax                        |  |                                   | 3      |   |                    |   | 2,342  |                          |  |   | (2,342            | ) |  |   | 3       |  
|Net income                                      |  |                                   | 2      |   |                    |   | 1,368  |                          |  |   | (1,368            | ) |  |   | 2       |  
|Cash (used in) provided by operating activities |  |                                   | (2,891 | ) |                    |   | 83     |                          |  |   |                   |   |  |   | (2,808  | )
|Cash used in investing activities               |  |                                   |        |   |                    |   | (81    | )                        |  |   |                   |   |  |   | (81     | )
|Cash used in financing activities               |  |                                   | (500   | ) |                    |   | (2     | )                        |  |   |                   |   |  |   | (502    | )



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ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



|                                                |  |                                   |        |   |                    |   |        |                          |  |    |                   |   |  |   |        |  
|----------------------------------------------- |  | --------------------------------- | ------ | - | ------------------ | - | ------ | ------------------------ |  | -- | ----------------- | - |  | - | ------ | -
|                                                |  | Three months ended March 31, 2003 |       
|                                                |  | Parent                            |        |   | CombinedGuarantors |   |        | ConsolidatingAdjustments |  |    | ConsolidatedTotal |  
|                                                |  | (in thousands)                    |       
|Sales, net                                      |  | $                                 | 8,002  |   |                    | $ | 21,080 |                          |  | ($ | 620               | ) |  | $ | 28,462 |  
|Gross profit                                    |  |                                   | 2,557  |   |                    |   | 4,629  |                          |  |    |                   |   |  |   | 7,186  |  
|(Loss) income before income tax                 |  |                                   | (1,237 | ) |                    |   | 1,388  |                          |  |    | (1,388            | ) |  |   | (1,237 | )
|Net (loss) Income                               |  |                                   | (771   | ) |                    |   | 863    |                          |  |    | (863              | ) |  |   | (771   | )
|Cash (used in) provided by operating activities |  |                                   | (1,049 | ) |                    |   | 82     |                          |  |    |                   |   |  |   | (967   | )
|Cash used in investing activities               |  |                                   | (18    | ) |                    |   | (82    | )                        |  |    |                   |   |  |   | (100   | )
|Cash provided by financing activities           |  |                                   | 1,067  |   |                    |   |        |                          |  |    |                   |   |  |   | 1,067  |  



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.



7.    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.



8.    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 has implemented the provision of SFAS No. 150 in the first quarter of 2004. Through the implementation of SFAS
No. 150 the Company has classified its redeemable preferred stock units and redeemable preferred stock as liabilities. The corresponding dividend amounts to be paid to holders is recorded as interest expense beginning in the first quarter of 2004.



9.    Reclassification



Certain amounts in the 2003 financial statements have been reclassified to
conform to the 2004 presentation.



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##### Table of Contents

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



Results of Operations



Three Months Ended March 31, 2004 Compared to Three Months Ended March 31, 2003



Net Sales  Engineering Services Segment: Net sales for the quarter ended March 31, 2004 increased $21.3
million, or 331.9%, to $27.7 million from $6.4 million for the corresponding period in 2003 due to the increase in size and number of projects in process. For the quarter ended March 31, 2004 the Engineering Services Segment had four projects with
sales over $1.0 million totaling $22.5 million, compared to no such projects for the quarter ended March 31, 2003. This increase was partially offset with decreases in projects between $0.5 million and $1.0 million. The Engineering Services Segment
had two projects with sales between $0.5 million and $1.0 million totaling $1.2 million for the first quarter of 2004, compared to four such projects totaling $3.1 million during the same period ended 2003.



Net Sales  Manufactured Products Segment: Net sales for the
quarter ended March 31, 2004 increased $2.7 million, or 12.0%, to $24.7 million from $22.0 million for the corresponding period in 2003 primarily due to increased sales of mining equipment, and electronic components, partially offset with decreased
fastener sales.



Gross Profit  Engineering Services
Segment: Gross profit for the quarter ended March 31, 2004 increased $0.5 million, or 41.1%, to $1.7 million from $1.2 million in the corresponding period in 2003, primarily due to the increased sales level. As a percentage of net sales, the
gross profit decreased to 6.2% for the quarter ended March 31, 2004 from 18.9% for the corresponding period in 2003 due to lower margins earned on larger engineering services projects in 2004.



Gross Profit  Manufactured Products Segment: Gross profit for
the quarter ended March 31, 2004 increased $1.6 million, or 27.0%, to $7.6 million from $6.0 million in the corresponding period in 2003 due to the higher sales level. As a percentage of net sales, the gross profit increased to 30.7% for the quarter
ended March 31, 2004 from 27.1% for the corresponding period in 2003. The increase was primarily due to higher margins earned from centrifugal dryers and electronic components.



Selling, General and Administrative Expenses: Selling, general and administrative expenses of the Company for the
quarter ended March 31, 2004 of $6.6 million increased $0.6 million from $6.0 million for the corresponding period in 2003 with increased employee related expenses, provisions for doubtful accounts, and estimating costs, along with decreased pension
income, partially offset with the write-off of remaining financing costs related to the retired credit facility in 2003.



Interest Income: Interest income of the Company for the quarter ended March 31, 2004 of $0.2 million approximated the corresponding period in 2003.



Interest Expense: Interest expense of the Company for
the quarter ended March 31, 2004 of $2.9 million increased $0.3 million or 13.0% from $2.6 million for the corresponding period in 2003. The increase was due to interest recorded on the Companys preferred stock, and preferred stock units in
accordance with FASB No. 150, and a higher debt level along with a higher interest rate incurred.



(Provision) Benefit for Income Taxes: Provision for income taxes of the Company for the quarter ended March 31, 2004 of $1,000 increased $0.5
million from the benefit of $0.5 million for the corresponding quarter ended March 31, 2003 due to the higher income level.



Net Income (Loss): The Company recorded net income of $2,000 for the three months ended March 31, 2004 compared to a net loss of $0.8 million for
the quarter ended March 31, 2003. The increase was due to the reasons discussed above.



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##### Table of Contents

Liquidity and Capital Resources



Net cash used by operating activities for the three months ended March 31, 2004 of $2.8 million was used by increased
accounts receivable, inventories, prepaid expenses and other assets, partially offset with cash generated from net income adjusted for non-cash charges, and increased accounts payable, and accrued expenses. Included in non-cash charges for the
quarter ended March 31, 2004 was depreciation of $0.6 million and other non-cash charges of $0.2 million, partially offset with pension overfunding income of $0.1 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 three months ended March 31, 2004 of $0.1 million consisted of capital expenditures resulting from the
Companys regular practice of upgrading and maintaining its equipment base and facilities.



Cash used in financing activities for the three months ended March 31, 2004 of $0.5 million consisted of the repayment of long-term debt.



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 March 31, 2004 was $76.8 million. Approximately $17.6 million relates to the Manufactured Products Segment, with the remainder of $59.2 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, adverse changes in general market and industry conditions and any resulting inability to comply with the financial covenants imposed by the Companys credit agreement. 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 United States reputation to generate sales in international markets. In the three months ended March 31, 2004
approximately 9% 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. Sales from the Australia office of Roberts &



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##### Table of Contents

Schaefer are usually denominated in Australian dollars. The majority of the Companys foreign sales and costs originated outside the Australia office of
Roberts & Schaefer are denominated in U.S. dollars. With respect to transactions denominated in foreign currencies, when possible the Company attempts to mitigate foreign exchange risk by contractually shifting the burden of the risk of currency
fluctuations to the other party to the transactions. It has been the Companys historic practice to conduct international sales in accordance with the foregoing. There can be no assurance that the Companys strategies will ensure that the
Company will be fully protected from foreign exchange risk. 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 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 the 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 evaluation.



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##### Table of Contents

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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##### 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.



ELGIN NATIONAL INDUSTRIES, INC.By:

/S/    WAYNE J. CONNER


Name:

Wayne J. ConnerTitle:

VicePresident, Treasurer, and Chief Financial Officer (DulyAuthorized Officer and Principal Financial Officer)




Dated: May 13, 2004



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##### Table of Contents

INDEX TO EXHIBITS



|              |  |                                                                                                                                                                                                                                                                                                                           |  |                   |  
|------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | -
|ExhibitNumber |  | Document Description                                                                                                                                                                                                                                                                                                      |  | FootnoteReference |  
|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                | )



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|              |  |                                                                                                                                                                                                                                                                     |  |                   |  
|------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | -
|ExhibitNumber |  | Document Description                                                                                                                                                                                                                                                |  | FootnoteReference |  
|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                | )
|              |  |                                                                                                                                                                                                                                                                    
|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                | )
|              |  |                                                                                                                                                                                                                                                                    
|10.15         |  | First Amendment to Loan and Security Agreement, dated February 19, 2004 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. |  | (9                | )
|              |  |                                                                                                                                                                                                                                                                    
|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 10-Q of the Company (File No. 001-05771) filed with the Commission on February 19, 2003.
|--- | --------------------------------------------------------------------------------------------------------------------------

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

|(9) | Incorporated by reference to Form 10-K of the Company (File No. 001-05771) filed with the Comission on March 27, 2004.
|--- | ----------------------------------------------------------------------------------------------------------------------

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



17