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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, 2005



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, 2005, there were outstanding 6,408.3 shares of Class A Common Stock and 19,951.7 shares of Preferred Stock.



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ELGIN NATIONAL INDUSTRIES, INC.



TABLE OF CONTENTS



|                                                                                                             |  |     
|------------------------------------------------------------------------------------------------------------ |  | ----
|                                                                                                             |  | Page
|PART IFINANCIAL INFORMATION                                                                                 |  |     
|                                                                                                             | 
|ITEM 1Financial Statements                                                                                  |  |     
|                                                                                                             | 
|Consolidated Balance Sheets as of March 31, 2005 and December 31, 2004                                       |  | 3   
|                                                                                                             | 
|Consolidated Statements of Operations for the Three Months Ended March 31, 2005 and March 31, 2004           |  | 4   
|                                                                                                             | 
|Consolidated Statement of Changes in Stockholders Deficit for the Three Months Ended March 31, 2005         |  | 5   
|                                                                                                             | 
|Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2005 and March 31, 2004 |  | 6   
|                                                                                                             | 
|Notes to Condensed Consolidated Financial Statements                                                         |  | 7   
|                                                                                                             | 
|ITEM 2Managements Discussion and Analysis of Financial Condition and Results of Operations                 |  | 12  
|                                                                                                             | 
|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  



2



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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, 2005 |         |   | December 31, 2004 |  
|ASSETS                                                                                                                                           |  |                |         |   |                   |   |         |  
|Current assets:                                                                                                                                  |  |                |         |   |                   |   |         |  
|Cash and equivalents                                                                                                                             |  | $              | 795     |   |                   | $ |        |  
|Accounts receivable, net                                                                                                                         |  |                | 38,241  |   |                   |   | 39,500  |  
|Inventories, net                                                                                                                                 |  |                | 21,809  |   |                   |   | 20,343  |  
|Prepaid expenses and other assets                                                                                                                |  |                | 4,503   |   |                   |   | 2,463   |  
|Deferred income taxes                                                                                                                            |  |                | 3,078   |   |                   |   | 3,078   |  
|                                                                                                                                                 |  |                |         |   |                   |   |         |  
|Total current assets                                                                                                                             |  |                | 68,426  |   |                   |   | 65,384  |  
|Property, plant and equipment, net                                                                                                               |  |                | 18,540  |   |                   |   | 19,008  |  
|Loans receivable from related parties                                                                                                            |  |                | 11,639  |   |                   |   | 11,475  |  
|Prepaid pension cost                                                                                                                             |  |                | 24,601  |   |                   |   | 24,504  |  
|Other assets                                                                                                                                     |  |                | 4,523   |   |                   |   | 5,061   |  
|Goodwill                                                                                                                                         |  |                | 18,995  |   |                   |   | 18,995  |  
|                                                                                                                                                 |  |                |         |   |                   |   |         |  
|Total assets                                                                                                                                     |  | $              | 146,724 |   |                   | $ | 144,427 |  
|                                                                                                                                                 |  |                |         |   |                   |   |         |  
|LIABILITIES AND COMMON STOCKHOLDERS DEFICIT                                                                                                     |  |                |         |   |                   |   |         |  
|Current liabilities:                                                                                                                             |  |                |         |   |                   |   |         |  
|Current portion of long-term debt                                                                                                                |  | $              | 16,234  |   |                   | $ | 1,575   |  
|Accounts payable                                                                                                                                 |  |                | 30,819  |   |                   |   | 29,891  |  
|Accrued expenses                                                                                                                                 |  |                | 13,609  |   |                   |   | 11,899  |  
|                                                                                                                                                 |  |                |         |   |                   |   |         |  
|Total current liabilities                                                                                                                        |  |                | 60,662  |   |                   |   | 43,365  |  
|Long-term debt less current portion                                                                                                              |  |                | 89,282  |   |                   |   | 103,380 |  
|Mandatorily redeemable preferred stock units                                                                                                     |  |                | 15,653  |   |                   |   | 15,471  |  
|Mandatorily redeemable preferred stock                                                                                                           |  |                | 4,293   |   |                   |   | 4,243   |  
|Other liabilities                                                                                                                                |  |                | 1,287   |   |                   |   | 1,397   |  
|Deferred income taxes                                                                                                                            |  |                | 4,926   |   |                   |   | 4,925   |  
|                                                                                                                                                 |  |                |         |   |                   |   |         |  
|Total liabilities                                                                                                                                |  |                | 176,103 |   |                   |   | 172,781 |  
|                                                                                                                                                 |  |                |         |   |                   |   |         |  
|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, 2005 and December
31, 2004 |  |                |         |   |                   |   |         |  
|Retained deficit                                                                                                                                 |  |                | (29,764 | ) |                   |   | (28,784 | )
|Accumulated other comprehensive income                                                                                                           |  |                | 385     |   |                   |   | 430     |  
|                                                                                                                                                 |  |                |         |   |                   |   |         |  
|Total common stockholders deficit                                                                                                               |  |                | (29,379 | ) |                   |   | (28,354 | )
|                                                                                                                                                 |  |                |         |   |                   |   |         |  
|Total liabilities and stockholders deficit                                                                                                      |  | $              | 146,724 |   |                   | $ | 144,427 |  
|                                                                                                                                                 |  |                |         |   |                   |   |         |  



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



3



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ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES



CONSOLIDATED STATEMENTS OF OPERATIONS



For the Three Months Ended March 31, 2005 and 2004

(in thousands)

(Unaudited)



|                                             |  |      |        |   |      |   |        |  
|-------------------------------------------- |  | ---- | ------ | - | ---- | - | ------ | -
|                                             |  | 2005 |        |   | 2004 |  
|Net sales                                    |  | $    | 46,434 |   |      | $ | 52,396 |  
|Cost of sales                                |  |      | 37,420 |   |      |   | 43,097 |  
|                                             |  |      |        |   |      |   |        |  
|Gross profit                                 |  |      | 9,014  |   |      |   | 9,299  |  
|Selling, general and administrative expenses |  |      | 7,504  |   |      |   | 6,581  |  
|                                             |  |      |        |   |      |   |        |  
|Operating income                             |  |      | 1,510  |   |      |   | 2,718  |  
|Other expenses (income)                      |  |      |        |   |      |   |        |  
|Interest income                              |  |      | (170   | ) |      |   | (171   | )
|Interest expense                             |  |      | 3,089  |   |      |   | 2,886  |  
|                                             |  |      |        |   |      |   |        |  
|(Loss) income before income taxes            |  |      | (1,409 | ) |      |   | 3      |  
|(Benefit) provision for income taxes         |  |      | (429   | ) |      |   | 1      |  
|                                             |  |      |        |   |      |   |        |  
|Net (loss) income                            |  | $    | (980   | ) |      | $ | 2      |  
|                                             |  |      |        |   |      |   |        |  







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



4



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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, 2005

(in thousands except share data)

(Unaudited)



|                                                             |  |              |   |                    |   |         |                                        |  |   |                             |   |  |   |         |  
|------------------------------------------------------------ |  | ------------ | - | ------------------ | - | ------- | -------------------------------------- |  | - | --------------------------- | - |  | - | ------- | -
|                                                             |  | Common Stock |   | Retained (Deficit) |   |         | Accumulated Other Comprehensive Income |  |   | Total Stockholders Deficit |  
|Balance as of December 31, 2004                              |  | $            |  |                    | $ | (28,784 | )                                      |  | $ | 430                         |   |  | $ | (28,354 | )
|Net loss for the three months ended March 31, 2005           |  |              |  |                    |   | (980    | )                                      |  |   |                            |   |  |   | (980    | )
|Foreign currency translation adjustments net of tax of $(27) |  |              |  |                    |   |        |                                        |  |   | (45                         | ) |  |   | (45     | )
|                                                             |  |              |   |                    |   |         |                                        |  |   |                             |   |  |   |         |  
|Balance as of March 31, 2005                                 |  | $            |  |                    | $ | (29,764 | )                                      |  | $ | 385                         |   |  | $ | (29,379 | )
|                                                             |  |              |   |                    |   |         |                                        |  |   |                             |   |  |   |         |  











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



5



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ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES



CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS



For the Three Months Ended March 31, 2005 and 2004

(in thousands)

(Unaudited)



|                                                    |  |      |      |   |      |   |        |  
|--------------------------------------------------- |  | ---- | ---- | - | ---- | - | ------ | -
|                                                    |  | 2005 |      |   | 2004 |  
|Net cash provided by (used in) operating activities |  | $    | 485  |   |      | $ | (2,778 | )
|                                                    |  |      |      |   |      |   |        |  
|Cash flows from investing activities:               |  |      |      |   |      |   |        |  
|Proceeds from sale of assets                        |  |      |     |   |      |   | 2      |  
|Purchase of property, plant and equipment           |  |      | (206 | ) |      |   | (83    | )
|                                                    |  |      |      |   |      |   |        |  
|Net cash used by investing activities               |  |      | (206 | ) |      |   | (81    | )
|                                                    |  |      |      |   |      |   |        |  
|Cash flows from financing activities:               |  |      |      |   |      |   |        |  
|Borrowings on long-term debt                        |  |      | 870  |   |      |   |       |  
|Repayments of long-term debt                        |  |      | (309 | ) |      |   | (502   | )
|                                                    |  |      |      |   |      |   |        |  
|Net cash provided by (used in) financing activities |  |      | 561  |   |      |   | (502   | )
|                                                    |  |      |      |   |      |   |        |  
|Effect of exchange rates on cash                    |  |      | (45  | ) |      |   | (30    | )
|                                                    |  |      |      |   |      |   |        |  
|Net increase (decrease) in cash                     |  |      | 795  |   |      |   | (3,391 | )
|                                                    |  |      |      |   |      |   |        |  
|Cash and cash equivalents at beginning of period    |  |      | 0    |   |      |   | 3,391  |  
|                                                    |  |      |      |   |      |   |        |  
|Cash and cash equivalents at end of period          |  | $    | 795  |   |      | $ | 0      |  
|                                                    |  |      |      |   |      |   |        |  







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



6



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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, 2004 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 2005 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.    Accounts receivable



Accounts receivable consist of:



|                                                                |  |                |        |                   |   |       
|--------------------------------------------------------------- |  | -------------- | ------ | ----------------- | - | ------
|                                                                |  | March 31, 2005 |        | December 31, 2004
|                                                                |  | (in thousands)
|Trade accounts                                                  |  | $              | 14,513 |                   | $ | 14,303
|                                                                |  |                |        |                   |   |       
|Construction contracts:                                         |  |                |        |                   |   |       
|Billed                                                          |  |                | 16,936 |                   |   | 16,422
|Costs and estimated earnings in excess of billings on Contracts |  |                | 347    |                   |   | 487   
|Retainage due upon completion of contracts                      |  |                | 6,489  |                   |   | 8,226 
|                                                                |  |                |        |                   |   |       
|                                                                |  |                | 23,772 |                   |   | 25,135
|                                                                |  |                |        |                   |   |       
|Trade accounts and construction contracts                       |  |                | 38,285 |                   |   | 39,438
|                                                                |  |                |        |                   |   |       
|Other receivables                                               |  |                | 604    |                   |   | 704   
|                                                                |  |                |        |                   |   |       
|                                                                |  |                | 38,889 |                   |   | 40,142
|Less allowance for doubtful accounts                            |  |                | 648    |                   |   | 642   
|                                                                |  |                |        |                   |   |       
|                                                                |  | $              | 38,241 |                   | $ | 39,500
|                                                                |  |                |        |                   |   |       



3.    Inventories



Inventories consist of:



|                                 |  |                |        |                   |   |       
|-------------------------------- |  | -------------- | ------ | ----------------- | - | ------
|                                 |  | March 31, 2005 |        | December 31, 2004
|                                 |  | (in thousands)
|Finished goods                   |  | $              | 11,974 |                   | $ | 12,354
|Work-in-process                  |  |                | 3,685  |                   |   | 2,605 
|Raw materials                    |  |                | 7,949  |                   |   | 7,139 
|                                 |  |                |        |                   |   |       
|                                 |  |                | 23,608 |                   |   | 22,098
|Less excess and obsolete reserve |  |                | 1,799  |                   |   | 1,755 
|                                 |  |                |        |                   |   |       
|                                 |  | $              | 21,809 |                   | $ | 20,343
|                                 |  |                |        |                   |   |       



7



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ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



4.    Comprehensive loss



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



|                             |  |                |        |   |                |   |     |  
|---------------------------- |  | -------------- | ------ | - | -------------- | - | --- | -
|                             |  | March 31, 2005 |        |   | March 31, 2004 |  
|                             |  | (in thousands) |       
|Net (loss) income            |  | $              | (980   | ) |                | $ | 2   |  
|Foreign currency translation |  |                | (45    | ) |                |   | (30 | )
|                             |  |                |        |   |                |   |     |  
|                             |  | $              | (1,025 | ) |                | $ | (28 | )
|                             |  |                |        |   |                |   |     |  



The components of
accumulated other comprehensive income, net of related tax consists of foreign currency translation of $385,000 and $430,000 as of March 31, 2005 and December 31, 2004, respectively.



5.    Components of Net Periodic Pension Cost



|                                        |  |                |      |   |                |   |        |  
|--------------------------------------- |  | -------------- | ---- | - | -------------- | - | ------ | -
|                                        |  | March 31, 2005 |      |   | March 31, 2004 |  
|                                        |  | (in thousands) |     
|Service cost                            |  | $              | 217  |   |                | $ | 674    |  
|Interest cost                           |  |                | 358  |   |                |   | 914    |  
|Expected return on assets               |  |                | (719 | ) |                |   | (1,987 | )
|Net amortization of prior service costs |  |                | 38   |   |                |   | (15    | )
|Net amortization of prior gain          |  |                | 8    |   |                |   | 266    |  
|                                        |  |                |      |   |                |   |        |  
|Net periodic pension cost               |  | $              | (98  | ) |                | $ | (148   | )
|                                        |  |                |      |   |                |   |        |  



8



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ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



6.    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 segment is presented below for the three months ended March 31:



|                                                                       |  |                |        |   |      |   |        |  
|---------------------------------------------------------------------- |  | -------------- | ------ | - | ---- | - | ------ | -
|                                                                       |  | 2005           |        |   | 2004 |  
|                                                                       |  | (in thousands) |       
|Net sales to external customers:                                       |  |                |        |   |      |   |        |  
|Manufactured Products                                                  |  | $              | 28,524 |   |      | $ | 24,694 |  
|Engineering Services                                                   |  |                | 17,910 |   |      |   | 27,702 |  
|                                                                       |  |                |        |   |      |   |        |  
|Total net sales to external customers                                  |  | $              | 46,434 |   |      | $ | 52,396 |  
|                                                                       |  |                |        |   |      |   |        |  
|Net sales to internal customers:                                       |  |                |        |   |      |   |        |  
|Manufactured Products                                                  |  | $              | 1,479  |   |      | $ | 1,987  |  
|Engineering Services                                                   |  |                | 639    |   |      |   | 49     |  
|                                                                       |  |                |        |   |      |   |        |  
|Total net sales to internal customers                                  |  | $              | 2,118  |   |      | $ | 2,036  |  
|                                                                       |  |                |        |   |      |   |        |  
|Net sales:                                                             |  |                |        |   |      |   |        |  
|Manufactured Products                                                  |  | $              | 30,003 |   |      | $ | 26,681 |  
|Engineering Services                                                   |  |                | 18,549 |   |      |   | 27,751 |  
|                                                                       |  |                |        |   |      |   |        |  
|Total net sales                                                        |  |                | 48,552 |   |      |   | 54,432 |  
|Elimination of net sales to internal customers                         |  |                | 2,118  |   |      |   | 2,036  |  
|                                                                       |  |                |        |   |      |   |        |  
|Total consolidated net sales                                           |  | $              | 46,434 |   |      | $ | 52,396 |  
|                                                                       |  |                |        |   |      |   |        |  
|Earnings (loss) before corporate expenses, interest, and income taxes: |  |                |        |   |      |   |        |  
|Manufactured Products                                                  |  | $              | 3,899  |   |      | $ | 3,725  |  
|Engineering Services                                                   |  |                | (736   | ) |      |   | 568    |  
|                                                                       |  |                |        |   |      |   |        |  
|Total segment earnings                                                 |  |                | 3,163  |   |      |   | 4,293  |  
|Corporate expenses                                                     |  |                | (1,653 | ) |      |   | (1,575 | )
|Interest income                                                        |  |                | 170    |   |      |   | 171    |  
|Interest expense                                                       |  |                | (3,089 | ) |      |   | (2,886 | )
|                                                                       |  |                |        |   |      |   |        |  
|Consolidated (loss) income before income taxes                         |  | $              | (1,409 | ) |      | $ | 3      |  
|                                                                       |  |                |        |   |      |   |        |  



9



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ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



7.    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, 2005   
|                    |  | Parent            |        | CombinedGuarantors |   | ConsolidatingAdjustments |  |   | ConsolidatedTotal
|                    |  | (in thousands)   
|Current assets      |  | $                 | 15,780 |                    | $ | 52,646                   |  |   |                   |   |  | $ | 68,426 
|Noncurrent assets   |  |                   | 52,112 |                    |   | 43,834                   |  | $ | (17,648           | ) |  |   | 78,298 
|                    |  |                   |        |                    |   |                          |  |   |                   |   |  |   |        
|Total assets        |  | $                 | 67,892 |                    | $ | 96,480                   |  | $ | (17,648           | ) |  | $ | 146,724
|                    |  |                   |        |                    |   |                          |  |   |                   |   |  |   |        
|Current liabilities |  | $                 | 23,586 |                    | $ | 37,076                   |  |   |                   |   |  | $ | 60,662 
|Total liabilities   |  | $                 | 92,989 |                    | $ | 83,114                   |  |   |                   |   |  | $ | 176,103
|                    | 
|                    |  | December 31, 2004
|                    |  | Parent            |        | CombinedGuarantors |   | ConsolidatingAdjustments |  |   | ConsolidatedTotal
|                    |  | (in thousands)   
|Current assets      |  | $                 | 12,642 |                    | $ | 52,742                   |  |   |                   |   |  | $ | 65,384 
|Noncurrent assets   |  |                   | 52,745 |                    |   | 41,545                   |  | $ | (15,247           | ) |  |   | 79,043 
|                    |  |                   |        |                    |   |                          |  |   |                   |   |  |   |        
|Total assets        |  | $                 | 65,387 |                    | $ | 94,287                   |  | $ | (15,247           | ) |  | $ | 144,427
|                    |  |                   |        |                    |   |                          |  |   |                   |   |  |   |        
|Current liabilities |  | $                 | 7,942  |                    | $ | 35,423                   |  |   |                   |   |  | $ | 43,365 
|Total liabilities   |  | $                 | 91,309 |                    | $ | 81,472                   |  |   |                   |   |  | $ | 172,781



|                                                |  |                                   |        |   |                    |   |        |                          |  |   |                   |   |  |   |        |  
|----------------------------------------------- |  | --------------------------------- | ------ | - | ------------------ | - | ------ | ------------------------ |  | - | ----------------- | - |  | - | ------ | -
|                                                |  | Three months ended March 31, 2005 |       
|                                                |  | Parent                            |        |   | CombinedGuarantors |   |        | ConsolidatingAdjustments |  |   | ConsolidatedTotal |  
|                                                |  | (in thousands)                    |       
|Sales, net                                      |  | $                                 | 8,892  |   |                    | $ | 38,313 |                          |  | $ | (771              | ) |  | $ | 46,434 |  
|Gross profit                                    |  |                                   | 2,874  |   |                    |   | 6,140  |                          |  |   |                  |   |  |   | 9,014  |  
|(Loss) income before income tax                 |  |                                   | (1,409 | ) |                    |   | 1,450  |                          |  |   | (1,450            | ) |  |   | (1,409 | )
|Net (loss) income                               |  |                                   | (980   | ) |                    |   | 769    |                          |  |   | (769              | ) |  |   | (980   | )
|Cash provided by operating activities           |  |                                   | 401    |   |                    |   | 84     |                          |  |   |                  |   |  |   | 485    |  
|Cash used in investing activities               |  |                                   | (175   | ) |                    |   | (31    | )                        |  |   |                  |   |  |   | (206   | )
|Cash provided by (used in) financing activities |  |                                   | 569    |   |                    |   | (8     | )                        |  |   |                  |   |  |   | 561    |  
|Effect of exchange rate on cash                 |  |                                   |        |   |                    |   | (45    | )                        |  |   |                  |   |  |   | (45    | )
|                                                | 
|                                                |  | 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 | ) |                    |   | 113    |                          |  |   |                  |   |  |   | (2,778 | )
|Cash used in investing activities               |  |                                   |       |   |                    |   | (81    | )                        |  |   |                  |   |  |   | (81    | )
|Cash used in financing activities               |  |                                   | (500   | ) |                    |   | (2     | )                        |  |   |                  |   |  |   | (502   | )
|Effect of exchange rate on cash                 |  |                                   |        |   |                    |   | (30    | )                        |  |   |                  |   |  |   | (30    | )



10



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ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



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.



8.    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.



9.    Reclassification



Certain amounts in the 2004 financial statements have been reclassified to
conform to the 2005 presentation.



11



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



Results of Operations



Three Months Ended March 31, 2005 Compared to Three Months Ended March 31, 2004



Net SalesEngineering Services Segment: Net sales for the quarter ended March 31, 2005 decreased $9.8 million,
or 35.3%, to $17.9 million from $27.7 million for the corresponding period in 2004 due to the decrease in size of projects in process, partially offset with an increased number of projects. For the quarter ended March 31, 2005 the Engineering
Services Segment had five projects with sales over $1.0 million totaling $10.7 million, compared to four such projects totaling $22.5 million in sales for the quarter ended March 31, 2004. This decrease was partially offset with higher sales from
smaller projects less than $1.0 million. For the quarter ended March 31, 2005 the Engineering Services Segment had $7.2 million in sales of smaller projects, compared to $5.2 million for the quarter ended March 31, 2004.



Net SalesManufactured Products Segment: Net sales for the
quarter ended March 31, 2005 increased $3.8 million, or 15.5%, to $28.5 million from $24.7 million for the corresponding period in 2004 primarily due to increased sales of mining equipment, equipment used in the oil industry, and increased fastener
sales.



Gross ProfitEngineering Services Segment:
Gross profit for the quarter ended March 31, 2005 decreased $0.9 million, or 53.2%, to $0.8 million from $1.7 million in the corresponding period in 2004 primarily due to the increased sales level. As a percentage of net sales, the gross profit
decreased to 4.5% for the quarter ended March 31, 2005 from 6.2% for the corresponding period in 2004 due to lower margins earned on larger projects in 2005, partially offset with higher margins earned and increased volume of smaller engineering
services jobs.



Gross ProfitManufactured Products
Segment: Gross profit for the quarter ended March 31, 2005 increased $0.6 million, or 8.2%, to $8.2 million from $7.6 million in the corresponding period in 2004 due to the higher sales level. As a percentage of net sales, the gross profit
decreased to 28.8% for the quarter ended March 31, 2005 from 30.7% for the corresponding period in 2004. The decrease was primarily due to lower margins earned from fasteners and electronic components.



Selling, General and Administrative Expenses: Selling, general and
administrative expenses of the Company for the quarter ended March 31, 2005 of $7.5 million increased $0.9 million from $6.6 million for the corresponding period in 2004 with increased employee related expenses, estimating costs, and banking fees.



Interest Income: Interest income of the Company for the
quarter ended March 31, 2005 of $0.2 million approximated the corresponding period in 2004.



Interest Expense: Interest expense of the Company for the quarter ended March 31, 2005 of $3.1 million increased $0.2 million or 7.0% from $2.9 million for the corresponding period in 2004. The increase was due
to a higher debt level along with a higher interest rate incurred.



Benefit (Provision) for Income Taxes: Benefit for income taxes of the Company for the quarter ended March 31, 2005 of $0.4 million increased $0.4 million from the provision of $1,000 for the corresponding quarter ended March 31, 2004
due to the lower operating results and higher interest expense.



Net (Loss) Income: The Company recorded net loss of $1.0 million for the three months ended March 31, 2005 compared to a net income of $2,000 for the quarter ended March 31, 2004. The decrease was due to the reasons discussed above.



Liquidity and Capital Resources



Net cash generated by operating activities for the three months ended March
31, 2005 of $0.5 million was generated from net income adjusted for non-cash charges, increased accounts payable, and accrued expenses, and



12



---

decreased accounts receivable, partially offset by cash used by increased inventories, prepaid expenses and other assets. Included in non-cash charges for
the quarter ended March 31, 2005 was depreciation of $0.7 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, 2005 of $0.2 million consisted of capital expenditures resulting from the
Companys regular practice of upgrading and maintaining its equipment base and facilities.



Cash generated by financing activities for the three months ended March 31, 2005 of $0.6 million consisted of an increase in the Companys revolver
borrowings, partially offset by the repayment of long-term debt.



The Companys liquidity requirements, both long term (over one year) and short term, are primarily 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 monitors its liquidity position on a regular basis, and is working with their lenders to insure that our credit availability is maximized. 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. However, if the Company
has lower than expected earnings, or there are material delays in collections within our accounts receivable, the Companys liquidity could be impaired.



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, 2005 was
$129.6 million. Approximately $18.0 million relates to the Manufactured Products Segment, with the remainder of $111.6 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, the anticipated benefits from the Companys capital expenditures, 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, 2005
approximately 20% of the Companys net sales were attributable to services provided or products sold for use outside the United States, primarily to Australia and Indonesia. 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 & Schaefer are usually denominated in Australian dollars. The majority of the



13



---

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 evalution.



14



---

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



15



---

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, andChief Financial Officer (Duly Authorized Officer and Principal Financial Officer)


|
|



Dated: May 13, 2005



16



---

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                | )
|              |  |                                                                                                                                                                                                                                                                                                                          
|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                | )



17



---

|              |  |                                                                                                                                                                                                                                                                     |  |                   |  
|------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | -
|ExhibitNumber |  | Document Description                                                                                                                                                                                                                                                |  | FootnoteReference |  
|              |  |                                                                                                                                                                                                                                                                    
|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                | )
|              |  |                                                                                                                                                                                                                                                                    
|10-16         |  | Second Amendment to Loan and Security Agreement, dated June 30, 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.    |  | (10               | )
|              |  |                                                                                                                                                                                                                                                                    
|10-17         |  | Waiver, Consent and Agreement, dated March 31, 2005 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.                     |  | (1                | )
|              |  |                                                                                                                                                                                                                                                                    
|10-18         |  | Extension Letter, dated April 15, 2005 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.                                  |  | (1                | )
|              |  |                                                                                                                                                                                                                                                                    
|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 Commissionon November 12, 2002.
|--- | -------------------------------------------------------------------------------------------------------------------------

|(7) | Incorporated by reference to Form 8-K 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.
|--- | ----------------------------------------------------------------------------------------------------------------------

|(10) | Incorporated by reference to Form 10-Q of the Company (File No. 001-05771) filed with the Commissionon August 13, 2004.
|---- | -----------------------------------------------------------------------------------------------------------------------

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



18