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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



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FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2006

OR

 ̈TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 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 |  | 60515-1050                          
|(Address of principal executive offices)                             |  | (Zip Code)                          

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.    Yes x  No ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a
non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act.

Large
accelerated filer ̈Accelerated filer ̈Non-accelerated filer    x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes ̈No x

Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the latest practicable date.



|                     |  |                                 
|-------------------- |  | --------------------------------
|Class                |  | Outstanding at November 13, 2006
|Class A Common Stock |  | 6,408.3 shares                  



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##### Table of Contents

ELGIN NATIONAL INDUSTRIES, INC.

TABLE OF CONTENTS



|                                                                                                                                                                                   |  |     
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----
|                                                                                                                                                                                   |  | Page
|PART IFINANCIAL INFORMATION                                                                                                                                                       |  |     
|                                                                                                                                                                                   | 
|ITEM 1Financial Statements                                                                                                                                                        |  |     
|                                                                                                                                                                                   | 
|Consolidated Balance Sheets as of September 30, 2006 and December 31, 2005                                                                                                         |  | 3   
|                                                                                                                                                                                   | 
|Consolidated Statements of Operations for the Nine Months Ended September 30, 2006 and September 20, 2005 and for the Three Months Ended September 30, 2006 and September 30, 2005 |  | 4   
|                                                                                                                                                                                   | 
|Consolidated Statement of Changes in Stockholders Deficit for the Nine Months Ended September 30, 2006                                                                            |  | 5   
|                                                                                                                                                                                   | 
|Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2006 and September 30, 2005                                                                |  | 6   
|                                                                                                                                                                                   | 
|Notes to Condensed Consolidated Financial Statements                                                                                                                               |  | 7   
|                                                                                                                                                                                   | 
|ITEM 2Managements Discussion and Analysis of Financial Condition and Results of Operations                                                                                       |  | 13  
|                                                                                                                                                                                   | 
|ITEM 3Quantitative and Qualitative Disclosures about Market Risk                                                                                                                  |  | 16  
|                                                                                                                                                                                   | 
|ITEM 4Controls and Procedures                                                                                                                                                     |  | 16  
|                                                                                                                                                                                   | 
|PART IIOTHER INFORMATION                                                                                                                                                          |  |     
|                                                                                                                                                                                   | 
|ITEM 1Legal Proceedings                                                                                                                                                           |  | 17  
|                                                                                                                                                                                   | 
|ITEM 1ARisk Factors                                                                                                                                                               |  | 17  
|                                                                                                                                                                                   | 
|ITEM 2Unregistered Sales of Equity Securities and Use of Proceeds                                                                                                                 |  | 17  
|                                                                                                                                                                                   | 
|ITEM 3Defaults Upon Senior Securities                                                                                                                                             |  | 17  
|                                                                                                                                                                                   | 
|ITEM 4Submission of Matters to a Vote of Security Holders                                                                                                                         |  | 17  
|                                                                                                                                                                                   | 
|ITEM 5Other Information                                                                                                                                                           |  | 17  
|                                                                                                                                                                                   | 
|ITEM 6Exhibits                                                                                                                                                                    |  | 17  
|                                                                                                                                                                                   | 
|SIGNATURES                                                                                                                                                                         |  | 18  
|                                                                                                                                                                                   | 
|EXHIBIT INDEX                                                                                                                                                                      |  | 19  



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##### Table of Contents

PART I



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

ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(in thousands except share data)

(Unaudited)



|                                                                                                                                                      |  |                    |         |   |                   |   |         |  
|----------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | ------- | - | ----------------- | - | ------- | -
|                                                                                                                                                      |  | September 30, 2006 |         |   | December 31, 2005 |  
|ASSETS                                                                                                                                                |  |                    |         |   |                   |   |         |  
|Current assets:                                                                                                                                       |  |                    |         |   |                   |   |         |  
|Cash and equivalents                                                                                                                                  |  | $                  | 4,396   |   |                   | $ | 2,621   |  
|Accounts receivable, net                                                                                                                              |  |                    | 68,123  |   |                   |   | 46,737  |  
|Inventories, net                                                                                                                                      |  |                    | 24,293  |   |                   |   | 23,064  |  
|Prepaid expenses and other assets                                                                                                                     |  |                    | 2,004   |   |                   |   | 697     |  
|Deferred income taxes                                                                                                                                 |  |                    | 2,547   |   |                   |   | 2,547   |  
|                                                                                                                                                      |  |                    |         |   |                   |   |         |  
|Total current assets                                                                                                                                  |  |                    | 101,363 |   |                   |   | 75,666  |  
|Property, plant and equipment, net                                                                                                                    |  |                    | 19,354  |   |                   |   | 18,272  |  
|Loans receivable from related parties                                                                                                                 |  |                    | 12,651  |   |                   |   | 12,131  |  
|Prepaid pension costs                                                                                                                                 |  |                    | 23,513  |   |                   |   | 24,190  |  
|Other assets                                                                                                                                          |  |                    | 2,696   |   |                   |   | 3,134   |  
|Goodwill                                                                                                                                              |  |                    | 18,995  |   |                   |   | 18,995  |  
|                                                                                                                                                      |  |                    |         |   |                   |   |         |  
|Total assets                                                                                                                                          |  | $                  | 178,572 |   |                   | $ | 152,388 |  
|                                                                                                                                                      |  |                    |         |   |                   |   |         |  
|LIABILITIES AND COMMON STOCKHOLDERS DEFICIT                                                                                                          |  |                    |         |   |                   |   |         |  
|Current liabilities:                                                                                                                                  |  |                    |         |   |                   |   |         |  
|Current portion of long-term debt                                                                                                                     |  | $                  | 1,232   |   |                   | $ | 1,237   |  
|Accounts payable                                                                                                                                      |  |                    | 60,837  |   |                   |   | 46,277  |  
|Accrued expenses                                                                                                                                      |  |                    | 17,281  |   |                   |   | 16,694  |  
|                                                                                                                                                      |  |                    |         |   |                   |   |         |  
|Total current liabilities                                                                                                                             |  |                    | 79,350  |   |                   |   | 64,208  |  
|Long-term debt less current portion                                                                                                                   |  |                    | 100,707 |   |                   |   | 96,622  |  
|Mandatorily redeemable preferred stock units                                                                                                          |  |                    | 16,744  |   |                   |   | 16,198  |  
|Mandatorily redeemable preferred stock                                                                                                                |  |                    | 4,593   |   |                   |   | 4,443   |  
|Other liabilities                                                                                                                                     |  |                    | 2,972   |   |                   |   | 1,542   |  
|Deferred income taxes                                                                                                                                 |  |                    | 3,626   |   |                   |   | 1,736   |  
|                                                                                                                                                      |  |                    |         |   |                   |   |         |  
|Total liabilities                                                                                                                                     |  |                    | 207,992 |   |                   |   | 184,749 |  
|                                                                                                                                                      |  |                    |         |   |                   |   |         |  
|Common stockholders deficit:                                                                                                                         |  |                    |         |   |                   |   |         |  
|Common stock, Class A par value $.01 per share; authorized 23,678 shares; 6,408 issued and outstanding as of September 30, 2006 and
December 31, 2005 |  |                    |        |   |                   |   |        |  
|Retained deficit                                                                                                                                      |  |                    | (29,829 | ) |                   |   | (32,741 | )
|Accumulated other comprehensive income                                                                                                                |  |                    | 409     |   |                   |   | 380     |  
|                                                                                                                                                      |  |                    |         |   |                   |   |         |  
|Total common stockholders deficit                                                                                                                    |  |                    | (29,420 | ) |                   |   | (32,361 | )
|                                                                                                                                                      |  |                    |         |   |                   |   |         |  
|Total liabilities and stockholders deficit                                                                                                           |  | $                  | 178,572 |   |                   | $ | 152,388 |  
|                                                                                                                                                      |  |                    |         |   |                   |   |         |  

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



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ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands)

(Unaudited)



|                                             |  |                                         |         |   |                                          |   |         |      |  |   |        |   |  |   |        |  
|-------------------------------------------- |  | --------------------------------------- | ------- | - | ---------------------------------------- | - | ------- | ---- |  | - | ------ | - |  | - | ------ | -
|                                             |  | For the Nine Months Ended September 30, |         |   | For the Three Months Ended September 30, |  
|                                             |  | 2006                                    |         |   | 2005                                     |   |         | 2006 |  |   | 2005   |  
|Net sales                                    |  | $                                       | 230,733 |   |                                          | $ | 153,271 |      |  | $ | 82,367 |   |  | $ | 55,690 |  
|Cost of sales                                |  |                                         | 191,234 |   |                                          |   | 124,699 |      |  |   | 69,328 |   |  |   | 46,839 |  
|                                             |  |                                         |         |   |                                          |   |         |      |  |   |        |   |  |   |        |  
|Gross profit                                 |  |                                         | 39,499  |   |                                          |   | 28,572  |      |  |   | 13,039 |   |  |   | 8,851  |  
|Selling, general and administrative expenses |  |                                         | 25,696  |   |                                          |   | 23,598  |      |  |   | 8,983  |   |  |   | 8,073  |  
|                                             |  |                                         |         |   |                                          |   |         |      |  |   |        |   |  |   |        |  
|Operating income                             |  |                                         | 13,803  |   |                                          |   | 4,974   |      |  |   | 4,056  |   |  |   | 778    |  
|Other expenses (income)                      |  |                                         |         |   |                                          |   |         |      |  |   |        |   |  |   |        |  
|Interest income                              |  |                                         | (610    | ) |                                          |   | (536    | )    |  |   | (215   | ) |  |   | (179   | )
|Interest expense                             |  |                                         | 9,054   |   |                                          |   | 9,262   |      |  |   | 3,072  |   |  |   | 3,080  |  
|                                             |  |                                         |         |   |                                          |   |         |      |  |   |        |   |  |   |        |  
|Income (loss) before income taxes            |  |                                         | 5,359   |   |                                          |   | (3,752  | )    |  |   | 1,199  |   |  |   | (2,123 | )
|Provision (benefit) for income taxes         |  |                                         | 2,447   |   |                                          |   | (974    | )    |  |   | 581    |   |  |   | (665   | )
|                                             |  |                                         |         |   |                                          |   |         |      |  |   |        |   |  |   |        |  
|Net income (loss)                            |  | $                                       | 2,912   |   |                                          | $ | (2,778  | )    |  | $ | 618    |   |  | $ | (1,458 | )
|                                             |  |                                         |         |   |                                          |   |         |      |  |   |        |   |  |   |        |  

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 Nine Months Ended September 30, 2006

(in thousands except share data)

(Unaudited)



|                                                           |  |              |   |                    |   |         |                                        |  |                             |     |  |   |         |  
|---------------------------------------------------------- |  | ------------ | - | ------------------ | - | ------- | -------------------------------------- |  | --------------------------- | --- |  | - | ------- | -
|                                                           |  | Common Stock |   | Retained (Deficit) |   |         | Accumulated Other Comprehensive Income |  | Total Stockholders Deficit |    
|Balance as of December 31, 2005                            |  | $            |  |                    | $ | (32,741 | )                                      |  | $                           | 380 |  | $ | (32,361 | )
|Net income for the nine months ended September 30, 2006    |  |              |  |                    |   | 2,912   |                                        |  |                             |    |  |   | 2,912   |  
|Foreign currency translation adjustments net of tax of $26 |  |              |  |                    |   |        |                                        |  |                             | 29  |  |   | 29      |  
|                                                           |  |              |   |                    |   |         |                                        |  |                             |     |  |   |         |  
|Balance as of September 30, 2006                           |  | $            |  |                    | $ | (29,829 | )                                      |  | $                           | 409 |  | $ | (29,420 | )
|                                                           |  |              |   |                    |   |         |                                        |  |                             |     |  |   |         |  

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



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ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Nine Months Ended September 30, 2006 and 2005

(in thousands)

(Unaudited)



|                                                    |  |      |        |   |      |   |        |  
|--------------------------------------------------- |  | ---- | ------ | - | ---- | - | ------ | -
|                                                    |  | 2006 |        |   | 2005 |  
|Net cash (used in) provided by operating activities |  | $    | (542   | ) |      | $ | 4,772  |  
|                                                    |  |      |        |   |      |   |        |  
|Cash flows from investing activities:               |  |      |        |   |      |   |        |  
|Proceeds from sale of assets                        |  |      |       |   |      |   | 1      |  
|Purchase of property, plant and equipment           |  |      | (1,625 | ) |      |   | (656   | )
|                                                    |  |      |        |   |      |   |        |  
|Net cash used by investing activities               |  |      | (1,625 | ) |      |   | (655   | )
|                                                    |  |      |        |   |      |   |        |  
|Cash flows from financing activities:               |  |      |        |   |      |   |        |  
|Finance costs                                       |  |      | (167   | ) |      |   |       |  
|Borrowings on long-term debt                        |  |      | 5,017  |   |      |   |       |  
|Repayments of long-term debt                        |  |      | (937   | ) |      |   | (4,089 | )
|                                                    |  |      |        |   |      |   |        |  
|Net cash provided by (used in) financing activities |  |      | 3,913  |   |      |   | (4,089 | )
|                                                    |  |      |        |   |      |   |        |  
|Effect of exchange rates on cash                    |  |      | 29     |   |      |   | (28    | )
|                                                    |  |      |        |   |      |   |        |  
|Net increase in cash and cash equivalents           |  |      | 1,775  |   |      |   |       |  
|                                                    |  |      |        |   |      |   |        |  
|Cash and cash equivalents at beginning of period    |  |      | 2,621  |   |      |   |       |  
|                                                    |  |      |        |   |      |   |        |  
|Cash and cash equivalents at end of period          |  | $    | 4,396  |   |      | $ |       |  
|                                                    |  |      |        |   |      |   |        |  

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 an independent registered public accounting firm, 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, 2005 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 nine months of 2006 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:



|                                                                |  |                    |        |                   |   |       
|--------------------------------------------------------------- |  | ------------------ | ------ | ----------------- | - | ------
|                                                                |  | September 30, 2006 |        | December 31, 2005
|                                                                |  | (in thousands)    
|Trade accounts                                                  |  | $                  | 19,042 |                   | $ | 16,370
|                                                                |  |                    |        |                   |   |       
|Construction contracts:                                         |  |                    |        |                   |   |       
|Billed                                                          |  |                    | 34,001 |                   |   | 21,753
|Costs and estimated earnings in excess of billings on contracts |  |                    | 3,406  |                   |   | 991   
|Retainage due upon completion of contracts                      |  |                    | 11,559 |                   |   | 7,978 
|                                                                |  |                    |        |                   |   |       
|                                                                |  |                    | 48,966 |                   |   | 30,722
|                                                                |  |                    |        |                   |   |       
|Trade accounts and construction contracts                       |  |                    | 68,008 |                   |   | 47,092
|                                                                |  |                    |        |                   |   |       
|Other receivables                                               |  |                    | 786    |                   |   | 266   
|                                                                |  |                    |        |                   |   |       
|                                                                |  |                    | 68,794 |                   |   | 47,358
|Less allowance for doubtful accounts                            |  |                    | 671    |                   |   | 621   
|                                                                |  |                    |        |                   |   |       
|                                                                |  | $                  | 68,123 |                   | $ | 46,737
|                                                                |  |                    |        |                   |   |       



|3. | Inventories
|-- | -----------

Inventories consist of:



|                                 |  |                    |        |                   |   |       
|-------------------------------- |  | ------------------ | ------ | ----------------- | - | ------
|                                 |  | September 30, 2006 |        | December 31, 2005
|                                 |  | (in thousands)    
|Finished goods                   |  | $                  | 14,000 |                   | $ | 12,695
|Work-in-process                  |  |                    | 3,589  |                   |   | 3,424 
|Raw materials                    |  |                    | 8,729  |                   |   | 8,761 
|                                 |  |                    |        |                   |   |       
|                                 |  |                    | 26,318 |                   |   | 24,880
|Less excess and obsolete reserve |  |                    | 2,025  |                   |   | 1,816 
|                                 |  |                    |        |                   |   |       
|                                 |  | $                  | 24,293 |                   | $ | 23,064
|                                 |  |                    |        |                   |   |       



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ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Unaudited)



|4. | Comprehensive income (loss)
|-- | ---------------------------

Total comprehensive
income (loss) and its components, net of related tax are as follows:



|                             |  |                                        |       |      |                                         |        |      |  |      |     |  |   |        |  
|---------------------------- |  | -------------------------------------- | ----- | ---- | --------------------------------------- | ------ | ---- |  | ---- | --- |  | - | ------ | -
|                             |  | For the Nine MonthsEnded September 30, |       |      | For the Three MonthsEnded September 30, |       
|                             |  | 2006                                   |       | 2005 |                                         |        | 2006 |  | 2005 |    
|                             |  | (in thousands)                         |      
|Net income (loss)            |  | $                                      | 2,912 |      | $                                       | (2,778 | )    |  | $    | 618 |  | $ | (1,458 | )
|Foreign currency translation |  |                                        | 29    |      |                                         | (28    | )    |  |      | 27  |  |   | 4      |  
|                             |  |                                        |       |      |                                         |        |      |  |      |     |  |   |        |  
|                             |  | $                                      | 2,941 |      | $                                       | (2,806 | )    |  | $    | 645 |  | $ | (1,454 | )
|                             |  |                                        |       |      |                                         |        |      |  |      |     |  |   |        |  

The components of accumulated other comprehensive income, net of related tax consists of foreign
currency translation of $409,000 and $380,000 as of September 30, 2006 and December 31, 2005, respectively.



|5. | Components of net periodic pension cost
|-- | ---------------------------------------



|                                        |  |                   |        |   |                    |   |        |               |  |   |               |   |  |   |      |  
|--------------------------------------- |  | ----------------- | ------ | - | ------------------ | - | ------ | ------------- |  | - | ------------- | - |  | - | ---- | -
|                                        |  | Nine Months Ended |        |   | Three Months Ended |  
|                                        |  | Sept 30, 2006     |        |   | Sept 30, 2005      |   |        | Sept 30, 2006 |  |   | Sept 30, 2005 |  
|                                        |  | (in thousands)    |       
|Service cost                            |  | $                 | 626    |   |                    | $ | 637    |               |  | $ | 224           |   |  | $ | 202  |  
|Interest cost                           |  |                   | 1,085  |   |                    |   | 1,048  |               |  |   | 389           |   |  |   | 332  |  
|Expected return on assets               |  |                   | (2,023 | ) |                    |   | (2,107 | )             |  |   | (725          | ) |  |   | (668 | )
|Net amortization of prior service costs |  |                   | 154    |   |                    |   | 111    |               |  |   | 55            |   |  |   | 35   |  
|Net amortization of prior gain          |  |                   | 834    |   |                    |   | 541    |               |  |   | 299           |   |  |   | 369  |  
|                                        |  |                   |        |   |                    |   |        |               |  |   |               |   |  |   |      |  
|Net periodic pension cost               |  | $                 | 676    |   |                    | $ | 230    |               |  | $ | 242           |   |  | $ | 270  |  
|                                        |  |                   |        |   |                    |   |        |               |  |   |               |   |  |   |      |  



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ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Unaudited)



|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
industry is presented below for the nine months and the three months ended September 30:



|                                                                             |  |                               |         |   |                                |   |         |      |  |   |        |   |  |   |        |  
|---------------------------------------------------------------------------- |  | ----------------------------- | ------- | - | ------------------------------ | - | ------- | ---- |  | - | ------ | - |  | - | ------ | -
|                                                                             |  | Nine Months EndedSeptember 30 |         |   | Three Months EndedSeptember 30 |  
|                                                                             |  | 2006                          |         |   | 2005                           |   |         | 2006 |  |   | 2005   |  
|                                                                             |  | (in thousands)                |        
|Net sales to external customers:                                             |  |                               |         |   |                                |   |         |      |  |   |        |   |  |   |        |  
|Manufactured Products                                                        |  | $                             | 104,018 |   |                                | $ | 94,260  |      |  | $ | 35,135 |   |  | $ | 32,416 |  
|Engineering Services                                                         |  |                               | 126,715 |   |                                |   | 59,011  |      |  |   | 47,232 |   |  |   | 23,274 |  
|                                                                             |  |                               |         |   |                                |   |         |      |  |   |        |   |  |   |        |  
|Total net sales to external customers                                        |  | $                             | 230,733 |   |                                | $ | 153,271 |      |  | $ | 82,367 |   |  | $ | 55,690 |  
|                                                                             |  |                               |         |   |                                |   |         |      |  |   |        |   |  |   |        |  
|Net sales to internal customers:                                             |  |                               |         |   |                                |   |         |      |  |   |        |   |  |   |        |  
|Manufactured Products                                                        |  | $                             | 8,006   |   |                                | $ | 4,779   |      |  | $ | 2,479  |   |  | $ | 1,452  |  
|Engineering Services                                                         |  |                               | 1,667   |   |                                |   | 708     |      |  |   | 495    |   |  |   | 146    |  
|                                                                             |  |                               |         |   |                                |   |         |      |  |   |        |   |  |   |        |  
|Total net sales to internal customers                                        |  | $                             | 9,673   |   |                                | $ | 5,487   |      |  | $ | 2,974  |   |  | $ | 1,598  |  
|                                                                             |  |                               |         |   |                                |   |         |      |  |   |        |   |  |   |        |  
|Total net sales:                                                             |  |                               |         |   |                                |   |         |      |  |   |        |   |  |   |        |  
|Manufactured Products                                                        |  | $                             | 112,024 |   |                                | $ | 99,039  |      |  | $ | 37,614 |   |  | $ | 33,868 |  
|Engineering Services                                                         |  |                               | 128,382 |   |                                |   | 59,719  |      |  |   | 47,727 |   |  |   | 23,420 |  
|                                                                             |  |                               |         |   |                                |   |         |      |  |   |        |   |  |   |        |  
|Total net sales                                                              |  |                               | 240,406 |   |                                |   | 158,758 |      |  |   | 85,341 |   |  |   | 57,288 |  
|Elimination of net sales to internal customers                               |  |                               | 9,673   |   |                                |   | 5,487   |      |  |   | 2,974  |   |  |   | 1,598  |  
|                                                                             |  |                               |         |   |                                |   |         |      |  |   |        |   |  |   |        |  
|Total consolidated net sales                                                 |  | $                             | 230,733 |   |                                | $ | 153,271 |      |  | $ | 82,367 |   |  | $ | 55,690 |  
|                                                                             |  |                               |         |   |                                |   |         |      |  |   |        |   |  |   |        |  
|Earnings (loss) before corporate expenses, interest, taxes and income taxes: |  |                               |         |   |                                |   |         |      |  |   |        |   |  |   |        |  
|Manufactured Products                                                        |  | $                             | 16,751  |   |                                | $ | 12,997  |      |  | $ | 5,687  |   |  | $ | 4,364  |  
|Engineering Services                                                         |  |                               | 3,368   |   |                                |   | (2,394  | )    |  |   | 816    |   |  |   | (1,544 | )
|                                                                             |  |                               |         |   |                                |   |         |      |  |   |        |   |  |   |        |  
|Total segment earnings                                                       |  |                               | 20,119  |   |                                |   | 10,603  |      |  |   | 6,503  |   |  |   | 2,820  |  
|Corporate expenses                                                           |  |                               | (6,316  | ) |                                |   | (5,629  | )    |  |   | (2,447 | ) |  |   | (2,042 | )
|Interest income                                                              |  |                               | 610     |   |                                |   | 536     |      |  |   | 215    |   |  |   | 179    |  
|Interest expense                                                             |  |                               | (9,054  | ) |                                |   | (9,262  | )    |  |   | (3,072 | ) |  |   | (3,080 | )
|                                                                             |  |                               |         |   |                                |   |         |      |  |   |        |   |  |   |        |  
|Consolidated income (loss) before income taxes                               |  | $                             | 5,359   |   |                                | $ | (3,752  | )    |  | $ | 1,199  |   |  | $ | (2,123 | )
|                                                                             |  |                               |         |   |                                |   |         |      |  |   |        |   |  |   |        |  



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ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Unaudited)



|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.



|                                                |  |                                      |         |   |                    |   |         |                          |  |   |                   |   |  |   |         |  
|----------------------------------------------- |  | ------------------------------------ | ------- | - | ------------------ | - | ------- | ------------------------ |  | - | ----------------- | - |  | - | ------- | -
|                                                |  | September 30, 2006                   |        
|                                                |  | Parent                               |         |   | CombinedGuarantors |   |         | ConsolidatingAdjustments |  |   | ConsolidatedTotal |  
|                                                |  | (in thousands)                       |        
|Current assets                                  |  | $                                    | 14,642  |   |                    | $ | 70,919  |                          |  | $ | 15,802            |   |  | $ | 101,363 |  
|Noncurrent assets                               |  |                                      | 93,082  |   |                    |   | 30,799  |                          |  |   | (46,672           | ) |  |   | 77,209  |  
|                                                |  |                                      |         |   |                    |   |         |                          |  |   |                   |   |  |   |         |  
|Total assets                                    |  | $                                    | 107,724 |   |                    | $ | 101,718 |                          |  | $ | (30,870           | ) |  | $ | 178,572 |  
|                                                |  |                                      |         |   |                    |   |         |                          |  |   |                   |   |  |   |         |  
|Current liabilities                             |  | $                                    | 11,076  |   |                    | $ | 56,687  |                          |  | $ | 11,587            |   |  | $ | 79,350  |  
|Total liabilities                               |  | $                                    | 137,145 |   |                    | $ | 59,260  |                          |  | $ | 11,587            |   |  | $ | 207,992 |  
|                                                | 
|                                                |  | December 31, 2005                    |        
|                                                |  | Parent                               |         |   | CombinedGuarantors |   |         | ConsolidatingAdjustments |  |   | ConsolidatedTotal |  
|                                                |  | (in thousands)                       |        
|Current assets                                  |  | $                                    | 11,662  |   |                    | $ | 55,061  |                          |  | $ | 8,943             |   |  | $ | 75,666  |  
|Noncurrent assets                               |  |                                      | 82,931  |   |                    |   | 26,336  |                          |  |   | (32,545           | ) |  |   | 76,722  |  
|                                                |  |                                      |         |   |                    |   |         |                          |  |   |                   |   |  |   |         |  
|Total assets                                    |  | $                                    | 94,593  |   |                    | $ | 81,397  |                          |  | $ | (23,602           | ) |  | $ | 152,388 |  
|                                                |  |                                      |         |   |                    |   |         |                          |  |   |                   |   |  |   |         |  
|Current liabilities                             |  | $                                    | 7,587   |   |                    | $ | 48,491  |                          |  | $ | 8,130             |   |  | $ | 64,208  |  
|Total liabilities                               |  | $                                    | 126,954 |   |                    | $ | 49,653  |                          |  | $ | 8,142             |   |  | $ | 184,749 |  
|                                                | 
|                                                |  | Nine months ended September 30, 2006 |        
|                                                |  | Parent                               |         |   | CombinedGuarantors |   |         | ConsolidatingAdjustments |  |   | ConsolidatedTotal |  
|                                                |  | (in thousands)                       |        
|Sales, net                                      |  | $                                    | 29,479  |   |                    | $ | 171,596 |                          |  | $ | 29,658            |   |  | $ | 230,733 |  
|Gross profit                                    |  |                                      | 10,172  |   |                    |   | 27,065  |                          |  |   | 2,262             |   |  |   | 39,499  |  
|Income before income tax                        |  |                                      | 5,359   |   |                    |   | 13,840  |                          |  |   | (13,840           | ) |  |   | 5,359   |  
|Net income                                      |  |                                      | 2,912   |   |                    |   | 9,135   |                          |  |   | (9,135            | ) |  |   | 2,912   |  
|Cash (used in) provided by operating activities |  |                                      | (3,437  | ) |                    |   | 6,328   |                          |  |   | (3,433            | ) |  |   | (542    | )
|Cash used in investing activities               |  |                                      | (542    | ) |                    |   | (4,487  | )                        |  |   | 3,404             |   |  |   | (1,625  | )
|Cash provided by (used in) financing activities |  |                                      | 3,950   |   |                    |   | (37     | )                        |  |   |                  |   |  |   | 3,913   |  
|Effect of exchange rate on cash                 |  |                                      |        |   |                    |   |        |                          |  |   | 29                |   |  |   | 29      |  



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ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Unaudited)



|                                      |  |                                       |        |   |                    |   |         |                          |  |   |                   |   |  |   |         |  
|------------------------------------- |  | ------------------------------------- | ------ | - | ------------------ | - | ------- | ------------------------ |  | - | ----------------- | - |  | - | ------- | -
|                                      |  | Nine months ended September 30, 2005  |       
|                                      |  | Parent                                |        |   | CombinedGuarantors |   |         | ConsolidatingAdjustments |  |   | ConsolidatedTotal |  
|                                      |  | (in thousands)                        |       
|Sales, net                            |  | $                                     | 27,479 |   |                    | $ | 112,061 |                          |  | $ | 13,731            |   |  | $ | 153,271 |  
|Gross profit                          |  |                                       | 9,189  |   |                    |   | 17,941  |                          |  |   | 1,442             |   |  |   | 28,572  |  
|(Loss) income before income tax       |  |                                       | (3,752 | ) |                    |   | 4,910   |                          |  |   | (4,910            | ) |  |   | (3,752  | )
|Net (loss) income                     |  |                                       | (2,778 | ) |                    |   | 2,469   |                          |  |   | (2,469            | ) |  |   | (2,778  | )
|Cash provided by operating activities |  |                                       | 4,153  |   |                    |   | (3,166  | )                        |  |   | 3,785             |   |  |   | 4,772   |  
|Cash used in investing activities     |  |                                       | (89    | ) |                    |   | 3,191   |                          |  |   | (3,757            | ) |  |   | (655    | )
|Cash used in financing activities     |  |                                       | (4,064 | ) |                    |   | (25     | )                        |  |   |                  |   |  |   | (4,089  | )
|Effect of exchange rate on cash       |  |                                       |       |   |                    |   |        |                          |  |   | (28               | ) |  |   | (28     | )
|                                      | 
|                                      |  | Three months ended September 30, 2006 |       
|                                      |  | Parent                                |        |   | CombinedGuarantors |   |         | ConsolidatingAdjustments |  |   | ConsolidatedTotal |  
|                                      |  | (in thousands)                        |       
|Sales, net                            |  | $                                     | 9,804  |   |                    | $ | 60,796  |                          |  | $ | 11,767            |   |  | $ | 82,367  |  
|Gross profit                          |  |                                       | 3,454  |   |                    |   | 8,677   |                          |  |   | 908               |   |  |   | 13,039  |  
|Income before income tax              |  |                                       | 199    |   |                    |   | 4,405   |                          |  |   | (4,405            | ) |  |   | 199     |  
|Net income                            |  |                                       | 618    |   |                    |   | 2,908   |                          |  |   | (2,908            | ) |  |   | 618     |  
|                                      | 
|                                      |  | Three months ended September 30, 2005 |       
|                                      |  | Parent                                |        |   | CombinedGuarantors |   |         | ConsolidatingAdjustments |  |   | ConsolidatedTotal |  
|                                      |  | (in thousands)                        |       
|Sales, net                            |  | $                                     | 8,852  |   |                    | $ | 44,039  |                          |  | $ | 2,799             |   |  | $ | 55,690  |  
|Gross profit                          |  |                                       | 3,027  |   |                    |   | 5,444   |                          |  |   | 380               |   |  |   | 8,851   |  
|(Loss) income before income tax       |  |                                       | (2,123 | ) |                    |   | 989     |                          |  |   | (989              | ) |  |   | (2,123  | )
|Net (loss) income                     |  |                                       | (1,458 | ) |                    |   | 360     |                          |  |   | (360              | ) |  |   | (1,458  | )

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 2005
financial statements have been reclassified to conform to the 2006 presentation.



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ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Unaudited)



|10. | New accounting pronouncements
|--- | -----------------------------

In June 2006, the
FASB issued Interpretation No. 48 (FIN 48), Accounting for Uncertainty in Income Taxesan interpretation of SFAS 109, Accounting for Income Taxes. FIN 48 prescribes a recognition threshold and measurement attribute for the financial
statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 developed a two-step process to evaluate a tax position and also provides guidance on derecognition, classification, interest and
penalties, accounting in interim periods, disclosure, and transition. This interpretation is effective for the Companys fiscal year ending December 31, 2007. Management has not yet determined the impact that adoption will have on the
Companys financial statements.

In September 2006, the FASB issued SFAS 157, Fair Value Measurements. SFAS 157 defines fair value,
establishes a framework for measuring fair value and expands disclosures about fair value measurements. The requirements of SFAS 157 are effective for the Companys fiscal year ending December 31, 2008. Management has not yet determined
the impact that adoption will have on the Companys financial statements.

In September 2006, the FASB issued SFAS 158,
Employers Accounting for Defined Benefit Pension and Other Postretirement Plans-an amendment of FASB Statements No. 87, 88, 106, and 132(R). SFAS 158 requires an employer to recognize the overfunded or underfunded status of a defined
benefit postretirement plan (other than a multiemployer plan) as an asset or liability in its statement of financial position and to recognize changes in that funded status in the year in which the changes occur through comprehensive income of a
business entity. SFAS 158 also requires an employer to measure the funded status of a plan as of the date of its year-end statement of financial position, with limited exceptions. The Company is required to recognize the funded status of its defined
benefit postretirement plan and to provide the required disclosures as of the end of the fiscal year ending December 31, 2007. The requirement to measure plan assets and benefit obligations as of the date of the Companys fiscal year-end
statement of financial position is effective for the fiscal year ending December 31, 2008. Management has not yet determined the impact that adoption will have on the Companys financial statements.



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

Results of Operations

Three Months Ended September 30, 2006 Compared to Three Months Ended September 30, 2005

Net Sales: Net sales for the quarter ended September 30, 2006 increased $26.7 million, or 47.9%, to $82.4 million from
$55.7 million for the corresponding period in 2005. The Engineering Services Segments sales increased $24.0 million or 102.9% to $47.3 million for the quarter ended September 30, 2006 from $23.3 million for the quarter ended
September 30, 2005 due to the timing and size of projects. For the quarter ended September 30, 2006 the Engineering Services Segment had eleven larger projects with sales in excess of $1.0 million, totalling $39.5 million in sales,
compared to nine larger projects totalling $14.3 million in sales for the quarter ended September 30, 2005. The Manufactured Products Segments sales increased $2.7 million, or 8.4%, primarily due to increased sales of centrifuges and high
voltage equipment, partially offset with decreased steel fabrication sales.

Gross Profit: Gross profit for the quarter ended
September 30, 2006 increased $4.2 million, or 47.3%, to $13.0 million from $8.8 million for the corresponding period in 2005. As a percentage of net sales, the gross profit decreased to 15.8% for the quarter ended September 30, 2006 from
15.9% for the corresponding period in 2005. The Companys overall margin decreased as a percentage of sales due to the increased sales level within the Engineering Services Segment, which earns lower margins than the Manufactured Products
Segment. The Engineering Service Segment had a gross profit margin as a percentage of net sales of 6.0% for the quarter ended September 2006 compared to 0.5% for 2005. In 2005 the Engineering Services Segment had a reduction in margin on an
aggregate project due to higher than anticipated construction costs resulting in a loss on the job. The Manufactured Product Segments gross profit margin as a percentage of net sales of 29.1% in 2006 increased 2.1% compared to 27.0% for the
quarter ended September 30, 2005. This increased margin as a percentage of net sales was mainly due to increased margins on, industrial capital equipment, and steel fabrication, and fasteners.

Selling, General and Administrative Expenses: Selling, general and administrative expenses of the Company for the quarter ended September 30,
2006 of $9.0 million were $0.9 million, or 11.3%, higher than the selling general and administrative expenses of $8.1 million for the corresponding period in 2005. The increased costs from 2005 were mainly due to higher legal fees and payroll
related expenses. As a percentage of net sales, selling, general and administrative expenses decreased from 14.5% for the quarter ended September 30, 2005 to 10.9% for the quarter ended September 30, 2006.

Interest Income:Interest income of the Company for the quarter ended September 30, 2006 of $0.2 million was unchanged from the corresponding
period ended September 30, 2005.

Interest Expense:Interest expense of the Company for the quarter ended September 30,
2006 of $3.1 million approximated the corresponding period in 2005 with lower interest recorded on the Companys Term Loan C, offset with higher interest recorded on the Companys other variable rate loans.

Provision (Benefit) for Income Taxes: Provision for income taxes of the Company for the quarter ended September 30, 2006 of $0.6 million
compared to a benefit of $0.7 million recorded for the quarter ended September 30, 2005. The increased expense of $1.3 million was due to the higher operating income for the quarter ended September 30, 2006.

Net Income (Loss): The net income for the Company for the quarter ended September 30, 2006 of $0.6 million increased $2.1 million from a net
loss of $1.5 million for the quarter ended September 30, 2005 for the reasons discussed above.



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Nine months Ended September 30, 2006 Compared to Nine months Ended September 30, 2005

Net Sales: Net sales for the nine months ended September 30, 2006 increased $77.4 million, or 50.5%, to $230.7 million from
$153.3 million for the corresponding period in 2005. The Engineering Services Segments sales increased $67.7 million, or 114.7% from $59.0 million for the nine months ended September 30, 2005 to $126.7 million for the nine months ended
September 30, 2006, due to the timing and size of projects. For the nine months ended September 30, 2006 the Company had eighteen larger projects with sales over $1.0 million, totalling $114.6 million in sales, compared to seventeen larger
projects totalling $47.0 million in sales for the nine months ended September 30, 2005. The Manufactured Products Segments sales increased $9.7 million from $94.3 million for the nine months ended September 30, 2005 to $104.0 million
for the nine months ended September 30, 2006, with increased sales of centrifugal dryers and high voltage equipment.

Gross
Profit: Gross profit for the nine months ended September 30, 2006 increased $10.9 million, or 38.2%, to $39.5 million from $28.6 million for the corresponding period in 2005. The increase resulted from the higher sales level, partially
offset with a lower margin earned as a percentage of net sales. As a percentage of net sales, the gross profit decreased to 17.1% for the nine months ended September 30, 2006 from 18.6% for the corresponding period in 2005. The lower overall
margin as a percentage of sales was due to increased sales within the Engineering Services Segment, which earn lower margins than the Manufactured Products Segment. The Engineering Services Segment had a gross profit margin as a percentage of net
sales of 7.0% for the nine months ended September 2006 compared to 4.2% for 2005. In 2005 the Engineering Services Segment had reduced the margin on a larger aggregate project, however the impact of this reduction was offset by profit that was
recognized on the closeout of a project in Poland. The Manufactured Products Segments gross profit margin increased $4.5 million to $30.6 million for 2006 from $26.1 million for 2005 due to the higher sales level. The Manufactured Products
Segments gross profit as a percentage of net sales of 29.5% in 2006 increased 1.8% compared to 27.7% for the nine months ended September 30, 2005. This increased margin as a percentage of net sales was mainly due to the increased margins
on fasteners, steel fabrication and centrifugal dryer sales.

Selling, General and Administrative Expenses: Selling, general and
administrative expenses of the Company for the nine months ended September 30, 2006 of $25.7 million were $2.1 million, or 8.9% higher than the selling, general and administrative expenses for the corresponding period in 2005 mainly due to
higher payroll related expenses and legal fees.

Interest Income: Interest income of the Company of $0.6 million for the nine months
ended September 30, 2006 increased $0.1 million from the corresponding period in 2005 due to increased income on officers notes.

Interest Expense:Interest expense of the Company for the nine months ended September 30, 2006 of $9.1 million was $0.2 million or 2.2% lower than the interest expense of $9.3 million for the corresponding period in 2005. This
decrease was due to lower interest expense recorded on the Companys Term Loan C, partially offset with higher interest rates of other variable rate debt.

Provision (Benefit) for Income Taxes: Provision for income taxes of the Company for the nine months ended September 30, 2006 of $2.4 million increased $3.4 million from a benefit of $1.0 million for the
nine months ended September 30, 2005 due to the improved operating results.

Net Income (Loss): The net income for the Company
for the nine months ended September 30, 2006 of $2.9 million increased to $5.7 million compared to a net loss of $2.8 million for the nine months ended September 30, 2005 for the reasons discussed above.

Liquidity and Capital Resources

Net cash used in
operating activities for the nine months ended September 30, 2006 of $0.5 million was used by increased accounts receivable and inventory levels due to the larger sales levels and increased prepaid assets partially offset with cash generated
from net income adjusted for non-cash charges, increased accounts



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##### Table of Contents

payable, accrued expenses, preferred stock and preferred stock units. Included in non-cash charges for the nine months ended September 30, 2006 was
depreciation of $1.8 million other non-cash charges of $0.6 million, and pension overfunding expense of $0.7 million. Cash flows from operations for any specific period are often materially affected by the timing and amounts of cash receipts and
cash disbursements related to engineering services projects.

Cash used in investing activities for the nine months ended
September 30, 2006 of $1.6 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 nine months ended September 30, 2006 of $3.9 million consisted of additional usage of the
Companys revolver loan of $5.0 million, partially offset with the repayment of $0.9 million on the Companys term loans and $0.2 million used for financing costs related to the extension of the Companys Term Loan C.

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 continued 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 could be required to seek additional
financing, and there is no assurance that financing would be available on reasonable terms, or at all.

Backlog

The Companys backlog consists primarily of that portion of engineering services contracts that have been awarded but not performed and also includes
open manufacturing orders. Backlog at September 30, 2006 was $191.0 million, compared to $203.2 million as of September 30, 2005. Approximately $26.8 million relates to the Manufactured Products Segment, with the remainder of $164.2
million relating to the Engineering Services Segment. Included in the Engineering Services backlog for September 30, 2006 is $27.0 million for a turnkey project for a lignite handling facility, $57.8 million for three projects for
limestone and gypsum handling facilities and $21.0 million for two coal handling systems. A substantial majority of current backlog is expected to be realized in the next twelve months.

Safe Harbor

To the extent that statements made by the Company relate to the Companys future
economic performance or business outlook, projections or expectations of financial or operational results, or refer to matters that are not historical facts, such statements 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 or other litigation, 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. Except as otherwise required by law, we undertake no obligation to update any forward-looking statement to reflect events or
circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors may emerge from time to time and it is not possible for us to predict all such factors.



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

The Company continues to use its reputation in the United States to generate sales in international markets. In the nine months ended September 30, 2006 approximately 25% of the Companys net sales were attributable to services
provided or products sold for use outside the United States, primarily to Australia, Indonesia and Canada. 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 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
|------- | -----------------------

The Companys 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. The Companys Chief Executive Officer, and Chief Financial Officer have concluded that 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 is reasonably likely to have a material adverse effect on the financial condition, results of operation or cash flow of the Company.



|ITEM 1A. | RISK FACTORS
|-------- | ------------

As of the end of our second quarter,
there were no additional material risks and no material changes to the risk factors discussed in our Annual Report on Form 10-K for the year ended December 31, 2005.



|ITEM 2. | UNREGISTERED SALES OF EQUITY 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
|------- | --------

As listed in Index to Exhibits on page
19.



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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.
CONNERName:

Wayne J. ConnerTitle:

Vice President, Treasurer, and Chief Financial Officer (Duly Authorized Officer and Principal Financial Officer)


Dated: November 14, 2006



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##### Table of Contents

INDEX TO EXHIBITS



|              |  |                                                                                                                                                                                                                                                                                        |  |                   |  
|------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | -
|ExhibitNumber |  | Document Description                                                                                                                                                                                                                                                                   |  | FootnoteReference |  
|              |  |                                                                                                                                                                                                                                                                                       
|10.15         |  | Fourth Amendment to Loan and Security Agreement, dated October 31, 2006 and among Elgin National Industries, Inc. and each of its subsidiaries and Wells Fargo Foothill, Inc. as lender,
arranger and administrative agent, and Mast Credit Opportunities I (Master), LTD., as lender. |  | (1                | )
|              |  |                                                                                                                                                                                                                                                                                       
|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 therewith
|--- | ---------------



19